The ESAB Group restructuring the European welding industry

Abstract

During the late 1970s, the Gothenburg-based ESAB welding company became so unprofitable that it was threatened by split-up or bankruptcy. Underlying driving forces included:

• 1. the disappearance of the demand for manual welding products from European shipyards and a subsequent decline in oil rig production

• 2. a gradual switch from manual welding techniques to more advanced (semi-automatic, fully automatic, and robotic) techniques1

• 3. in the area of solid wire, ESAB met new competitors, namely the steel works ‘integrating forward’

• 4. the abolition of a ‘stocking subsidy’ paid by the Swedish state to counteract business cycles.

This case study is based on one half-day interview in Gothenburg on 19 October 1998 by Dr Arpi with Mr Bengt Eskilson. former president and CEO of ESAB. and two further 3-hour interviews in Brussels with Mr Bo Sandqvist, executive vice president of ESAB at the time of the turnaround. plus Dr Arpi’s own notes and reports from the time of the turnaround. Valuable assistance as to financial performance data for the turnaround period were provided by Mr John Forsell. still with the ESAB Group. The authors take this opportunity to thank all three for their valuable input.