As it celebrates 185 years in business, the Finnish power and technology giant has changed from an equipment and service provider to a smart technology company. Now it’s going to change the world.
(Article originally published in May/June 2019 edition.)
On April 12, Wärtsilä celebrated its 185th birthday as employees in 200 offices around the world had cake and ice cream and posted online videos applauding the firm’s enduring success. At a time when companies come and go in dizzying succession, 185 years is remarkable and unique, particularly when its business is thriving and growing.
“Not many brands these days make it to the 100-year mark, let alone 185 years,” noted Ritva Seppänen, the company’s Vice President of Brand. “That’s why we at Wärtsilä feel this anniversary is definitely worth celebrating together with our people.”
The people part involves – in addition to the office celebrations – 185 “Wärtsilians” who will tell their stories over the course of the year and be recognized on the company’s website and in special announcements. They include long-time employees hailing from different countries and cultures as well as fresh young talent motivated by a desire to make a difference. The stories are designed to give an up-close and personal look into their lives and the different factors that drive them in their daily work.
“This is definitely the time for these stories to be shared,” says Human Resources chief Päivi Castrén. “We want our people to speak for themselves about their part in our journey to our 185th anniversary. They show us the direction for the future, and we still have plenty of more stories to tell.”
Sound different? You bet. And it typifies the culture of innovation and shared achievement that permeates the company. You don’t survive for 185 years without being innovative and adapting to change.
A History of Adaptation
Wärtsilä was founded in 1834 as a small sawmill operation near the town of Wärtsilä, Finland, and later expanded into iron works. After the Russian Revolution of 1917 and the collapse of the Russian economy, its primary market, the company fell deeply into debt and struggled for its very existence.
Enter Wilhelm Wahlforss, a Finnish businessman with a reputation for rescuing distressed companies, who joined the company in 1926. As he traveled from client to client, he found it would take more than iron bars to keep the enterprise afloat. The company soon began manufacturing nails, band iron, radiators and other iron-based products.
Although still encumbered with debt, a steady flow of profits ensued. But when the Great Depression hit the global economy a few years later, the company nearly went under.
Two events saved it. First, Wärtsilä was the only Nordic company that manufactured galvanized wire, a valuable commodity. Second, its employees overwhelmingly agreed to lower their salaries in order to save the firm. By the end of the 1930s, Wahlforss had refocused and restructured Wärtsilä, and more than 6,000 people were employed by the firm.
During his 46 years at the helm, Wahlforss turned Wärtsilä into the largest company in Finland and a global manufacturing powerhouse. He retired in 1961 and will always be remembered for establishing the first Nordic galvanization plant, taking the company into vessel and shipyard ownership, and building and distributing diesel engines around the world.
The decades that followed saw the growth of global operations, the first stock listings as a public company, and a series of mergers and acquisitions. By the early 2000s the company was firmly ensconced as a major manufacturer of diesel engines and other equipment for the marine and power segments with a growing international presence and a reputation for engineering expertise and service excellence.
In 2007 it pioneered in LNG through a joint venture agreement with Hyundai Heavy Industries to build dual-fuel engines in Korea, the first in a series of breakthroughs in LNG technology and one of several partnerships with other stakeholders that would characterize Wärtsilä’s business strategy.
In 2009 it joined the list of the Global 100 Most Sustainable Companies and reinforced its commitment to sustainable solutions with the introduction of the Wärtsilä 31 engine in 2015 (acknowledged by Guinness World Records as the world’s most efficient 4-stroke diesel engine), the startup of solar power operations in 2016 and the successful testing of remote vessel operation in 2017.
With strong and growing positions in its major markets – Marine and Energy – the stage was set for the transition from equipment and service provider to enabler of smart technology solutions for a changing world.
Becoming a Smart Marine Company
“Our goal is to enable sustainable societies with smart technology,” says President & CEO Jaakko Eskola. “The demand for clean and flexible energy and the need for efficient and safe transportation are increasingly affecting the way that customers operate. This forms the basis for our Smart Marine and Smart Energy visions.”
Smart Marine means leveraging the opportunities created by digitalization to promote safety, alleviate environmental impact and improve efficiency. As maritime is transformed through increased connectivity, new business models and a stronger focus on environmental solutions, Eskola wants Wärtsilä to play a lead role in the process of creating a Smart Marine Ecosystem.
Smart Energy means leading the industry’s transformation toward a future that utilizes 100 percent renewable energy. The objective is for customers to recognize the company as the leading energy systems integrator, providing all the essential technologies, services and solutions for sustainable and reliable power systems.
It’s a big challenge. To facilitate the process and better serve customers, the company underwent an organizational restructuring late last year that saw the Service unit integrated into the Marine and Energy divisions. It further undertook a series of acquisitions designed to strengthen its energy storage, IT and automation offerings including Eniram in 2016, Greensmith Energy Management Systems and Guidance Marine in 2017 and, perhaps most importantly, Transas last year.
“The Transas acquisition marked a key milestone for us in realizing our Smart Marine vision,” says Eskola. “Transas is a leader in marine navigation solutions, training and simulation services and ship traffic control.”
Collaboration and knowledge-sharing are also a key part of “the Wärtsilä way,” and it starts at home. Last fall the company moved into a new, state-of-the-art office building in Helsinki to encourage new working methods and sustainable development at headquarters with the help of the latest office technologies.
The company is also building a new R&D and production center in Vaasa, Finland and inviting all interested stakeholders to participate. When completed next year, the Smart Technology Hub will enable more agile and efficient testing, development and production of solutions for the marine, oil and gas, and energy industries.
Last year Wärtsilä opened an Acceleration Center in Singapore with the aim of promoting innovation and collaboration with industry, academia and local partners to strengthen and develop Singapore’s maritime ecosystem. In partnership with PSA Marine, a major tug operator, and the Maritime & Port Authority of Singapore, the company launched the Wärtsilä Intellitug Project to develop a harbor tug with autonomous navigation. The vessel will be capable of performing a range of routine missions designed to further improve tug safety and efficiencies while reducing operator workload and pressures in one of the world’s most demanding harbor environments.
With increased connectivity and the growth of digital solutions, cyber attacks have become a serious threat. As part of its cybersecurity offerings, Wärtsilä entered into a partnership in 2018 with Templar Executives, a specialist cybersecurity company, to establish a cyber academy offering courses designed to support and enhance awareness within the maritime community. The partnership has resulted in the introduction of a new international cyber intelligence and incident support platform, MCERT, to strengthen safeguards within the maritime ecosystem.
The transition to a Smart Marine company is an ongoing process, says Eskola, but he’s happy with the results to date: “Our new organization, formed to serve the Marine and Energy markets, and our transformation into a technology services company have enhanced the value we deliver to customers through a stronger emphasis on lifecycle solutions tailored to specific market needs.”
As proof of the pudding, the company recently won a contract to supply 40 Wärtsilä 20DF engines for China’s first fleet of LNG-fueled platform supply vessels. The engines feature high fuel efficiency, low operating costs and good environmental performance.
While Wärtsilä focuses on its Marine and Energy businesses with smart solutions for its customers, it recognized early on that one company can do only so much and that no one company can do the job alone. To bring about change on an industry-wide level, not to mention a global level, means partnering with others. “We are all in this together,” Eskola says, “and so we must combine technologies and share strategies if we are to achieve meaningful results.”
The goal is global sustainability, and so it came as no real surprise when the company rolled out its “Oceanic Awakening” initiative at last September’s SMM Exhibition in Hamburg. Oceanic Awakening is focused on the radical transformation of the world’s marine and energy industry into one supremely efficient, ecologically sound and digitally connected ecosystem.
There’s that word again – “ecosystem.” It means all parties working together toward a common goal, a feat requiring collaboration across multiple segments and active involvement in leveraging emerging technologies to create new business opportunities for all.
Wärtsilä knows how to collaborate. It’s already demonstrated that in its own company and in partnership with others. As a leading engine manufacturer for the marine and energy industries, IMO 2020 and IMO 2050 are significant markers for Wärtsilä, in partnership with others, to work toward to reduce greenhouse gases, a major contributor to global warming.
“We simply cannot afford to wait for the marine and energy industries to evolve at their own pace,” Eskola says. “It’s a huge problem for the planet, and we all need to pitch in and solve the issues surrounding greenhouse gases. ‘An Oceanic Awakening’ is our wake-up call to everyone. If we don’t fix these problems in a collaborative manner, the outcome will be disastrous.”
It’s a tall order, not for the faint of heart. Effecting change at any level is hard enough, nevermind on a global scale. But Wärtsilä has done it within its own house. Why not the world?
The opinions expressed herein are the author's and not necessarily those of The Maritime Executive.