The crisis made Scania more efficient

In 2010 the third quarter was stronger than usual for Scania. What is the reason?

Before the financial crisis, Europe accounted for 65-75 percent of our sales. Today its share is down to around 50 percent, mainly because South America represents a larger slice of the pie. As a result, we are not as strongly affected by the European summer holiday period as in previous years, when we essentially had three months of costs but only two months of revenue. In South America, the summer holiday period is around Christmas.

Brazil, the company’s biggest market today, has a history of economic and political instability. Does this mean that Scania is also more unstable?

No, I don’t think so. Politically and economically, Brazil today is a much more stable market than previously. And the increased role of South America means that Scania has two strong legs to stand on − Europe being the other one − and this reduces volatility. Europe and South America don’t always follow exactly the same economic cycle, as the most recent crisis demonstrates well.

Scania has begun hiring again. Although the world economy seems to be rebounding, there are still many sources of concern, especially in southern Europe. Are you expanding too fast?

During the financial crisis, essentially half our market vanished during a one-year period. Certainly no one had thought it could happen. This has made us cautious. Now that we are increasing our staffing, we are doing so in a flexible way: new hires in our production network have short-term contracts. Not increasing capacity as fast as demand is also a risk. It is bad for earnings to lose a 1,000 truck order to a competitor just because we can’t deliver in time.

One year after a deep crisis, Scania is enjoying record-high profitability. The operating margin was 18.3 percent during the third quarter. How is this possible?

A combination of stronger demand and high cost consciousness pays off. Mentally, Scania is still in the crisis. Everyone in the company has become more cost-conscious. The last time our industry underwent such a trial by fire was in the early 1990s. After a long period of good earnings, all companies become a bit lazy and there is potential to improve efficiency. We have cut costs in all parts of our operations, and the four-day week showed that things can be made more efficient.

Is it possible to improve efficiency elsewhere in the company, aside from the production network, where Scania has been successful in such efforts for many years?

Absolutely. One example is service operations. There are still major differences in how service is provided around the world. By applying good practice and Scania Production System principles in our sales and service network, we can become even more efficient. None of our competitors are using this proactive approach today.

Text: Göran Lind