They Wanted a Non-American for This Job

Bo I. Andersson grew up in Falkenberg, a tiny coastal town south of Gothenburg on Sweden’s west coast. After completing his mandatory military service, he set out to become an officer and studied at the Borensberg military college. But in 1987, he left the army to become a buyer at Saab Automobile. Three years later, he was Saab’s top purchasing manager, but his mother was worried. Wasn’t there any better company to work for than one that lost several million dollars a day?

The year when he became Saab’s buyer-in chief, 1990, was the year that General Motors bought 50 percent of the company. His new boss, Saab’s first American CEO, David J. Herman, asked Andersson what he wanted to do next, to which he replied, “Work in the United States. ”But Herman said that he didn’t want to send any Europeans to the U.S: ”It’s too damn political!” In 1992 Herman left Saab to become CEO of Adam Opel in Germany and asked Andersson to follow. But Andersson was in the middle of the Saab 900 launch and had to decline. In 1993 Herman called from Germany and said that it was safe to go to the U.S. now that the company’s global purchasing manager from Spain, Jose Ignacio Lopez de Arriortua, was out.

Andersson rushed to America and became head of GM’s Worldwide Purchasing Electrical group, reporting to Lopez’s successor, Richard Wagoner, Jr., who 10 years later became CEO. The young, ambitious Swede moved up the hierarchy quickly, joining GM’s corporate board in 2001 (after a 1997–98 stint in Europe and a crash course in management at Harvard Business School). He then became second in command for purchasing, the supply chain and logistics, and the only non-American among the 15 members of the board.

Has anything you brought from Sweden been helpful in your career at GM?

“My best takeaway is that in a small company you deal with the same issues as in a large company, but you don’t have the resources. I had 150 people when I ran purchasing at Saab in 1990, and today I have 2,500, and maybe 5,000 globally.

“I have worked in all functions, and understand finance, engineering, manufacturing, public relations, and legal, because in a small company, you have to deal with them all.”

Some of these huge American companies can be very bureaucratic.

“Yes, exactly! And you may sub-optimize. But at the same time, we don’t get enough recognition for the fact that we’re doing extremely well in the emerging markets, where we don’t have the same bureaucracy. China is a great example, as is Russia, the Middle East, Mexico and Brazil. Here the big and heavy GM is doing better than anybody else, because it is working with small groups of people who know that they have to move fast. There is no legacy there. In the U.S. we’re a 99-year-old company carrying a load. We have 1.1 million retirees in the U.S. alone, while Toyota has 100.”

You’re rumored to be on track to become the next CEO….

“Next question….No, I don’t think that will happen, but somebody floated my name. Do I think that it’s going to happen? Absolutely not.”

How is it to work in the U.S.? You have your Swedish upbringing and attitudes.

“I try to keep the best of both. I love the U.S., or else I wouldn’t be here. It’s a great country with great opportunities. I don’t have a fraternity network, but what I bring with me is my discipline and the fact that I’m not afraid of anything. Another strength is that it’s easier for me to deal with Chinese, Japanese, Koreans, Germans, Brazilians, or Mexicans. They see me as neutral. I think I have a certain advantage in China, Japan, and Korea over my American peers. I also have the benefit of speaking several languages, but the biggest benefit might be that I understand history.

“The GM board wanted a non-American on this job. That was clearly spelled out, and it pissed some people off,” says a Swede who seems to have left the infamous Law of Jante behind.

The Right Stuff at the Right Place at the Right Time

Logistics may not be the hottest buzzword in town, but without it there wouldn’t be much of a town, or a business for that matter. As the Swedish king Karl XII, Napoleon and Hitler learned the hard way; armies can’t win the war without good logistics. And neither can corporations.

Back in the early 1990’s, I interviewed Lt. Gen. Gus Pagonis, who had just become head of logistics for Sears, Roebuck & Co., after having led the logistics effort of “Operation Desert Storm.” He did it so well that General Norman Schwarzkopf dubbed him the “Einstein of Logistics.” He saw many parallels between civilian and military logistics. One was that logistics should not be seen as a profit center. Cost is just one aspect of logistics, and it must be seen in the perspective of the overall goal, otherwise we will sub optimize, the general warned:

“If we produce a product and the marketing people advertise it on Saturday when the kids will be watching cartoon shows, then that product must be on the shelves when the mother and the kids go to the store. If the transportation person of that organization is profit oriented, he will try to find the least costly mode of transportation to get the item there. That can be by barge or boat. Well, the item doesn't get there for four weeks and you just wasted a million dollar marketing. Yet the transporter may ship that item for a penny a thing versus five pennies by air. What you do as a logistician, and that is why I think there should be a senior vice president of logistics in every firm. He must cross all functional areas and makes sure that he takes so many by barge and so many by air.”

That was over twelve years ago, and since then the world has gone global.

When I began planning Currents’ logistics issue, the first name that came to my mind this time, was Bo I. Anderson, who in 2001 became vice president of the General Motor’s worldwide logistics program and in 2005 became its top worldwide supply manager. He is also rumored to be the next CEO of the auto giant.

Getting the Goods Where They Are Needed

They Wanted a Non-American for This Job

I also interviewed Sten Wandel, an international expert on logistics. He has studied the topic for four decades and is currently professor of engineering logistics at the University
of Lund in southern Sweden.

Sweden's Logistics Paradox


Hans Sandberg

Getting the Goods Where They Are Needed

“Purchasing is the big dog — logistics is a support function,” says Bo I. Andersson, who has been running General Motors’ global purchasing and supply chain since 2005. It’s his job to bring in the stuff GM needs for production and get the products out to the dealers. The process has changed drastically over the past decade, thanks to free trade and technology, Andersson says.

“We buy parts for $86 billion a year, $15 billion’s worth of supplies, machines and equipment, fuel and natural gas, and so on. On top of that we spend $6 billion on logistics, $4.5 billion of which is for North America. So if you look at the big picture, purchasing has a much bigger impact on our profitability, while logistics is more of an operational issue.”

But as every general knows, weak logistics can undermine even the loftiest plans (just think of the failed attempts to conquer Moscow made by Napoleon and Sweden’s Charles XII). Andersson, a former army officer, doesn’t take logistics lightly, even though it only counts for a small fraction of the $105 billion in total expenditures he handles (revenue was $193 billion in 2005).

“Around Christmas 2005, after Hurricanes Rita and Katrina, we had 250,000 units in the pipeline on outbound logistics, and the railways and waterways were down,” he recalls. The circumstances forced Andersson and GM to find new solutions. “We started to ship short sea in the U.S.,” he says, referring to short-haul sea transport from Mexico to San Diego, which takes 30 days. “It was time consuming, but cost effective.”

The second solution to the crisis was “drive-aways,” the hiring of young drivers to deliver new cars to dealers within 50 miles of a GM plant. “They can sell these cars as new as long as the odometer reads less than 50. It costs $200 to $400 to send a car by truck or rail, but a drive where away only costs $50 per car. We saved a lot of money that way,” he says, noting that having this option also keeps some healthy pressure on water- and rail-transport companies.

At GM, logistics is increasingly being seen as an integral part of the supply chain, which is reflected in the fact that the term was dropped from Andersson’s title in 2005, when he became GM’s top general for global purchasing and the supply chain.

“I’ve spent a lot of time on logistics over the last two years, because of its complexity. We buy 160,000 parts globally and ship 9 million cars a year. Here in North America, we ship 19,000 cars every day, seven days a week. Material supply, production control, and logistics are all part of the supply chain.”

It’s been said that the earth is flattening, business-wise. But is it really that flat from a logistics and supply management perspective? Or is this just another media buzzword?

“I think it’s very real,” Andersson says. “If we take an example from components, 66 percent of our aluminum wheels, of which we buy more than a billion dollars every year, come from China. By [buying from China], we’re saving over 20 percent on a landed basis. If you take a $100 aluminum wheel, the logistics cost for me to bring it from China is $16. It’s not something I want to ship, but on the other hand, the shipping cost for the $3 billion of radios I buy, half of which come from China, is $2 per radio. That’s $2 out of $100. Ideally, I would like to ship more radios and fewer wheels.

“The earth is very flat, but on the other hand, we make all our decisions on a total landed cost, so it’s not that many parts costing $100 where you can allow $20 in logistics cost.” (Total landed cost = all costs to make and deliver a product to its revenue-generating stage.)

Bo Andersson came to the U.S. in 1993 as head of Worldwide Purchasing Electrical; a $15 billion unit that included Delphi, which was spun off in 1999. In 2001 he became number two in purchasing and joined the company’s 15-member board, where he is the only non-American. What do you see when you look in the rear-view mirror?

“The first thing is that competitive pressures have changed dramatically as a result of the various free-trade agreements. For example, we used to be the biggest player when it came to vehicles, but there were only 33 vehicles sold in Mexico then, as they had to be produced domestically. Today there are 133 vehicles sold on the Mexican market, which has been opened up more than anywhere else.

“The second thing is that the logistics and transportation industry has become globalized, and we have more people with full-fledged capabilities. Just look at FedEx and DHL, and shipping companies like the Norwegian Höegh and the Swedish Wallenius. Competitive pressure has created new needs for transportation solutions, and for tools and visibility. We are focusing very much on supply-chain visibility. We might tell suppliers, you can manage the supply chain, but we want visibility. We want to know where the 15 containers on the way from China to the U.S. are right now. We have an advanced control center in Detroit for the supply chain, and when we go into crisis mode, it becomes more like a military organization.” (Andersson notes that the retail giant Wal-Mart’s supply chain dwarfs that of GM and even the Pentagon. In 2002 Wal-Mart imported 292,000 forty-foot containers, compared to 182,000 by Home Depot and close to 100,000 by Heineken. GM imported 11,000, one quarter of Toyota’s exports to the U.S. Today, GM’s number is around 100,000, he says.)

The rise of China has been one of the biggest shifts in the world’s supply chain since you started at Saab in 1987.

“We’ve been in China for eight or ten years now, and we’ve been active in purchasing for export over the past five years. A lot of people are saying, Bo is buying everything from China, but what I am losing sleep over is how to supply parts to China domestically, because the Chinese automotive industry is growing by 100,000 units a month. We estimate it to be 8 to 8.5 million vehicles, and we have 10 percent of that market. We believe we will sell over a million vehicles in China in 2007. We sold 856,000 units there last year, and we are profitable. We make much more money in China than in any other country in the world. My primary focus is to supply China’s domestic market. My second is to export out of China, to Korea, Australia, India, Europe, and finally to the U.S. This is something we look at every day.”

Globalization is not the only global trend. Do the counter-forces increase the risk for a company such as GM? Does it affect your planning?

“Yes, and no,” he says. “I run a huge operation and we have purchasing people in 40 countries, but we run it in a both centralized and decentralized way, which means that I have four people sitting in Mexico buying seatbelts for the whole world. That doesn’t mean that they buy them from Mexico, but that they have centralized control of all the seatbelts we buy, and they figure out the best place to buy them from, whether they’re going to Europe, North America, Asia, or Latin America. We also do contingency planning every day. We use airplanes and helicopters somewhere in the world every day, because something always happens, whether it is a fire, a tornado, or a bankruptcy. We are very good at handling disasters, because if you move 35,000 vehicles and get 160,000 parts in every day, something will always happen somewhere.

“People are often very surprised over that we have such short product pipelines and never have more than one or two days’ inventory at our assembly plants,” he says, but adds that the auto industry still has far to go in taking advantage of the flattening earth compared with the white-goods industry and Wal-Mart.

New and tougher rules and inspections from the Department of Homeland Security (DHS) have not been a big problem for GM. Andersson says that the company has been working very close with DHS for three years and has been proactive; whether it concerns the $10 billion shipments the company receives from Canada every year or the container traffic it operates on its own from South Korea.

Andersson has won many battles to rein in and control GM’s costs, but there are areas that have stumped even this hard-charging Viking.
“We have not been successful in pharmaceutical, and healthcare costs are going up 15 percent a year. We are the largest buyer in the world of Viagra.”

Why — because it makes the cars go faster?

“No, it’s part of the union contract! UAW won free Viagra in the 1999 negotiations. I don’t like it, but that’s the way it is,” he says.

Well, it’s probably not something to lose sleep over, and certainly not a Waterloo.

Hans Sandberg

The Swedish Crime Stoppers, Inc.

Currents' Fall issue 2006.

To many Americans, Sweden is more known for social security, than for stopping crime. But then we have Securitas, Inc., which around year 2000 became America’s largest private security company through a series of acquisitions orchestrated by Don Walker. He ran the U.S. security giant Pinkerton before it was picked up by the Swedes. Currents' editor Hans Sandberg interviewed him about Securitas in the U.S.

Don Walker started out working for the Federal Bureau of Investigations back in the 1960’s, but later left the FBI to set-up his own security programs, first at a bank in New York, then at a company in Cleveland, Ohio, and six years later he started a similar program for a company in Nashville, TN, which eventually was spun-off as a wholly-owned security company. With the help of investors, he bought out the company and sold it to Pinkerton in 1991, where he became executive vice president and chief operating officer (COO.) Today, Don Walker is chairman of Securitas in the U.S., and of it's daughter company, Pinkerton. Securitas’ American branch has about 100,000 employees and about 2.6 billion dollars in revenues.

How do you explain Securitas presence in the American market?
“When I was COO for Pinkerton, we analyzed the competition in the U.S. and the world, because we were expanding Pinkerton internationally. Securitas was a company we watched very closely – this was before 1999 – as it had made some significant acquisitions in Spain, Germany, France, and the Scandinavian countries.”
“It was obvious that the Securitas leadership had the ambition to be number one in Europe, and that it didn’t take much of a stretch of the imagination to think that they wanted to get into the American market, since it was the biggest security market in the world.”

What followed next was a set of meetings with key players in the industry to gage market facts and trends, and obtain general information about how to raise standards and develop the industry. It was during this process that the leadership of Pinkerton came to know the leadership of Securitas. “In 1998 we started to have serious discussions with them which culminated in the acquisition in early 1999,” he says.

One would think that the Americans would have the upper hand in the security business. How come it wasn’t Pinkerton that bought Securitas? And what did the Swedes bring to the table?
“When we saw what Securitas had accomplished, how they did it, and the stock market’s appreciation of what they had done, we realized that we could learn something from them. They had a model and a plan. It was fairly simple, easy to understand and easy to communicate. Even though we all like to think that we know more about our positions than anybody else, we understood that Securitas had taken a fresh look at security,” Don Walker explains.
“It was not an issue of pride, but of professionalism. This is a tedious business with lots of details, and Securitas simplified it with their model. That’s why they were able to do certain things in Europe, and we brought that model to the U.S.”

Could you say that they benefited from coming in with an outsider’s perspective?
“Yes, definitively. Most people tend to get buried in the details, no matter what the job is. Or sometimes people focus on doing the same things differently, but there was no need to do more of the same. Securitas and in particular Thomas Berglund, was a dreamer who could visualize what should be. He had a very broad and deep imagination, which incorporated the idea of taking a risk. As Thomas and Håkan Winberg developed the strategy, and presented it to the Securitas board, it became very clear to the board, and the U.S. market, that they were on the right track.”

Don Walker says that Thomas Berglund early on in the talks made clear that he didn’t want to create just another U.S. security company. He wanted to lead and change the industry, and knew that it took market size to do that.
“He asked if we could create the largest security company in the United States, and I said, absolutely. Then he asked to see our plans for how to do that, so I put forth a strategy of acquisitions that was consistent with Securitas’ plans. Securitas then acquired Pinkerton.”

Within a year, Securitas has bought up a large part of the private American security industry, including American Protective Services (APS,) First Security Services, Smith’s Security, Doyle’s Security, and Burns International Security, which was the second largest security company in the U.S.
“Before buying Burns, we had grown Securitas from a company with roughly 600 million dollars in U.S. sales, to a company doing about a 1.3 billion dollars. Burns added another 1.1 billion,” he says.

What is Securitas in the U.S. today? You fused a number of regional and local security companies with Pinkerton at the core?
“Yes.”

What’s the difference between Securitas in the U.S. and in Europe?
“Well, it’s really a totally new company. When you take ten acquisitions with ten different cultures and mold those together, then you have to create a new culture.”
“It took a lot of hard work, but the Securitas model was a roadmap that made it easier.”

We had three objectives in mind and we accomplished them:

1. Establish a clear market leadership in each region of the country, as well as in the U.S. as a whole.
   
2. Create a large platform for organic growth.
   
3. Achieve density and cost efficiency.
   

“We’ve achieved all three, so now we are in the process of refinement and transitioning from selling services to selling security solutions.”

When you had just packaged these changes, 9/11 happened? How did 9/11 change things? Has it affected growth and strategy?
“It changed things in certain regions in the U.S., obviously in Boston, New York, Washington, D.C., Chicago and other mayor cities east of the Mississippi River. It was a change in attitude and perspective, but I would not say that there has been much of a change in other parts of the country.”

It must have been hard to merge ten different corporate cultures, but how about the merging with a corporate culture that came from Sweden, with its labor laws and so on? Swedish companies entering the U.S. can have a hard time dealing with America itself, its size, complications and lawsuits. People sometimes think that the world is more globalized than it really is. How was it for Securitas in the U.S. to work with the Swedes and the original model?
“The Securitas management probably underestimated the legal system in the U.S. They believed that there were differences in every country, but I don’t think that they fully appreciated the legal system, and how litigious the U.S. environment can be. Neither did they always understand the extent to which the industry is the controlled by individual states. It was an educational process,” he says

One would think that security is a very local business where you need to get down to the nitty-gritty of things? How come then that we are getting global companies with models that you can transfer from China to the U.S. and so on?
“This has changed dramatically over the past few years. Smaller accounts and contracts are local, but major U.S. corporations – not so much European and Asian corporations with the exception of Toyota – are looking for global commonalities. We have been talking about this major shift as far back as 1999, and even before that. Globalization is real and security is part of that.”

Could one say that the Swedish background affects the relationship to labor?
“Training is definitively a benefit that we have received from the Swedish experience. Thomas Berglund has been so committed to the Securitas executive training program that he personally attended every session. That’s been a major time commitment. Through his example, everybody understood that we are not just talking about training, but that it is real. Securitas has been very supportive in encouraging new training programs, some of them from Sweden, some from Norway and other countries. This has been a benefit of this new corporate structure within Securitas. We have all benefited from each other’s experiences.

So training is not only for executives?
“No, it goes all the way down.”

Does that affect your ability to retain staff?
“There are several things, of which retention is one. It’s also that we are telling people that we care, and that there is a career path. People may start as a security officer, and work themselves up to a supervisor and security manager. We have several vice presidents that started as security officers.”

Securitas has a national footprint in the U.S. and is spreading out into consulting. Is that the wave of the future?
“Yes, consulting, investigations, and risk analysis. We are working with the energy industry, and the government, especially the federal government.”

Isn’t hard to work with the federal government when you are a foreign-owned company?
“We’ve addressed these issues by creating Pinkerton Government Services, which has an independent board of directors in the U.S., and is well received to handle top secret or cleared government contracts. But Securitas can handle many other contracts that don’t need to be cleared.”

Will Securitas U.S. experience help in your global expansion?
“We’ve already announced that we are expanding into new markets. We’ve just opened our first office in India, Pinkerton Investigation Services, and we’ve just opened our first office in China. We have a company in Argentina that is relatively new, and we are working on a company in Brazil. It’s a global expansion.”

What is your impression of working with Swedes?
“We’ve all been impressed by how hardworking and dedicated the Swedish management is, and how loyal they are to the company. Sometimes we’ve had concerns that our particular issues here were not as well understood as they should be, but then we had to step back, and say that maybe we didn’t do such a good job in explaining it. It’s an educational process, because people from different cultures have differences. It doesn’t matter who you are, or what country you are from. What is important is to have an open mind and work together. It’s been fine, a good relationship.”

Hans Sandberg

We're all neighbors now

I can't help but feeling that there is something rotten … no not in the Kingdom of Denmark … but in the entire world. As much as I want to, I cannot put all the blame for the ugly state of the world on George W. Bush, or Dick Cheney, or for that matter Osama bin-Laden. Contrast our current malaise with the world at the end of the Cold War. Do you remember how good we felt when the wall came down? There was hope in the air, where today, there seems to be mostly smoke after bombs and disasters. It as if the only bright spot in the world is China, which is very sad, as it is a repressive authoritarian regime.

What happened to hope? The current outrage among fundamentalist Muslims is a sign of what is wrong with our time, but it also points to the underlying causes that makes people on one side of the world explode in fury over a set of cartoons published on the other side. Technology has brought the world together and released the economic forces of globalization. Hence we are now much closer to each other than anybody thought was possible, rendering us not only benefits of trade, but the whole shebang. Mankind has rather unwittingly entered into a global wedding, for better or worse. The honeymoon was quick and sweet, and then came the fight over the dishes, and fear of our new neighbors, who are watching those strange movies on their satellite-TV system.

We are so close now, so close that we care for each other the way people care for each other across ethnic and micro-geographic borders. It used to be that neighbors hated each other, like the Germans and the French, the British and the Irish, the Khmers and the Vietnamese, the Indians and the Pakistanis, the Hutus and the Tutsis, the Iranians and the Iraqis, and once also the Danes and the Swedes – Remember the Bloodbath in Stockholm 1520? (I guess, there were not enough good fences to go around.)

You don't hate people who you don't see. It's when you see them you realize how different they are, and how scary the thought is that your kids may want to play with their kids, and that your daughter may one day fall in love with one of them, one of THEM!

Greed and progress brings us all together, but coming back from the market with the short end of the stick, you are upset. Fear and suspicion undermines the marketplace and breeds resentment, which is why the scale is not just a symbol for justice, but a peacemaker. Some people are not ready for the marketplace, while others seems to have grown up there… It is easy to throw blame around, but deep down you know that it was your own weakness that made you into a victim. What are you going to do? Sharpen your knives or your skills?

It is always easier to blame someone else. Who wants to go tell the chief or the elder council that our age-old traditions and accumulated collective wisdom doesn't work anymore? For all of its poetic beauty, it doesn't do the trick. The priest, the rabbi, the mufti or the medicine man may be great comforters, telling us what we want to hear so badly, but they don't heal bleeding wounds, nor do they fill empty stomachs.

Adam Smith was right. You don't expect the baker to give you a loaf of bread out of charity, or the baker will go out of business. You have to bring something to the market in order to bring something back.

It was probably easier when roads were short and markets small. You knew whom you were dealing with, and you would meet him or her during the week. But who knows where that pair of sneakers are made (except that they were assembled in China, by a subsidiary of a company whose shares are traded in New York.) Marx called that feeling alienation. You don't know your producer anymore, and feel estranged from the product and the world behind it. You have lost control; you depend on others. That is why trade breeds fear. There is a lack of trust.

During the Cold War, there were at least two rivals caring for us out of fear that we would turn to the other. When the wall came down, and the Kremlin crumbled, they stopped caring. The new U.S. president, George W. Bush, looked at the Middle East back in the beginning of 2001 and told the world that he didn't care. It took the terror attacks of September 11 to make him change his mind. No, I'm not saying that 9/11 was his fault, but his initial pullback from the world – remember his dizzing of the Kyoto Protocol and the International Court? – gave the world the impression that America doesn't care, which played into the hands of the reactionary mullahs of Iran, the Talibans of Afghanistan and the bitter Osama bin-Laden. America's walkout was their big chance.

Globalization pulls the world together economically, while at the same time pulling it apart emotionally. It's time to focus more on what our neighbors say and think, rather than to focus on what they look like.

Hans Sandberg
21 feb 2006

How St. Paul Got Energy

(This article was first published in Currents Magazine, Spring 2006).

Back in 1979 -- during the second oil crisis – the state of Minnesota sent a delegation to Europe in search of a way to break its oil dependency. They found it in Uppsala, just northwest of Stockholm. “What made us unique was that we could use many different types of fuel,” says Anders Rydåker, president of District Energy in St. Paul, which runs a huge state-of-the-art system for remote heating/cooling.

District heating means that you warm up buildings by circulating hot water or steam through underground pipes, instead of relying on heaters in each individual factory, office or apartment building. The basic idea goes back to the aqueducts of the Roman Empire, but one of the oldest written reports is a complaint in France about two citizens, who didn’t pay their heating bills. The year was 1332.
“The modern technology for district heating was invented in the U.S. about 120 years ago, but Sweden has developed the technology to a point where we can help other countries. Our system knowledge is quite unique,” says Sven Werner, professor at Chalmers University of Technology, and a leading expert on district heating systems.

When the Minnesota delegation arrived in Uppsala, Anders Rydåker worked for Hans Nyman at Uppsala Industriverk (the local energy authority,) who had pioneered an advanced district heating system. It produced and distributed heat generated by a wide variety of methods, from burning household garbage, waste products from forestry, to tapping energy from fields of solar panels, and extracting heat from sewage water with heat pumps. “Today, half of all heating in Sweden is district heat,” Sven Werner says.

The energy department of Minnesota was so convinced by the Uppsala demonstration that they called Hans Nyman and asked him to come over and evaluate the prospects for introducing the technology there. It took four years to investigate and prepare for a new system, but eventually they could start converting the old obsolete district heating system in St. Paul to the new Swedish model. However, Hans Nyman called Anders Rydåker in 1983. “You have to come over. I need you here,” he said. Nyman felt that it was hard to get the Americans to understand the new model, which used hot water in contrast to older steam-based systems.

“The project in St. Paul was seen as a pilot project for the entire state. It took two years to build it, but just as we had finished it, the oil and natural gas prices dropped, which made it economically hard for us to compete,” Anders Rydåker says. He was offered the job as head of St. Paul’s energy company after Hans Nyman died from cancer in 1993. District Energy Inc. today serves close to 475 commercial, industrial and residential buildings in and around St. Paul. President George W. Bush toured the company before he gave his first major speech on his energy policy in May of 2001. In it he described the company as a model of energy efficiency, diversity and affordability.

The system in St. Paul relies on biomass in the form of wood chips, but can also use oil, natural gas, or coal. Over time it eliminated 75 percent of the oil and coal usage, delivering heat at stable prices for two decades while providing this city of 400,000 with an environmentally friendly energy system.

However successful the district heating system was in St. Paul, it lost much of its steam when oil and gas prices dropped drastically, forcing Anders Rydåker and his colleges to rethink their mission. They now started to design systems that circulate cold water instead of hot.
”Property owners realized in the 1960’s that a more centralized system could save money by reducing the size of the maintenance staff for heaters and air-conditioning units. We investigated the technology and by 1993 we had figured out how to do it,” says Anders Rydåker, who had moved back to Sweden in 1989 and convinced Stockholm’s public energy utility to build a seawater-based system that keeps all of downtown Stockholm cool during the summer. “It is one of the world’s largest district cooling system,” Sven Werner says.

One reason for why Sweden became so strong in district energy and other alternative energy technologies was the country’s energy taxes, especially on oil and gas.
”They forced its engineers to be more inventive when it came to diminish the dependence on oil and natural gas. This helped Sweden to move ahead in this field,” says Anders Rydåker.

The hardest part when it comes to promoting district energy is that it takes large investments, which may seen from a strictly economical point of view only yield marginal benefits. The interest in district energy has been much stronger in Europe, Russia and the former Eastern Europe, and Canada, but the interest is growing in the U.S. as well.

The rising oil- and natural gas prices, and the growing awareness of the global warming has opened up new opportunities for District Energy, both when it comes to heating and cooling. Honolulu Seawater Air Conditioning, a subsidiary of District Energy’s affiliate Market Street Energy, is currently developing a 120 million dollar system for cooling downtown Honolulu with deep-seawater. One of Anders Rydåker’s colleges, Ingvar Larsson, is chief engineer for the project.

“I am very optimistic and believe that we are in the beginning of an expansion phase. Our customers are very happy, and we will expand our systems. We are right now evaluating different expansion scenarios dependent on various price levels for oil and gas. We don’t need to search for new customers. They are knocking on our doors,” he says.

Hans Sandberg

Trollbäck: Street-Smart Swede Takes Fifth

(From Currents' Fall 2005 issue)

Jakob Trollbäck comes off as the stereotypical humble shy Swede, but don’t believe it. He is actually one of the hotter creative names in U.S. advertising, and all you need to do feel his impact, is to flag down a Manhattan taxicab. Chances are good that the sign on top will read ”Getaway car.” And if you head for the bus, a sign on the side might read: ”Witness Relocation,” while the sign on the bus that you can’t get around reads ”Roadblock.” These subliminal signs, which hint at an unseen world of excitement, are part of a multimillion campaign for Court TV produced by Trollbäck + Company.

Jakob Trollbäck came to New York pretty much empty handed, well not quite as he did carry his “book,” when he did his rounds, looking for a job in the big city. He didn’t have much in terms formal education in the trade, but he was - among other things - a pretty good disc jockey, and he had taught himself how to do graphics design on a Macintosh, which in December 1991 was not as common a skill as it is today.

Why New York? He went there as a tourist in 1987 and was struck by the creative environment, and the “can do” attitude. Back home in Stockholm, he had found it impossible to the foot in the door, as the first question would always be about his education in the trade. “Things have changed since then. This was fifteen years ago,” he reminds us.

In the Big Apple, he landed a job with Bob Greenberg’s agency R/Greenberg, a pioneer in using CAD (computer aided design) to make movies like “Alien” and "Superman.”
“I knew a freelancer that had worked for them and I knew that they worked with animation. Besides, I did know computers, which at that time was not as common as today,” he says. He worked there for seven years and became its creative director before leaving in 1999 to start his own company. The new company was set up with his and his wife’s money as the only investments. His first client was Leo Burnett, the Chicago based agency. “We started with motion graphics, and did a logo for Leo Burnett’s ad movies.”
Trollbäck + Company has also done work for HBO, TCM, Jaguar, Nike, Volvo, Target and Chevrolet.

About twenty people work at the main office on the fourteenth floor at the corner of Fifth Avenue and 31’s Street, two blocks south of the Empire State Building. The company recently opened a second office with five employees in Venice outside L.A.

The difference between Swedish and American TV is that the pressure is much higher to get people to stay with the channel, he says. That makes it essential to communicate brand attitude to the viewer, which is something Trollbäck + Company did when they redesigned the cable channel TNT, and later the American Movie Channel (AMC) and Court TV.

“Swedes are highly respected in the trade, he says, and suggests that their popularity has something to do with the Lutheran heritage, which favored the clean and simple message over the elaborate and ornamental. “When you come to New York, it is all cool stuff, but after a while you start to think about how to cut through the clutter,” he says mentioning keywords such as “clever,” “intelligent” and “truth.” “It’s about respecting people’s intelligence.” Part of the secret behind the success of Jakob Trollbäck could be that he approaches the country with a degree of skepticism. “Sometimes I feel like America is a land of teenagers, where there is little respect for wisdom.” What is it that Sweden brings to America in advertising? “In Swedish advertising you have to respect the customers. That is ABC. People say that they do it in America too, but advertising tend to be superficial and to talk down to people.” Another Swedish trait popular in the U.S. is its “dry” humor, like that sign on the phone booth saying “The Lookout,” or the umbrella over the hotdog-stand with “Undercover” on it.

Hans Sandberg

Don’t Forget Your Heritage, But Don’t Overplay It Either

Currents Fall issue 2005.

In Sweden, you can take chances without risking your job, argues Hans Ullmark, in a wide-ranging interview about Swedes and advertising, and how you communicate in the American market. Hans Ullmark is CEO of the San Francisco based advertising agency Collaborate. Back in the mid 1980’s he started up Anderson & Lembke in New York City together with Steve Trygg.

One would think that it would be hard to crack the advertising business for anybody but a true native. However, we have seen a bunch of Swedes making it over here. Why is this? Is it just a matter of highly talented people lured to the huge U.S. market, much like Swedish hockey stars dream of the national hockey league? Or do they bring anything else that helps them succeed in the U.S.? “I don’t know,” Hans Ullmark says, warning against hyperbole. “I have been here for 21 years and I have had agencies in Europe and in Sweden, and I have seen people coming over here, but some of them failed despite being very capable people. One was a professor of design in Sweden, and had an enormous talent, but it didn’t work out too well. And then there was Hall & Cederquist, whose New York office failed despite them being extremely good in Sweden and having a very good local manager,” he says.

“But Sweden has been very strong in advertising for at least forty years. Sweden is probably the European country that has won most international awards per capita. I’m not sure about what it is, but we do have a large degree of creative freedom. You are allowed to make mistakes, without having to fear for your job. Another thins thing is that our agencies are less hierarchical compared to the American ones. It is fairly egalitarian, which creates a leveled playing field for talents and ideas. Neither do we in Sweden believe in polling and testing every idea, which allows us to follow your our heart and mind. If it feels right, let’s go with it,” he says and adds. “We also worked with a rather refreshing humor, which may have been a bit raw, but not vulgar. People could relate to it.”

“When Swedish advertising professionals took their craft to the U.S., they quickly found themselves at home, with agencies that were willing to listen to their ideas, and clients who were ready to consider the ideas even if they at first sounded a bit wacky.”

Should I take it that the Swedish employment-security model nurtures creative talents, who then skip over to the U.S. to avoid the high income taxes? “Well, I can only speak for myself, and in my case it wasn’t the high taxes, but the dream of a larger playing field.”

Sweden is, despite its Lutheran heritage, deeply Americanized. You grow up entrenched by the American popular culture, and at the same time, while the French and Germans have the option of focusing on their home markets, ours is too small. “You are making a good point, and I believe that there is a lot to it. We Swedes find it easy to take in the American culture, and to figure out how to use it. I have just finished a branding workshop with 300 people from all over the world, where many had a hard time getting the message, despite the fact that they all speak English. It is as if they don’t really understand what I am saying. We never have that problem when we work with Swedes coming to the U.S. to work with marketing.”

At the same time, one could argue that the Swedish environment in many ways is hostile to advertising, with politicians trying to limit it and the average consumer being very skeptic against ads. Isn’t this a paradox? ”Yes it is, but all I know is that there are people who like to do the opposite thing, myself included. I grew up as a socialist, and took flak from my friends when I started in advertising. ‘How can you do this?’ they asked, but after a while they understood that I was not out to hurt society.”

Does being Swedish still affect your work after two decades in the U.S.? Does it help, or does it trip you up sometimes? “Steve Trygg and I may have been talking a little too much about Sweden when we came here twenty-one years ago, but we corrected that and defined ourselves as a global agency, coming out of Sweden. We sometimes used our history to help explain our thinking, while we ignored it if it was not relevant. But it never tripped me up, and if anything it was something positive,” he says.

“As for my new bureau agency Collaborate, the only thing Swedish about it is that we try to give people a little longer vacations, and that we want our staff to have a balance between life and work. We try to be more egalitarian and a little less hierarchical than an average American agency. This worked out really well at Anderson & Lembke.”

Growing up in Sweden, you become somewhat naïve, and not as cynical as a native New Yorker. When a Swede comes to New York, he jumps on the first train to Harlem. “Well, when I came to New York the first time, I walked a hundred blocks down from the Apollo Theatre in the middle of the night and dressed in a white suite. That was naïve, but nobody did anything to me. They just laughed,” says Hans Ullmark.

“Swedish and Scandinavian design was of tremendous help when we started Anderson & Lembke in the U.S. It was well known, and our American clients were impressed when they saw how we implemented it. It went home really well.”

“The Swedish way of communicating is conceptual and focuses on the idea. We often had to retrain our American designers, and teach them a new way of thinking, a cleaner and more striking graphic design.”

What are the biggest communication mistakes a Swedish company can do when it tries to reach the American market? “I have met with hundreds of European and Swedish companies over the years, and many are extremely naïve about how to pursue the American market, both large and small companies. The main problem is that they look at the U.S. as one single market, but it is very hard for any Swedish company to take on this huge continent. They don’t understand market segmentation very well. In Sweden, you can go from zero to being a leader in a fairly short time because it is a small market, but it is impossible to do that in the U.S. Even if you managed to do it in Europe, it is not going to work here,” he says.

“Another mistake is that they stress their Swedish origin too much, and talk way too much about Sweden. You can talk about Sweden when it is relevant, but you need to show that you are committed to this market and here to stay. People often fail to make this point.”

“You also need to have an American management. There can be Swedes too, but they have to play it in a way so that it feels like the company has an American leadership.”

So it is more a matter of substance, than the language itself? “Yes, right!”

“Swedes can also be naïve when it comes to money and investments. It will cost a lot of money to start a company here, whatever business you are in. Most companies have no clue about the cost. When Steve and I started in the U.S., we took out a meager salary, which was hardly enough to pay the mortgage on our houses in Connecticut. It was tough, but we prioritized to invest 100,000 dollars in marketing the company. We invested more in marketing than in our salaries. Few Swedes get this, as entrepreneurship is less risky in Sweden compared to in the U.S. We have no safety nets. You’re on your own.”

”It takes some time to figure these things out, but some companies do. They hire the right Americans and blend the best of their Swedish heritage with the best of the American corporate culture. I remember a piece of advice I got from Volvo in the beginning. They told me to always speak English, even if you are two Swedes sitting alone in a conference room. Other ways, people may assume that you are talking about them. Small things like that are important when you build a company in the U.S.”

Hans Sandberg(This interview was first published in Currents' Fall issue 2005.)

Americans Are Finally “Getting” Cheese

(First published in the Norwegian food retail newspaper Dagligvarehandelen in September 2005.) 

If you ask for American Cheese in an American supermarket, chances are that you will be offered a small square block of an industrially processed product that is pre-sliced and individually wrapped, but has little if any taste. But the American cheese landscape is changing, and could follow the path towards sophistication, similar to what happened to the country's coffee and wine culture over the past few decades. 

“We are serving 160 wines by the glass and have over 200-250 cheeses,“ says Frank Bismuth, General Manager of Artisanal, a New York restaurant located on the 32^nd Street close to Park Avenue.

Artisanal opened in 2001 and seats about 180 people. One of the most popular items on the menu is the cheese fondue, of course! Many customers, who come in for lunch or dinner, and smell the cheese, end up buying a piece of hand made and often pungent cheese from the cheese deli, which sits along one side of the restaurant.

“Cheese is becoming more popular, especially in New York City, which is very cosmopolitan and where people travel a lot,” says Frank Bismuth, who came to New York from Paris eleven years ago. “We find that people are very passionate about cheese," he says.

It is a bit of a paradox that cheese is gaining in popularity at the same time as health care experts and mass media warn of the obesity epidemic, but Frank Bismuth gives at least some of the credit for the current cheese craze to the Atkins diet, which allows its dieters to indulge in fatty foods, as long as they cut back on the carbohydrates. “You can enjoy your cheese without feeling guilty,” he adds. 

Artisanal carries cheeses from all over the world, from Spain, Italy and France, England and Scotland, just to name a few places of origin. “We also have a lot of great domestic cheeses, like those from Vermont and California,” he says. “And more and more restaurants are expanding their cheese selection,” he says. This growing cheese interest led to the opening of the Artisanal Premium Cheese Center in New York in 2003, which promotes and distributes artisan cheese, as well as gives classes to cheese lovers and aspiring cheese sellers alike. New York Times recently reported that many women are entering the cheese trade, and some even have taken up making artisan cheese. Over 1,700 people have taken classes at the center. The American Cheese Society, which is headquartered in Kentucky, has seen its membership double in four years and now counts about 1,000 members.

Good cheese is of course not new to New York City, but it seems that the taste for good non-industrial cheese is spreading beyond the ethnic enclaves of the big cities. Valdemar Albrecht is in charge of the cheeses at Artisanal. He is from Germany, but has lived in Barcelona, Spain and about ten years in the U.S. “Our focus here is to showcase artisan cheese making. All these cheeses are small batches. We both sell cheese to customers, but also prepare them for customers who want some cheese to their wine,” he says, adding “Almost everything you see here comes from the Artisanal Premium Cheese Center, but we have our own cave here where we stock our cheeses.” 

“Rouge River Blue is one of the most expensive domestic cheeses we have. We also have a classic French cheese called Roquefort. They sell for about 37 dollars per pound. This might sound like a lot, but these are cheeses made by artists, so I think they are prices accordingly.”

“I think that the attitude to cheese is changing the more we expose them to cheeses and educated about them. Luckily, we have an extremely savvy clientèle here in New York. They are world travelers, very well educated and they know the products that they want. But there is definitively a shift in the United States’ cheese culture. We were in Kentucky two weeks ago, at the American Cheese Society’s convention, and you can see cheese makers coming out of every single state of the United States. That speaks very positive for the future of America’s cheese culture,” says Valdemar Albrecht. 

“People see cheese as the perfect food. It has been eaten for a thousand years and it is easily digested, and there is something wonderful about it. As far as the cholesterol goes, you may need to have some red wine with it,” he laughs.

Are there any Scandinavian cheeses among the 250? 

“No, but we are very interested in tasting artisan cheeses from Scandinavia. I am really fond of Norwegian gjetost, which my father used to give me when I was little. I might have issues with calling it a cheese, but I really enjoyed it.”

Good cheese can also be a very personal choice. When asked about his personal favorites, Valdemar Albrecht says: “I do have a passion for many of these cheeses. They can bring memories of a happy time that I had. When I for example think of a cheese such as the Spanish Roncal, it reminds me of my grandfather, because that was the first cheese that he gave me. That cheese will always have a very special place in my heart.” He says that one of the most rewarding aspects of his job is to see the expression in the face of somebody when he has served them that special cheese they are connected to.

Hans Sandberg