Contacts with Volvo

1979 1985 Volvo BM

Tractor markets were reaching capacity towards the end of the 70s when Volvo BM decided to concentrate on earth moving equipment.

“In October 1975 we read with great enthusiasm an article in the Swedish periodical ‘Land’ predicting that Volvo tractors would close and Valmet would continue” Mr Lindell recalls.

“By 1977 we were quite seriously discussing the joint manufacture of a large tractor. In March 1978 the president of Volvo, Per Gyllenhammar, invited the president of Valmet, Jaakko Ihamuotila, to negations. In addition to its factory in Eskilstuna, complete with a staff of 1600, Volvo offered us the combine factory in Hallsberg and an assembly plant in Iran.”

According to Mr Lindell, proceedings commenced six months later. “The agreement was completed in June 1979, but it still had to be accepted by the boards of both companies and the State Banks of both Finland and Sweden. The final agreement was signed on October 1 1979.”

Having negotiated the contract with Volvo Väinö Lindell went on well-deserved pension and Mr Pertti Naulapää was appointed general manager of the tractor group. His first duty was to put the Volvo contract into practice.

The logic of the merger is easy to see when we look at figures: In 1978 AB Volvo’s turnover was about 2.2 billion Euro, Valmet Oy’s turnover approximately 0.68 billion Euro. As for the turnover of Volvo’s tractor business, it was some some 50 million and that of Valmet’s some 150 million, including Valmet do Brasil.

The companies established a new business, Scantrac, in Eskilstuna (Sweden) owned 50:50% by Valmet and Volvo. Scantrac was to market both Valmet and the Volvo BM tractors. At the same time fifteen tractor designers were transferred to the company, and together with the development department at Tourula, they started to design a new “Nordic Tractor”.