6. Develop the Asian potential
Asia offers a major potential growth market. ASSA ABLOY's goal is to develop the Group's presence on markets in Asia, and particularly in China. At the same time the Group is trying to increase the production of simple, high-volume products in Asia. In 2005 ASSA ABLOY acquired BEST Metaline, which is one of South Korea's leading suppliers of lock and door fittings and automatic doors. In China ASSA ABLOY has acquired a majority stake in Wang-li, which is focused on the manufacture and distribution of high-security doors and high-security locks. Wangli has a comprehensive distribution network in China and holds a leading position in its segment.
Theme 3. Radically reduce our break-even cost
7. Capture purchasing and production synergies and adopt Lean methods
The Group's fragmented production structure, with resulting overcapacity in many areas, is one consequence of its many acquisitions. The Group's goal is to make the production structure as a whole more efficient, while at the same time maintaining a local presence for rapid assembly of customer-tailored products. Manufacturing, especially of simple, high-volume products and components, will gradually be moved to low-cost countries or outsourced. ASSA ABLOY sees significant potential in further coordination of purchasing and increased standardization of components. In 2005 several production plants were closed or merged in New Zealand, Australia, the United Kingdom, Denmark, Italy, Spain and elsewhere. To an ever-increasing extent the Group's production units have adopted cost-effective ('Lean') production methods. All activities from administration to manufacturing are now being evaluated so as to eliminate superfluous steps, smooth the product flow, lessen administrative costs, reduce inventories and use premises efficiently.
Completion of the Leverage & Growth program
Towards the end of 2003 a two-year action program, 'Leverage & Growth'. was launched with the aims of taking advantage of economies of scale and creating a basis for sustainable growth. Underperforming companies should be turned round by the end of 2004, or else divested. The action program was completed during 2005 at total cost of SEK 1,320 M. The Group's employees have been reduced by a total of 1,400 people and annual savings are calculated at SEK 450 M.
Clearer differentiation of the Group's brands
As a result of ASSA ABLOY's many acquisitions the Group possesses a wide range of brand names that are well recognized by customers. To be able to manage and take advantage of this valuable asset and to benefit from the size of the Group, ASSA ABLOY is currently reviewing the brand strategy.
ASSA ABLOY's brand message Unlock Your Life was launched in 2002. The aim is to link the word 'security' to 'freedom' and not to 'fear'. As far as possible the normal negative perceptions of security should be avoided. Its opportunities should be stressed instead. This philosophy pervades the Group's whole brand strategy and brand platform.
To prevent duplication and high parallel development costs, the number of brands will be reviewed and reduced. ASSA ABLOY will be the Group's only main brand for security solutions, and represents the Group's accumulated knowledge, professionalism and sense of service. It is thus not tied to any particular products.
The main brand will be backed by a number of strong brands that the Group chooses to invest in. These are currently being selected in close collaboration with the Group's regional units. The strong brands will sometimes work as components of a product solution under the Group brand ASSA ABLOY, but will also continue to operate as independent brands where they can meet the needs of customers.
The project to select the Group's strong brands will judge them on how general or specialized they are. The review will also take account of how local or global each brand is. The number of general brands should be restricted to a smaller total.
Joint sales forces
In order to compete effectively on a global market, ASSA ABLOY's sales forces are increasingly working across company boundaries. The joint sales organizations work under the Group brand ASSA ABLOY, but at the same time act as representatives of the local product brands that the customer already knows. The salesmen thus handle not just a single brand but several product brands in meeting customers' security needs.
Yale the consumer brand
Yale is ASSA ABLOY's worldwide consumer brand. On some markets the brand will operate in conjunction with strong local brands, while in other areas Yale will shine more strongly on its own. The Yale Security Point stores are one such example. This is a franchise concept currently being tested in South Africa, Germany and Great Britain.