History | Part 2

“Entrepreneurs have a lot in their hands, but we never felt it was too much”

History | Part 2
History | Part 3

”I want to make this company even better”

10 December 2020

Current entrepreneur and owner Tommi Peltonen continues the story of ST-Koneistus. This is the third part of a series of articles on the history of the company, recounting the events and developments of ST-Koneistus from the beginning of the millennium to the present day.

History | Part 3

Second generation

In the last part, we left off at a point where Tuomo wanted to ask his son Tommi something before buying Seppo’s share of ST-Koneistus. The question was if Tommi was willing to continue ST-Koneistus’s business at all. Of course, his daughter Katja was also a potential successor, but she was still too young at the time to consider her future in terms of continuing the company.

However, Tommi’s entry into the industry seemed inevitable. As already mentioned in the first article, the family lived for a long time in a residential building built in connection with ST-Koneistus, which made the factory also a familiar playground for Tommi.

According to Tuomo, Tommi was only three years old when he was already squeezing between the machines with his own small wheelbarrows and shovelling metal burr. Tommi also started actual machining at a very young age – at around the age of 14.

– I have to admit that I had never very deeply thought whether or not to do this work. Maybe on some level it was self-evident, but yes, dad asked me and I promised to continue.

When purchasing Seppo’s share, Tuomo transferred ST-Koneistus’s shares to Tommi and Katja. Tommi already became the majority owner of the company at that time.

The ownership changed the next time only in December 2017, when Tommi bought the entire share capital of ST-Koneistus from Tuomo and Katja. 

– I think that the generational transfer was completed at a good point, because at that time I was planning the largest investments in our history, which naturally involved risks. At the same time, I was the only one of the three of us who was actively developing the company and working on it.

On the other hand, Tommi sees that the completion of the generational change was also clarified by the fact that this time the initiative for changes in ownership came from Katja.

Also, the fact that the siblings would have continued ST-Koneistus together was never an excluded option. 

– The fact that this did not happen was largely Katja’s decision. She had her own projects that she wanted to work on in full. The only will of our father in this matter, on the other hand, was that after dealing with it, we would feel that we had been treated equally. It was also important to me that we could all fit on the same Christmas table even after this – and we did.

“What the previous stories do not tell is that my dad worked wearing his overalls ‘till the end of his career, and so did Seppo”.

Tommi Peltonen, current entrepreneur and owner of ST-Koneistus Oy

Offsprings of Hopeatie
 

Towards machinery career

Even if you are a family member you still have to earn your place at the Peltonen family business, and that required at least the same level of education as the father of the family who had completed technical college. 

When Tommi graduated from a vocational school, Finland was going through the worst times of recession, and ST-Koneistus did not have a summer job to offer him just then. However, Tommi got a summer job from Abloy’s Tampere factory, where he eventually worked continuously for a few years.

– Abloy taught me a lot about how a larger organization works. I feel I got a lot of good ideas from there about how employees should be treated in the first place so that they are willing to help the company succeed.

In 1995, Tommi decided to seek new drive for his engineering workshop career at the Turku University of Applied Sciences with a degree in mechanical engineering.

– I got acquainted with the first CAD programs at school and practiced their use by digitizing the old drawings of ST-Koneistus. By the way, they were the same drawings that dad said he drew from Vickers catalogue 25 years earlier, Tommi laughs.

Tommi started his actual career at ST-Koneistus as a machinist after graduating from school in 1998. When Tuomo retired in 2003, Tommi also gained his position as the company’s CEO.

– What the previous stories do not tell is that my dad worked wearing his overalls ‘till the end of his career, and so did Seppo, Tommi reveals. 

In addition to the office work mentioned in the previous part, Tuomo made cylinder assemblies and Seppo sawed blanks after he stopped lathing.

The apple has not fallen far from the tree, as Tommi also spent almost his entire nine-year managing career in production among other employees machining.

– I still spend most of my working day in production, although I do not machine that much. It is a more natural place for me than the office to look at the company’s operations; on the other hand, also the things I deal with are often related to production.

“Apparently, some people think that having people work day and night is a good thing. However, I dare say that people generally prefer to be at home in the evenings with their families and sleep at night.”

Tommi Peltonen, current entrepreneur and owner of ST-Koneistus Oy

Intergenerational view of productivity

Throughout the history of ST-Koneistus, regardless of generation, the company’s owners have been open-minded about utilizing new, more efficient production technologies.

Over the decades, the company has invested in countless machines, robots, pallets, containers, production systems and measuring equipment. In addition, ST-Koneistus has expanded its facilities well over a dozen times.

However, Tommi remembers that the development of ST-Koneistus has not always been viewed positively due to the increased level of automation. 

At the turn of the 21st century, for example, the hustle and bustle of the Peltonen family was marvelled when they bought pallets for a larger sum than what the machining equipment itself had cost. 

– Apparently, some people think that having people work day and night is a good thing. However, I dare say that people generally prefer to be at home in the evenings with their families and sleep at night.

According to Tommi, it is important to realize that productivity must improve and it is not done by exploiting people – it comes from better machines and automation.

Ultimately, in the case of ST-Koneistus, it has always been the case that the Peltonen family has believed that productivity is the key to competitiveness and the growth of a company that enables competitiveness, and growth in turn creates jobs.

I do not like the idea that things will stay as they are. On the other hand, if you decide to stay where you are today, you may find yourself unemployed tomorrow.

Tommi Peltonen, current entrepreneur and owner of ST-Koneistus Oy

Robot cell
ST-Koneistus' Pallatech system
Flexible manufacturing system
Hydraulic manifolds
Mitutoyo Crysta-Apex S 9108
Assembly and testing services
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To the next level

Tommi has been responsible for the development and corporate governance of ST-Koneistus since 2003 to the present day. The company has developed at a breath-taking pace, making it difficult to decide where to begin the summary.

In practice, the era is described by a seemingly endless chain of investments aimed at ensuring the company’s competitive pricing and high product quality. On the other hand, there has been a desire to look at the entire business model from a completely new perspective in recent years.

– I want to make this company even better. I do not like the idea that things will stay as they are. On the other hand, if you decide to stay where you are today, you may find yourself unemployed tomorrow.

The first significant development step during Tommi’s time took place immediately in 2004, when the first multi-function lathe was acquired. At the same time, the first robot was acquired and production facilities were expanded.

The combination of a multi-function lathe and a robot completely revolutionized piston production. 

– Before this, the manufacture of pistons began with lathes, continued with the machine tool, from where it passed to the hand machine until it returned to the lathes. There could be eight different work steps in one product, between which the product always had to be removed from the machine. With the collaboration of a multi-function lathe and a robot, they began to emerge on their own during the night.

The wheel of development had begun to turn and more space was needed the very next year, when Tommi purchased a new Doosa 5000 horizontal machining center, which was equipped with Fastems’s 12-pallet system, i.e. a container

With the transaction, a strong cooperation relationship was established between Fastems and ST-Koneistus, which was largely due to Pentti Järvinen, a retired machinery salesman. 

– At the turn of the millennium, I visited the Fastems stand at the FinnTec trade fair and met Pentti. He had such an honest and straightforward approach to making deals that was well suited for dealing with me, Tommi recalls.

The cooperation between Fastems and ST-Koneistus peaked in 2006. 

The acquired container was filled with work in a few months and Tommi was again considering acquiring additional capacity.

– Pentti, Juha Pihlajamaa and I stood around the container and thought about how we could connect more machines to it. 

The more Tommi pondered the matter, the more certain he was that expanding the container alone would not sufficiently promote the productivity needs of ST-Koneistus; at least not in the long run.

– I remember making my decision in an instant. I told Pentti and Juha to design an FMS system for this stern wall that could accommodate machines on both sides, and when the design is complete, provide me with the dimensions and I would finish the hall.

An FMS system (Flexible manufacturing system) is a production system that automatically transports products and materials between the machine and the warehouse.

The men doubted if Tommi was serious, but in the autumn of 2006 ST-Koneistus had a new hall ready and in the middle of it stood a new FMS system.

The acquisition of the FMS system is in many ways an important milestone in the history of ST-Koneistus, as it marks the beginning of a new era of better productivity in practice.

– In addition to productivity, it gave the company a lot of credibility, and perhaps for me as an entrepreneur, the courage to make large investments in the future as well.

“We informed the employees already in the winter that if no miracle happens, we will be out of work by May.”

Tommi Peltonen, current entrepreneur and owner of ST-Koneistus Oy

Owner and CEO
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2008-2009

Thus, the autumn of 2008 also began with a major investment decision. At that time, Tommi decided to expand the company’s office space and build a new 800m2 production facility for assembly operations.

However, there is an unwritten rule that entrepreneurship for any generation cannot be just fun investing, but it also involves challenges. 

Tommi says that he paid attention to the vertical rise in material prices already in June 2008 and even in November he remembers that the then Prime Minister Jyrki Katainen had assured the financial crisis would not affect Finland. 

However, the CEO, who enjoyed working in production, also soon had his hands full in the office.

– We informed the employees already in the winter that if no miracle happens, we will be out of work by May. At the same time, we had those expansions works decided in the autumn underway, Tommi recalls.

The miracle did not happen and ST-Koneistus was facing a new situation. The family business began its first extensive cooperation negotiations, at the end of which the company dismissed four employees and furloughed a dozen for a few months.

Tommi’s sister Katja was working as the company’s production designer at the time.

– Katja was responsible for leading the cooperation negotiations and she did a great job to get the situation under control. None of us at that time had any experience in organizing cooperation negotiations of that size.

However, thanks to the quick response, ST-Koneistus was able to buy new machines towards the end of the year, and from the beginning of 2010 the company’s payroll already had more personnel than before the recession.

There was also a lucky coincidence. The bank had made an error in the FMS system repayment plan calculation and had inadvertently charged ST-Koneistus larger instalments than had originally been agreed.  

– I had not noticed the matter and at the end of 2008 we got a letter stating: “Your investment loan has been repaid in full. Would you like some more money?”.

“We want to be the best company in Europe that manufactures hydraulic components and assemblies.”

Tommi Peltonen, current entrepreneur and owner of ST-Koneistus Oy

Next generation
 

Towards the European top

The money would indeed had been welcome, as the development trajectory of ST-Koneistus has been even wilder than in the last decade. 

In the last ten years alone, the company has expanded its facilities by nearly 3,000 square meters, purchased well over a dozen machines and doubled its turnover. Even the number of employees has increased by 15 people.

However, perhaps the most significant investments in the history of ST-Koneistus were made in 2018-2019. At the time, the company invested more than four million euros in Mazak-supplied Palletech system, three HCN-6800 machining centers and a Tool Hive tool magazine.

Palletech is an FMS-like production system that allows dozens of different works to be machined without the size of the series affecting productivity.

At the same time, ST-Koneistus built a new production hall for the system and invested again in a new assembly facility. The difference to the previous assembly facility was significant, as the current one was built to meet cleanroom conditions.

– All our recent investments are aimed at one and the same goal, we want to be the best company in Europe that manufactures hydraulic components and assemblies. Whether it takes us five or ten years does not matter, it is our goal in any case, Tommi emphasizes.

On the way to being the best hydraulic partner in Europe, Tommi also aims to renew cooperation with the customers. 

– Companies are actively re-evaluating their own core competencies. As a result, there are also companies in our customer base that want to acquire their own traditional work steps as purchasing services and we are ready to help them with that.

Tommi hopes to see ST-Koneistus’s turnover to come increasingly from the service business in the future.

– Our core competences are the machining, assembly and design of hydraulic components. Sovereign expertise in these areas allows us to act as a comprehensive partner for those in need of hydraulic systems.

However, he points out that own efficient manifold manufacturing is what all other possibilities rely on.

All in all, ST-Koneistus has invested almost 10 million euros in the development of its operations over the past ten years. The amount is exceptionally large in relation to the company’s turnover.

On the other hand, the pace does not seem to be slowing down, as Tommi has drawings on the table again. What are they related to?

– Time will tell, but if we want to be the best hydraulic subcontracting partner in Europe, we cannot settle for what we now have for very long.

It therefore seems that there will be lots to tell future generations about the coming decades.

ST-Koneistus Oy 50 years
 

ST-Koneistus is Finland’s largest manufacturer of hydraulic manifolds and components specializing in demanding special series. For 50 years, our mission has been to help hydraulic companies and the mechanical engineering industry manufacture high-quality end products.

Over the decades, our hydraulic products have been delivered to dozens of different countries around the world.