Around 10 years ago, Kemppi changed its strategy from being primarily a product-oriented company to being a more service-oriented welding solution company. This was due to the financial crisis and increased international competition from companies focusing on producing low-costs welding equipment.
Kemppi has developed new intelligent welding equipment and new welding management software to help their customers develop better welding and production processes adding new expert welding services for their customers. Besides this, Kemppi has also invested in automation of their production lines.
10 pct. of Kemppi’s annual turover is invested in R&D operations, automation, and digitalisation each year.
Firstly, Kemppi expects increased revenue in the coming years. Secondly, automated production processes have lowered production costs, meaning that they have been able to keep most of their production in Finland.
Kemppi Oy is a welding solutions company that 1) produces welding equipment, 2) develops welding management software, and 3) offers expert welding services. Kemppi’s headquarters, main manufacturing plant, and logistics centre are situated in Lahti in southern Finland. The global market for welding equipment consists of a number of large welding solutions companies from all over the world, including the USA, Germany, Italy, Japan and China. According to Anssi Rantasalo, CEO at Kemppi, Kemppi is one of the leading welding solutions companies in the European and Asian markets. Today 90 pct. of Kemppi’s annual revenue comes from international markets.
The company was founded in 1949 under the name Veljekset Kemppi Oy. Since the beginning, Kemppi has had the ambition to be a pioneering welding solutions company. In the 1950s, the development of the first welding rectifier began and they hired the first professional engineer responsible for product development. Kemppi created the world’s first inverter power source (1977), the world’s first digital power source (1993) and the world’s first universal welding management software (2014).
Today, Kemppi employs around 450 welding experts in Finland and 200 abroad. The company is headed and owned by the Kemppi family.
In the 2000s, Kemppi experienced increased international competition in the welding equipment market from, among others, Chinese companies producing low-cost welding equipment. Secondly, the financial crisis in the late 2000s hit Kemppi hard economically. According to Teresa Kemppi-Vasama, Chairman of the Board, these circumstances, coupled with the fact that Kemppi has always wanted to act proactively, led to the decision to change their strategy.
The new strategy was to lower Kemppi’s production costs through automating their welding equipment production processes, increasing investment in developing intelligent welding equipment and welding management software, as well as hiring more staff capable of delivering expert services to Kemppi’s customers.
“For us it is important to take two angles on investing in automation and digitalization. Firstly, how can it help us improve our own operations including manufacturing. Secondly, how can we add value to our customers besides providing traditional welding equipment.”
- Anssi Rantasalo
As part of Kemppi’s strategic change, productivity was to be improved by investing in the automation of their welding equipment production processes and lowering the proportion of employee costs in production.
In 2009, new modern manufacturing facilities, including a new electronics factory, was built next to Kemppi’s headquarters in Lahti. In their electronics factory, key components for Kemppi’s different welding equipment are produced, including Printed Circuit Boards (PCB) for the welding equipment. To produce the PCB’s, Kemppi has invested in automated surface-mount technology (SMT), pick and place machines and automated through-hole component inserting machines for example. Lines are equipped with Automated Optical Inspection (AOI) cameras for real time quality check-ups. These machines are essential, as the PCB’s are the hardware of the ‘brains’ of the welding equipment where specialized welding software is added.
In another building, Kemppi’s welding equipment is assembled at semi-automated final assembly lines, tested, packed and stored in a fully automatic warehouse. First, components for the welding equipment are placed on a board on a conveyer belt. The boards are then automatically transported to different stations where employees assemble the welding equipment using the components brought to them. When assembled, the welding equipment is automatically moved on the conveyer belts to specific stations where the welding equipment is tested. When tested and approved, the welding equipment is covered and packed in boxes and then stored. The inventory system is based on radio frequency identification (RFID), linking products automatically from stock to their IT-system.
RFID systems use radio frequencies to easily transmit information between two sources. The technology can be placed on anything you need to track, from equipment to inventory. RFID tags function like barcodes to help track certain information.
“We have obviously been able to improve our productivity in our own manufacturing of electronics and also in the final assembly of the equipment. But on the customer front especially, there has been a revolution where all of a sudden, welding has become transparent and traceable, which it was not before.”
- Anssi Rantasalo
Besides building new manufacturing facilities in Lahti, in 2011, Kemppi started producing low-cost welding equipment for local markets in their new manufacturing plant in Chennai, India. Still, the majority of Kemppi’s production of welding equipment takes place in Lahti. Before 2007, Kemppi had approximately 400 employees working in their manufacturing plant. In 2016, there are around 200 employees working in Kemppi’s manufacturing plants. However, the total number of employees has not been reduced.
As a part of the planned transformation to become a more service- and solution-oriented company, Kemppi started investing more in R&D. This means that 10 pct. of Kemppi’s annual revenue is invested in R&D operations each year.
“We have definitely continued to develop our hardware equipment business further. On top of that, we have started to invest much more into software and expert services.”
- Anssi Rantasalo
Furthermore, Kemppi started employing more highly skilled employees including engineers and IT-experts to develop new intelligent welding equipment and new software.
“Firstly, I think you should listen to the customers. The better you know what the trends of the customers are, the better you can actually help them. I think that is the key. Secondly, you should try to find the right people to do the transformation. This means that you have to find and train the right people in the company and hire new people that know about digitalization and automation. This is sometimes hard, but you need new people for new kinds of thinking.
- Teresa Kemppi-Vasama
Chairman of the Board
An important step was taken in the 2000’s when Kemppi acquired two software development companies; a local company called JPP-Soft Oy in 2009 and a Norwegian company called WeldIndustry in 2013.
In 2008, the first version of the Kemppi Arc System, a universal total welding management software which provides a 360-degree view of one’s welding, was launched. The fourth and current version, WeldEye, is designed to meet the increasing demands of better quality and higher productivity. WeldEye covers each step of the welding production process, from project configuration to final reporting, down to every meaningful detail. Welding data is collected digitally in real time into a cloud service. WeldEye is a multi-site management solution, which grants one the possibility to know who welded what, where and with which qualifications, parameters and fillers - regardless of one’s location.
Additionally, Kemppi has hired more sales personnel and welding experts in order to provide expert services for their customers. Kemppi’s expert service includes welding procedure specifications (WPS), training, consultation and maintenance.
In general, Kemppi today focuses more on how they can provide value for their costumer by offering 1) intelligent welding equipment, 2) welding management software, application software and welding programs, and 3) expert welding services to help their customers develop better welding production processes and the best solutions for individual needs.
“Some companies in the welding industry focus on producing low-cost welding equipment, while others focus on delivering high-quality welding solutions and service. Kemppi is in the latter category. Today, we are closer to our customers in order to help our customers develop better welding production processes.”
- Mikko Veikkolainen
Director, Technology Centers
More automated welding equipment production processes, new intelligent welding equipment using IoT (Internet of Things) leading welding management software and expert services have increased Kemppi’s competiveness as a comprehensive welding solution company. According to Teresa Kemppi-Vasama, Chairman of the Board Kemppi has also become their customer’s value partner as they are able to deliver high quality solutions to demanding industrial applications as well as ready-to-weld needs. As a result, Teresa Kemppi-Vasama is convinced, that Kemppi has built a strong foundation for future growth and revenue.