Changing of the guard
By 1958 it was becoming clear that KONE needed new leadership. Technical director Erik Ingvall had died, and sales and design engineer William Puomi was about to retire. New recruits included Lars Eriksson, Matti Matinpalo, Vilkko Virkkala and Eero Koskivaara. Heikki Herlin’s son, Pekka,had also joined the company in 1954, and in 1958 a broad reorganization put him in charge of administration, Eriksson in charge of marketing and production and Virkkala at the head of product development.
This team began rethinking how the company should work. Pekka Herlin and Eero Koskivaara began putting KONE’s dormant capital to work, Lars Eriksson and Matti Matinpalo began considering how to modernize KONE’s outmoded production processes, and Vilkko Virkkala started looking for ways not to copy competitors’ solutions but to improve on them.
Pekka Herlin replaced his father as president of KONE in 1964. His team, which now included financial director Arvo Tuononen, immediately began planning the construction of a modern elevator factory in Hyvinkää to replace the cramped and inefficient Haapaniemi Street factory. It opened in 1967 with a capacity of 2,000 units per year, double the size of Finland’s total elevator market and far more than KONE’s total annual output, which was only about 1,200 units in 1967.
KONE now had the tools it needed to compete with bigger international competitors, but it was saddled with too much debt and a tiny domestic market. Unless it could grow fast, it was at risk of being swallowed up by one of the big multinationals which were accelerating the consolidation of the elevator industry.