Restructuring

1985 1994 2

In 1991 the entire global tractor industry sunk into a crisis. Manufacturers had too much capacity, European farmers were threatened with lower subsidies as the EU expanded, and the entire agricultural sector declined both economically and in terms of appreciation.

Valmet Tractors found itself in a very tough situation. Valmet headquarters eventually decided to place all tractor operations in Tourula and Brazil, as well as diesel engine production in Nokia, under the same director. Jouko Tukiainen, who had headed up tractor operations since 1988, was given the task of developing overall operations in 1991. The combined turnover of the three large units was FIM 1.8 BILLION, or EUR 300 million without inflation calculated in. The total number of personnel was approximately 3000.

The outlook was bleak. Demand for new tractors had collapsed. Over 2500 unsold tractors lay in the warehouse, and the new Mega and Mezzo series were just entering production. Valmet even offered its tractor operations up for sale, but not even the competition was interested due to the unfavourable circumstances. Two options remained: close the factories altogether, or overhaul operations. The unanimous decision was the latter, even though it would cost hundreds of jobs – at least in the short term.

A salary transfer agreement was made with the remaining employees, according to which each worker agreed to transfer 7 to 22 percent of their salary – depending on their life situations – to be paid at a later date once the company’s finances were healthier. Once again the personnel at the factories demonstrated great flexibility and understanding, and a concerted effort was made to solve the problems. The return to better fortunes occurred around 1993, and all transferred salaries were paid. The company was finally in healthy shape again.