1990 - Global products and production
Scania captured a larger share of growth markets during the 1990s. The company further bolstered its economies of scale with the aid of a global product and production system.
Leif Östling, Managing Director of Scania Nederland, became President and CEO of Scania in the spring of 1989. He was soon bombarded by questions from journalists who wondered whether Scania might merge with another truckmaker. He emphatically denied such rumours, citing the risk of losing market share. He stubbornly repeated: "In the truck world, one plus one are seldom two, but at best one-and-a-half."
During the 1990s, Scania was able to increase its heavy vehicle sales from about 35,000 to 50,000 units per year. It expanded its share of the fast-growing European market. By the end of the decade, an increasingly borderless Western Europe accounted for more than 70 percent of sales. Meanwhile, Scania was making successful inroads in the previously closed markets of central and Eastern Europe. The company also strengthened its position in Latin America. Despite the removal of import barriers and stiffer competition, in mid-decade Scania broke sales records in both Brazil and Argentina.
A global production structure
Higher sales volume yielded benefits, which Scania added to by developing a global product system with standardised, interchangeable components. The principles behind the modular engine range also regained favour.
One idea behind the global product system was that items and components would flow freely between manufacturing units around the world. But this change could not be implemented without an extensive organisational change.
As the 1990s began, Scania was still dividing the market into Swedish and foreign production sectors. The Dutch factory in Zwolle had been built as a bridge into the then EEC, and Scania Nederland was subsequently responsible for both marketing and production on the European Continent.
Production companies in Latin America were set up to work in a corresponding way. However, Scania changed its market sectors in 1990 and split its production companies outside Sweden. It separated their technical and commercial functions. From then on, all production companies reported to Scania's technical management. This opened the way to the creation of a global production structure.
In highly-automated factories for making parts and components, Scania accentuated its economies of scale. Long operating hours and high workloads are very important at these expensive plants to ensure economical production. Scania therefore focused its European component production on fewer units in the 1990s.
Concentrating component manufacturing
All engine and axle production at Zwolle was transferred to Södertälje and Falun respectively. All research, development and manufacture of engine and transmission components moved to Södertälje. Cab production at Meppel, the Netherlands, was phased out and moved to Oskarshamn. Scania allowed its press shop in Luleå to increase capacity utilisation by doing production work for outside companies.
Like its Katrineholm-based bus production, Scania largely concentrated its European component manufacturing in Sweden during the 1990s. However, it expanded its chassis assembly operations on the continent. Since 1989, Zwolle has been Scania's largest single assembly unit and centre for final truck assembly.
The company continuously expanded capacity at Zwolle in the 1990s, but since economies of scale are limited in labour-intensive chassis assembly, Scania also built a completely new assembly unit in Angers, France.
Thanks to Scania's modular product system, global co-ordination has become a reality as well. Nowadays, items and components move between continents to overcome peak workloads. But even as production is becoming globally co-ordinated, it is changing at the local level. Scania assigns independent responsibility to each specialised factory where production teams are responsible for continuously developing and improving their own processes.