NORDIC HEAD OFFICE GAVE BOTTOM-LINE BONUS

Agfa-Gevaert reduced its administration costs by 40-70 per cent and increased its market share by 30 per cent as a result of consolidating a range of activities in Copenhagen.

“Act quickly. Avoid too many national compromises and take great care to select the right people to lead the regionalisation process. The highest placed people are not necessarily the best for cross-border work.”

The man giving the advice, Jørgen Vad, is managing director of Agfa-Gevaert North and he is speaking from experience. Ever since initial moves were made in 1993 to centralise Agfa-Gevaert’s Nordic activities, he has been one of the driving forces behind the initiative. Concurrently with this, Jørgen Vad has also been involved in establishing regional operations for Agfa-Gevaert in Asia in addition to being responsible for Global Accounts at the company’s head office in Belgium for two years.

Today, Agfa-Gevaert’s worldwide turnover totals EUR 3 billion. The companies that make up the group - Agfa Graphics, Agfa Healthcare and Agfa Materials - employ 13,700 people around the world.

Until 1993, there were four independent companies in Denmark, Sweden, Norway and Finland. Initially it was decided to group a range of management functions such as finance, HR, marketing and IT in Stockholm, which was the biggest of the Nordic companies and the one with the most customers. At that time the storage facility was also in Stockholm. However, due to personnel reasons it was decided to continue with an independent company in Finland, which according to Jørgen Vad has proven to be an error in judgement. “Some years later, when the Finns decided to join in the regionalisation process, they found it was too late to exert any influence over the new regional set-up.”

Relocated to Copenhagen
The placing of the regional head office in Stockholm also turned out to be an error and in 1998 the decision was taken to relocate to Copenhagen.

“The size of a country is often used as an argument in favour of where to locate a company’s head office. But it is an argument that does not stand up to close scrutiny. So we approached an independent third party to identify the optimal head office location for us and they came to the conclusion that geographically the Copenhagen/Malmö area would provide the best placing in terms of proximity to customers. The greater Øresund Region has a population of 9 million, whereas the population of the Stockholm region totals only 5 million,” explains Jørgen Vad and adds that Denmark’s flexible labour market was yet another argument in favour of Copenhagen.

“The Øresund Region was also found to be the best location for our storage facility. Our products are sent up to us from Europe, so the Copenhagen area was much more conveniently placed. And for the Finnish market we have continued to maintain a smaller storage facility in Finland.”

Improved bottom-line result
The result of regionalisation is reflected in the bottom-line results. The reason for concentrating activities in Copenhagen was to reduce costs and make Agfa-Gevaert more competitive. We have succeeded on both counts. HR has reduced costs by 60 per cent, administrative personnel have been reduced by 70 per cent and management costs by 40 per cent. In terms of competitiveness, Agfa-Gevaert’s market share over the period has increased by 30 per cent.

Read more about Agfa-Gevaert here