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The Right Direction – Scania Australia chief Mikael Jansson

Part Two: In this three-part series Steve Brooks delves into all things Scania starting with a test drive from Sydney to Melbourne in a new R540 B-double before a one-on-one talk with Scania Australia’s quietly composed managing director Mikael Jansson on some of the factors behind the brand’s steady rise in recent years. Then back in Sydney, Brooks climbs into the new baby of the bunch, the 7.0 litre P-series.

If ever two managing directors appeared to emerge from different sides of the corporate corridor, they are current Scania Australia chief Mikael Jansson and his retired predecessor, Roger McCarthy.

McCarthy, the sharply styled, articulate Englishman with a polished salesman’s flair for the limelight, and typically, always up for a chat on industry issues and Scania achievements. And a photo, of course.

Jansson, on the other hand, is the mild-mannered Swede with a strong Nordic accent and an apparent preference for quiet conversation rather than public appearance. In fact, now approaching four years in the top job at Scania Australia, it’s surprising to learn this is Mikael Jansson’s first one-on-one interview. Yet despite their decidedly different personas, they share a couple of critical similarities. Each is a passionately proud and loyal Scania stalwart with a determined competitive streak and most significant of all, each has achieved far more than any of his many predecessors.

Indeed, Scania Australia is today stronger and more successful than ever before and certainly nothing like the struggling entity which in the late ‘90s came close to being withdrawn from the market according to a blunt admission long ago by the brand’s authoritarian and often outspoken former leader, Leif Ostling.

Part One: Scania raises the stakes – R540 on the road

Yet while Sweden’s commitment to stay in Australia all those years ago had next to no impact on Scania’s position on the sales ladder, it apparently had a big influence on financial performance. According to a bullish Leif Ostling, interviewed during a 2004 visit, Australian profitability had by then improved to be one of the best in the Scania world on “an investment to equity relationship.”

Nonetheless, for the first decade of the new century, the Swedish maker simply could not climb off the lower rungs of the heavy-duty ladder, generally hovering around three or four per cent of the sector despite callow guesstimates by a succession of imported leaders that a 10 per cent slice was “entirely possible” within a few years.

Consequently, and given the underwhelming and occasionally short-lived performances of numerous predecessors, Roger McCarthy’s arrival in 2009 was cynically seen as just another Scania chief happy to enjoy an idyllic sunny break from the great grey of the northern hemisphere. It was soon evident though, this highly professional Pommie import was seriously intent on making a mark and over the next seven years, cleverly implementing several initiatives in niche markets and effectively making Euro 6 emissions a Scania specialty, the brand finally started to achieve steady growth.

A serious Mikael Jansson considers a question on COVID. “It was important to keep our competence (and) it makes me proud we were able to do that.”

To date, he is Scania Australia’s longest serving managing director and it’s fair to say, it was McCarthy who finally got the ball rolling for Scania. However, it’s equally apparent that despite a somewhat diffident demeanour, Mikael Jansson hasn’t been at all shy about picking up the ball and running with it.

At the close of 2017, just months after McCarthy’s departure for retirement and Mikael Jansson’s appointment, Scania for the first time cracked 1000 heavy-duty sales in a year – 1003 to be exact – but at 8.4 percent, still notably short of the elusive 10 percent share of the big boy class.

However, the best was yet to come and it is a surprisingly buoyant Mikael Jansson who agrees that the last four or five years have been Scania’s most successful in the Australian market.

Still, there have been a few unexpected setbacks. Certainly most worrying of all is COVID-19 but well before the pandemic struck with all its fears and frustrations, challenges were emerging which would rain on Scania Australia’s excitement after the early 2018 launch of its New Truck Generation (NTG).

Hiding under the fanfare of the new model release were destructive supply shortfalls in Europe, especially on components for building Scania’s popular V8 engine which led to the bent-eight production line shutting down for several months.

As Mikael Jansson commented, it was particularly disappointing “… after the new series had received so much positive feedback from customers. The new product ran into supply problems very quickly (creating) a major problem because we’re so dependent on the V8.”

Consequently, 2018 was a year of struggle that took the gloss off the initial excitement of the NTG release, with Scania achieving a relatively lacklustre 891 sales and falling back to just 6.2 per cent in what was then a booming market for the heavy-duty sector.

Still, according to Mikael Jansson, the market’s enthusiasm for the new model range and the gradual unblocking of V8 supply lines created ideal conditions for a major turnaround in 2019 and accordingly, Scania notched its best year ever with 1140 deliveries and 9.0 percent of the heavy-duty class.

Even so, demand for the new range continued to outstrip supply and it’s an adamant Jansson who insists 2019 would’ve been significantly better if supply had been able to match orders. Likewise, 2020!

Considering COVID

In Scania Australia’s Campbellfield (Vic) boardroom a few months back, Mikael Jansson was quick to express relief that people were once again sitting at desks and circulating through the office.

“We need to learn from the lessons of having more flexible working arrangements,” he comments. “But really, this change was coming before COVID with the younger generation looking for more flexible working arrangements.”

In the next breath though, he stresses the need for face-to-face interaction.

“Sometimes, important decisions are taken during discussions at the coffee machine (and) that’s the interaction you miss when working from home.” It was a simple example but the message was clear.

Quiet for a moment, Mikael continues, “I’m very proud how we handled COVID and how we had no infections at all.”

Equally, employment was kept at full strength, there was no shutdown for Scania and the service network stayed open and firmly fixed on meeting customer needs.

“We kept and protected our people, we kept supporting our customers, the retail operation was running at full speed, and the company was effectively managed despite so many people working from home.

“It was important to keep our competence. We had no people on JobKeeper at all, no support from government (and) it makes me proud that we were able to do that.”

Eager to push the point and no doubt, espouse a higher ideal.

“We should get support from government when we really need it, not just because we can get it. For me, that’s about maintaining our social responsibility.”

Yet whereas some companies were stunningly quick to use COVID as an axe to cut people, it was a forthright Mikael Jansson who remarked, “We kept all staff.” Then, a few minutes later in response to a question about Scania’s rising prominence;

“We now employ 500 people, so 25 per cent (100 people) more than when I came here, plus we’ve started Scania in New Zealand where we employ 150 people.”

Nonetheless, COVID-19 wasn’t the only constraint in 2020. In fact, “I was a bit surprised that COVID was not impacting the market as most thought it would.”

However, “Order intake for us last year was very strong (but) we lost market share because we had supply issues, so we ended just short of 900 trucks.”

The official number was 880 deliveries for 8.3 per cent of the market and fifth spot on the heavy-duty leader board.

People power. “We now employ 500 people, so 25 per cent (100 people) more than when I came here, plus we’ve started Scania in New Zealand where we employ 150 people,” explains an earnest Mikael Jansson.

Meantime, while he insists the strong order intake is continuing in 2021, so too are the supply issues which are certainly not peculiar to Scania alone. As Mikael explains, the issues are two-fold:

“One is the shortage of semi-conductors (essentially the micro components of the electronic control systems at the heart of almost every automotive product in the world today).

“That is a global problem but how much it will impact us is somewhat unknown, but it is a big challenge for everyone.”

Critically, however, it’s a challenge accentuated by the high level of international demand for Scania’s NTG range.

“So it’s a fight to get capacity from production, but the ramp up to get higher volumes at the factory is impacted by suppliers in Europe who in this COVID time can’t ramp up at the pace we all want,” he explains.

Consequently, it’s a sincere and gratefully candid Scania chief who says;

“We will not get the supply this year that we want from Europe.” On the positives though, he firmly suggests it’s a short-term issue.

Demand for the NTG range is, however, not peculiar to Europe alone.

“We have an order book now we have never seen before,” says a positive Mikael Jansson, predicting a strong market for heavy trucks this year and potentially, another record for Scania.

“The heavy segment was 10,600 (trucks) last year but I think it will increase by at least 10 per cent and if we get the supply we want, I’m confident we will get to 1200 sales.”

Thoughtful for a moment, he continues, “The supply issue may stop us from reaching that figure but from what we know at this moment, we will deliver over 1000 trucks this year. The order book is just so strong.”

Asked if Scania’s rise comes at the targeting of any one competitor, a serious Mikael replies,

“Mercedes-Benz and Volvo are the two main competitors normally (but) I don’t care. We are not focussed on who we target.

“It’s a tough market, especially with big fleets where you can get a lot of volume but it’s important for me to have a profitable business, so it’s not just about volume.”

Yet when subsequently asked if 10 per cent market share is still Scania’s target, an unequivocal Mikael Jansson said simply, “Yes!”

At this point in the discussion, he confidently stated he was looking forward to the end of March (see footnote below) when Scania’s strong performance for the first quarter of 2021 would be revealed.

As the numbers soon demonstrated, his confidence was entirely justified, finishing the first quarter with 218 deliveries and notching 8.9 per cent of the market.

Biggest news of all though, Scania’s performance for the month of March alone was exceptionally strong, finishing third in the heavy rankings with 10.3 per cent and just five units behind the other Swede, Volvo.

Talk of ‘the other Swede’ brought a wry smile to Mikael’s dial and an unusually sharp snipe at his competitor’s corporate leadership in Sweden.

“At the top executive level, Volvo has brought in a number of Scania people. Scania has not found the need to entice Volvo people into its executive realm.”

Yet asked why the two Swedish brands historically change Australian leadership so often, it’s a somewhat evasive Mikael Jansson who retorts;

“I can only talk from a Scania perspective (but) there are still things to do here and I am very keen to continue that journey.

“Stability,” he contends, “comes from a Scania way of working (but) you need to understand the local market, so it’s the people who are our asset and driving the changes.”

Has Australia been a tough learning curve for Mikael Jansson? The answer is immediate:

“No. This organisation was already working to Scania’s way of thinking but I quickly learned to like working with Australians. They are direct, but in a positive way. They tell you want they think and they understand that if things go wrong, it’s how you deal with problems that’s important. It’s a mentality I like.”

At 62 years of age and still with plenty to achieve here, it’s a convincing Mikael Jansson who declares there are no plans to go anywhere else.

More Muscle

It’s no secret, of course, that Scania is nowadays a vital part of the ambitious Traton Group, effectively the global commercial vehicle conglomerate of automotive giant Volkswagen which also includes MAN and most recently, Navistar (International) in the US.

Asked what influence Traton may have on Scania in Australia, Mikael just shrugs and says the conglomerate’s impact here is likely to be minimal, suggesting the main effects will be in global research and development programs on future product, and greater production efficiencies.

On the possibility of a closer commercial relationship with MAN and its association with the Penske organisation here, he says there has simply been no contact or discussion and moreover, expects none.

“For me, MAN is just one of the competitors,” Jansson says.

Far more important, he asserts, is the continuing evolution of the NTG range, not least the recent introduction of a 540hp rating in Scania’s 13-litre line-up.

While declining to comment on Scania’s reasons for limiting its top 13-litre rating to 500hp in the initial launch of the new models, he quickly contends;

“We now have the horsepower more in line with the competition and that will be good for us. The 540 is filling a gap that is important.”

There will, however, be no lack of power in a refreshed V8 range headed our way later this year, with Mikael Jansson confirming a top rating of 770hp and a stump-ripping 3700Nm (2730lb-ft) of torque, accompanied by 660, 590 and 530hp settings.

All four ratings will be Euro 6 models coupled to a significantly updated Opticruise automated transmission designed to work more efficiently with the big bore V8 and capable of producing fuel savings up to six per cent, according to Scania.

Consequently, it’s an upbeat Mikael Jansson who cites a powerful future for Scania Australia, in more ways than one.

“With increased volumes we also need to increase our retail network and that is creating a lot of new jobs,” he says enthusiastically.

“We have started to build a second workshop in western Sydney and a new national parts warehouse (in Melbourne) and a supporting warehouse in Perth.”

Meanwhile, plans for coming years include more service centres in other cities and regions, and as is the Scania custom, most will be company owned.

“Our strategy is to have company-owned facilities in the main cities and non-captive in the regions, which means 90 per cent of all workshop operation is captive. That’s important for us,” he continues.

“It’s a huge investment, of course, but you are in control of the service you’re giving the customers.”

All up, the future for Scania has never looked brighter?

“Yes, but if you stay still in this market, you will lose,” a definite Mikael Jansson concludes.

Footnote: Scania Soars in April

If Scania was happy with its market share in the month of March, it must be ecstatic with April’s barnstorming performance.

Scania’s take of the heavy-duty sector in April was a potent 14.1 per cent, second only to absolute market leader Kenworth and notably ahead of arch rivals Volvo and Mercedes-Benz.

April’s numbers pushed Scania’s year-to-date slice of the sector to 10.4 percent, putting it well within range of forging past Volvo and Benz in overall standings.

Meanwhile, the 2021 heavy-duty market remains defiantly strong and if current momentum continues, the sector will deliver around 12,000 trucks this year.

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