Alfa Laval AB - Growth and Expansion: 1950s–80s

Growth and Expansion: 1950s–80s

During the 1950s, the cellulose industry became the major customer group for plate heat exchangers, or PHEs, which were used in the pasteurizing process and for yeast manufacture. ABS's interest in these developments was taken care of in Germany by Bergedorfer Eisenwerk. PHEs could be used to comparable advantage in breweries and yeast manufacturing; later, distilleries, wineries, and other foodstuff industries came to appreciate their uses. One successful Swedish competitor, Rosenblads Patenter, was taken over by ABS in 1962. ABS dominated the market for PHEs in the chemical and marine sectors while the strength of its U.K. competitor, the Aluminium Plant and Vessel Company (APV), lay in the food and beverage sectors. APV was the same size as Alfa-Laval in this sector. ABS's major competitor in Europe was the family-owned company Westfalia AG in Oelde, Germany, and in the United States the Sharples Separator Company of Philadelphia. Westfalia and APV combined forces against ABS.

Production of separators began in Nevers, France, in 1947, and the U.K. manufacture of milking machines was moved to Cwmbron in Wales in 1949. A year later, the Italian subsidiary acquired plant and storage facilities in Muggio/Monza near Milan, and a subsidiary was established in Brussels in 1952. ABS formed new subsidiaries in Switzerland in 1960, in Bombay in 1961, and in Sao Paulo and Lima in 1962. In the same year, Turbinbolaget in the United States was sold to Lehrman Brothers.

In 1963, ABS (AB Separator) changed its name to Alfa-Laval AB. Further subsidiaries were formed in Santiago de Chile and Mexico City, and in the United States Lavalco acquired G & H Products, Jay-Ro Services, and Hercules Filter. In 1966, the Spanish company Touron y Cia (Tycosa), Madrid, became a wholly owned subsidiary. A new Alfa-Laval subsidiary was formed in Amsterdam and took over industrial sales from the agent, Koopman & Company, in 1967. At the same time, a new subsidiary was formed in Zürich after Alfa-Laval's takeover of its agent, Wenger. In 1968, Bergedorfer Eisenwerk merged with STAL Refrigeration AB of Norrköping, Sweden. The new company was known as Stal-Astra GmbH. In Melbourne, H. Hamilton Pty, Ltd. was acquired and the name changed to Alfa-Laval Separation A/S. Lavalco acquired two new subsidiaries in the United States, American Tool & Machinery and Contherm Corporation. Also in 1968, a subsidiary was formed in Kuala Lumpur, and a minority interest was acquired in the Japanese firm Kurose.

In 1970, a subsidiary was formed in Algeria, and new office and storage facilities were built in Dublin and Melbourne. The Spanish subsidiary purchased property near Madrid and constructed workshops, warehousing, and office facilities there. In 1974, property and buildings were purchased in Lidcombe, near Sydney. Alfa-Laval Engineering was formed in Tokyo and another subsidiary established in Caracas. In Leewarden, the Netherlands, Tebel Maschinefabrieken was acquired for the manufacturing of machines for cheesemaking. In 1975, a subsidiary was formed in Iran in connection with the delivery of two large dairy facilities. In 1976, an office was opened in Moscow, and Lavalco established production facilities in Branchbury, New Jersey, also building workshops and offices for its spray-dryer department. In the same year, Sullivan Systems of the United States, a producer of refining systems for vegetable oil, was acquired. In 1977, a subsidiary was formed in Athens; the West German subsidiary acquired Atmos Lebensmitteltechnik, a manufacturer of machines for the meat industry; STAL Refrigeration formed a subsidiary in the United States; De Laval Company (U.K.) purchased the Ibex Engineering Company, Hastings; and the OTEC project for the utilization of temperature differences in tropical oceans was initiated. In 1979, the U.S. company changed its name to Alfa-Laval Inc. and the Canadian company became Alfa-Laval Lté.

In 1980, Alfa-Laval Company (U.K.) bought Dairy Supplies Hereford. A subsidiary was formed in Harare, Zimbabwe. In 1981, the West German company Bran & Lübbe, Norderstedt, a producer of dosing pumps and system and measurement instruments for the food industry, was acquired. This company had subsidiaries in a number of countries. The French Alfa-Laval company bought the firm Jean Pagées et Fils of Lyon, office and service center facilities were built in Singapore, a subsidiary was formed in Nairobi, and the Peruvian subsidiary constructed offices and warehouses. In the same period, Alfa-Laval increased its interest in the Japanese firm of Nagase-Alfa to 70 percent and Alfa-Laval Service was established in Japan as a wholly owned company for the sale of spare parts to the industrial sector. Alfa-Laval Contracting was formed in the United Kingdom, and in West Germany Alfa-Laval acquired 26 percent of the shares in G. Riedel Kälte-und Klimatechnik. In 1983, offices were opened in Cairo and Damascus to service the Middle Eastern market.

In early 1985, Alfa-Laval established a subsidiary in Portugal and an office was opened in Peking. In the same year, 100 percent of the free-floating shares of the Swiss company Chemap and its subsidiaries were acquired. Chemap was one of the world's largest manufacturers of fermenters. Haven Automation International, Hong Kong, along with its subsidiaries, was purchased. The company served the marine and offshore markets in Southeast Asia. In Australia, Heat Transfer Pty. Ltd., a manufacturer of a specific type of tube heat exchanger, was acquired and a majority holding was taken in Bioter S.A., one of the market leaders in fish feed in Spain. In New Zealand, Alfa-Laval purchased the company Manus Nu-Pulse.

Two companies in Sweden and one in the Netherlands, the Tebel Pneumatiek, were sold during 1985. The total number of Alfa-Laval's employees decreased by 636 to 15,394; 5,239 new employees were appointed in Sweden and 10,155 abroad. In 1986, Alfa-Laval established a finance company, Alfinal, in Belgium. Finance companies were also formed in Denmark and West Germany, and a leasing company was started in Spain.

After a long period at the helm of Alfa-Laval, since 1922, Axel Wästfelt had retired as managing director in 1946 and was replaced by the English-born Harry G. Faulkner. Faulkner had been an auditor in the U.K. subsidiary of accounting company Price Waterhouse & Company and went on in the 1930s to become managing director of Electrolux. During Faulkner's leadership, Alfa-Laval grew at a rapid pace in all traditional areas, particularly overseas. He led the company aggressively in industrial marketing, in sharp contrast with the preceding decades. In 1960, the 36-year-old Hans Stahle took over as managing director.

A principal feature of the change lay in the transfers of companies, which were carried out during the merger-happy 1960s, in consultation with Jacob Wallenberg, chairman of the board from 1960 to 1970. The factory manufacturing industrial separators was moved from the Stockholm center to Tumba, 25 kilometers southwest of the city, and in 1964 the head office followed. In 1980, Hans Stahle became chairman and was succeeded as managing director by Harry Faulkner, son of Harry G. Faulkner. During the 1980s, a large number of divisions within manufacturing and administration were formed into affiliates responsible for their own accounting. In 1989, Harry Faulkner was replaced by Lars V. Kylberg, who joined Alfa-Laval in May 1989. In October of the same year, Hans Stahle died while still executive chairman and was succeeded by Peder Bonde.

It was during the directorship of Harry Faulkner that Alfa-Laval bought the Sharples Separator Company, at the end of 1988. Sharples was until 1988 the world's largest manufacturer of decanter centrifuges, with a very strong position in the U.S. domestic market. It was the same company that had already in 1883–84 cooperated with Alfa-Laval in the U.S. market, and since 1887 had turned out to be one of the Swedish company's most aggressive competitors, particularly in the United States. Harry Faulkner pointed out that of the 20 acquisitions made between 1986 and 1988 by Alfa-Laval, Sharples was the largest. The acquisition of Sharples was of strategic importance since it greatly strengthened the separator business which forms the core of Alfa-Laval's operations. The Sharples group has subsidiaries in some ten countries and production facilities in both the United States and Europe. The group's annual sales were approximately $100 million.

Koppens Machinenfabriek in the Netherlands and Krämer & Grebe in West Germany were also integrated into the Alfa-Laval group in 1989. During the first half of 1990, Alfa-Laval acquired TW Kutter in the United States, an engineering company and food processing equipment distributor. In the heat exchanger sector, Alfa-Laval purchased the Italian company Artec. Furthermore, joint-owned sales companies were formed in Hungary and Poland and negotiations were in progress in 1990 for the establishment of subsidiaries in other former Eastern bloc countries. Between 1985 and 1989, the number of employees in the original Alfa-Laval group was reduced by 4,000 as a result of rationalization, restructuring of production, and the sale of peripheral operations, and a total of 7,500 new employees joined the group as a result of acquisitions. The total number of employees during 1989 increased by 2,561, from 17,156 in 1988 to 19,717 in 1989. In 1989, new managing director Lars V. Kylberg pointed out that "in recent years our sales have doubled in North America. In the booming Pacific Basin, we are firmly rooted in Singapore and the Asian countries. Our overall strategy for the coming years is to grow within our core business."