How Selka made its business turnaround amidst the worst pandemic times, from bankruptcy to rapid growth.
Teksti: Sami Kuusela
Selkan tehdas, Nastola, Suomi
It has only been 10 months since the business was bought over.
It was chilly and tense when the owner company of Selka was declared bankrupt last August. The factory in Nastola, near Lahti, had been designing and manufacturing furniture for cruise liners and restaurants. That stopped abruptly in August.
News of the collapse saddened the 15,000 inhabitant-community. Selka had been an important employer in Nastola and for several decades, given livelihood and a liked employer.
"Tables that do not break", commented a customer.
Selka's products were known by customers for their durability. Someone had commented that the fault of Selka's tables was that they do not become broken even after years. The turnover has declined from its heyday when Selka’s tables and chairs were sold in Finland and internationally to several countries.
“Product development was forgotten by the previous set of owners,” analyzes Juha Nevalainen, a long-time employee of the company.
“I was a Master’s thesis worker when I first started to work for Selka. I have always enjoyed the camaraderie of the group. Most of the people who work here never leave.
Even as a young industrial engineering student, I saw that the products were always delivered on time to customers and the quality was never compromised for cost or speed.”
Very abruptly, bankruptcy became an actual opportunity
When the official announcement came about the bankruptcy, it gave rise to an idea that had been brewing for a long time.
Nevalainen called Mika Tolppala, who has been Selka’s factory manager since early 1990s. “I had talked with Mika for years about buying Selka out and running it as our own business,” Nevalainen recounted.
In a matter of days, bankruptcy became an actual opportunity. It was a now-or-never moment. The factory machines and equipment would have been sold off.
It was not an easy decision. Nevalainen picked up the phone and made calls to customers, suppliers and partners. “Would the partners still work with us?” The calls gave me faith, Nevalainen told, “I was worried that the company’s reputation would be lost and our customers would have found a replacement supplier.
But everyone hoped the company would continue, including the suppliers.
Core team was formed to take over
5 previous employees came together and bought the company over. They believed in the company that much to put their life savings into this venture. Nevalainen was appointed the CEO, Mika Tolppala continues as factory director, Janne Miettinen as foreman, Jari Suomunen in welding, Matti Leino in assembly.
Each of them has worked for the company for between ten to thirty years with their specialized skillsets.
“A number of Selka employees decided to act and as a result we are happy to say: SELKA’s story continues!” The company announced on its Facebook page in early October, just a month and a half after the bankruptcy was declared.
All former employees were eager to get back to work. "Machines and equipment can be bought, however, without a well-functioning team, we would be nothing," rejoiced Nevalainen.
The auction was cancelled. There was room to decide what new and revolutionary things the factory could start to work on. What was needed was a successful product that would put the business back on track.
A miracle happened.
The sun began to shine in Päijät-Häme. Sometimes, pieces fall into place in the midst of a crisis. This was the case for Selka, whose new concept took off incredibly well when corona pandemic hit Nastola and the entire world.
It took luck, relentlessness and courage to change the direction of the business. The black swan brings about unexpected change.
“At the end of February, the developer of our website asked for remote desks for his own needs,” says Nevalainen. “The laptop tables in our collection were reportedly too low and Janne hoped for a higher one.”
At this point, no one in Finland could foresee the COVID-19 impact or predict a State of Emergency.
Web designer, Janne Kujanen, drew wild pictures of his dream table and persistently sent them to Nevalainen. Eventually, Juha took over and promised to make a prototype.
Ari Kanerva, who was awarded the Finnish Furniture Designer in 2019, was contacted to design a small remote desk which height could be adjusted easily between sitting and standing positions.
The prototype was completed in March, at about the same time when coronavirus hit Finland. Business ground to a hilt but for Selka, the State of Emergency and lockdown provided the angle of attack. The timing on the remote desks could not have been better.
Factory foreman Janne Miettinen inspecting multiuse tables
Forced to work remotely from home, office workers hurt their backs and necks with bad postures. One worked with her PC on the shelf of her clothes wardrobe. Another built a standing table from an ironing board and a stack of books. People were forced into small spaces to work with the rest of the family members in the same room or apartment. The pain from working with poor ergonomics did not make it easier to endure the quarantine.
There was a huge need for a desk that could fit in every home and any room. The Selka team was ready to jump into the unknown.
“Everything was new to us”
"Everything was new to us," says Nevalainen. In the past, the furniture business was done with business customers. Now it was necessary to switch from a B2B model to a consumer model within just a few weeks. The company had only been in the ownership of the new owners for half a year.
“I was nervous. How much money is riding on this? What kind of losses could we make?” Nevalainen posed open questions to the group. There was not even experience in pricing consumer products. Well, inexperience did not slow the team down at the Nastola plant.
It was decided to invest fully in exports.
Momentum grew when the message was spread through Finnish social media channels, magazines and other media. Help was received from the likes of Peter Vesterbacka - known from Rovio and the Tallinn Tunnel - who became an ambassador and spokesperson in Kauppalehti's article on remote working.
“Not everything has to be perfect from the beginning,” reminds Nevalainen. "Just go for it, tell what you are working on and people will accept even a small imperfection."
“People want to help”
Selkastore, the online store selling Selka remote desks, was launched as soon as the prototypes were completed.
Like always, the beginning was a lesson. Not all parts were delivered to the factory on time and it took too long to deliver the products. Sincere enthusiasm and close contact with the first customers helped.
"Customers were really kind and patient with us even if the start was not all smooth."
Customer satisfaction was more than good with the fact that everyone who received their table was surprised by its features and quality of the finishing. Weighing nearly twenty kilograms and assembled from good quality components, the table was so sturdy that it was joked on Facebook that it’s not just a working desk, but it’s also your home bar counter, as you cannot go out during the Corona lockout.
For those accustomed to IKEA quality and cheap cardboard furniture, remote working desks produced with quality standards were a positive shock. Positive feedback started to pour and it was overwhelming to read their feedback.
The average rating for Facebook reviews is currently five, the best possible score.
"Negative feedback only comes from people that have not seen or tried the product physically,” says Nevalainen.
After the first tables were sold in Finland, marketing began abroad through social media. Cities where people were known to be in lockdown were targeted. The orders flowed in immediately, even though it was a purchase of several hundreds of euros from a manufacturer previously unknown to buyers.
The first order outside of Finland came from David in Belgium.
Now, Selka's remote working desks have been sold to nineteen countries.
These made-in-Finland desks are requested by countries where there are no reasonable logistics costs yet.
It's easy to start
The risk increases when the playground gets bigger and a lot more funds are used. "If we start supplying these tables to Asia, Africas and the United States, we will need capital for 4-6 months," says Nevalainen.
First, cashflow is tied to the required components, while the desks are being manufactured and packaged. After that, the tables are shipped in containers for several weeks, upon arrival, wait in logistics centres for months before they are received by buyers. It can take up to half a year to get the cash flowing back.
“We have great suppliers and partners who are bigger than us. The partners are able to supply us with components as they have huge capacities. Our factory processes have been optimised so well that as demand grows, we can handle the growth by increasing our manpower.
Partners who have known us for decades trust Selka in the hands of the new owners and there is support for the new business direction.
Even designers in Finland and the region are taking notice and making contact with Selka due to the overwhelming response to the new range of standing-sitting desks.”
The share of remote desks has risen to contribute towards a third of Selka's turnover in two months and the direction is clear. Remote desks are being delivered to the world at an accelerating pace, as exports already account for 75 percent of sales of adjustable standing-sitting desks.
It has only been three months since the first table was delivered to the first Selka consumer customer.