The last 30 years
From manufacturing industry to gas company
The 1970s were to be the decade of change. Reversal of the negative earnings trend required extensive restructuring and rationalization. It was Sven Ågrup, recently appointed President of the AGA Group, who was to lead AGA along new paths.
Operations were divided into clearly defined profit units with strict profitability responsibility. The company was now active in five product areas: the clearly profitable gas/welding, batteries, radiators and the less successful electronics and medical technology.
In 1971 the once so successful AGA trademark was phased out of the radio/TV market following the transfer of these operations to Svenska Philips. AGA decided to focus more strongly on the rapidly expanding air gas market. This is a local industry with local production and sales. AGA's foreign subsidiaries had been well established in their respective markets for many years. This both facilitated and accelerated development towards what was to be one of the world's most widely spread gas companies with significant market shares in the United States, Europe and Latin America. A deliberate geographic spread also distributed risks and evened out economic fluctuations. The goal was financial stability.
Pioneers in Environmental Technology
Demand for industrial gases rose considerably faster than industrial production in general. Many industries introduced new technology based on large-scale use of process gas. AGA responded with a dramatic increase in investment. Rising consumption demanded larger plants and a transfer to deliveries of gas in liquid form. This made a wider distribution area economically viable. Capacity in the plants was trebled over ten years.
New air separation plants are very capital-intensive. In 1971 AGA signed a cooperation agreement with L'Air Liquide, in order to achieve faster expansion in the important European gas market. 50-percent owned companies were formed in West Germany, the Netherlands, Belgium, and eventually in Luxembourg.
Oxygen was the major product and demand increased continuously. Early in the 1970s a focus on environmental issues began and oxygen was used for water purification and other applications. Environmental considerations also led to the Gruvön paper mill and AGA beginning to bleach woodpulp with oxygen instead of chlorine, a technique which achieved a definite breakthrough in 1975. Steady further development took place and over time this was to become very important to AGA. From previously being regarded as a waste product, nitrogen gas also became more attractive due, among other things, to its cooling ability and its inert character. Over a ten-year period until 1976, demand grew by 10% per year to then increase still further to 15% annually. New applications emerged on a broad front: heat treatment of metals, freezing food, freezing the ground when building roads and tunnels, medical research, nuclear physics, materials research, the electricity industry, rubber degrading, computer technology and electronics.
Medical applications for gas also increased and gas centers for distribution of gas to hospitals via pipelines became a key area for AGA.
Success for Cryogenic Equipment
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 | Through its subsidiary AGA-CRYO, specialized in transport tankers for liquid gas and vaporizers, AGA captured a significant share of the expanding European market for distribution tankers. Demand rose steadily and production capacity was extended. By 1978, 40% of sales of cryogenic equipment went to external companies. The welding market expanded continuously, with fast growth for some methods. This applied in particular to arc welding, MIG and TIG. In 1970 AGA launched MIG 3000 Electronic, an entirely new concept for arc welding. The company made substantial investments and focused on an extensive welding program.
The transfer from manual to automatic cutting was accelerated.
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A strategically important agreement in the electric welding sector was concluded with ESAB in 1971. AGA-ESAB became the world's largest producer of welding equipment.
An significant breakthrough for AGA came early in the 1970s when Avesta in Sweden became the first company to use the AOD process and argon from AGA. This method allows production of stainless steel with less contamination and at a lower cost. At the same time, lighthouse technology continued to decline in importance. In 1972 signal operations with lighthouses, buoys, etc., accounted for only 2% of the Group's total sales. A brief upturn was experienced, however, in the mid-1970s when the serious environmental risks of increasing larger tankers led to upgrading and improvement of international navigation systems.
The Oil Crisis
In 1973 the electronics division was divided into five separate subsidiaries: AGA Geotronics AB, AGA Infrared Systems AB, AGA Mobilradio AB, AGA Aerotronics AB and AGA Navigation Aids. AGA Medical was started in 1973 to take care of clinical equipment while AGA Spiro's product area was the strongly expanding market for breathing apparatus.
The subsidiary Tudor developed into the largest battery company in the Nordic region, and became, technically, one of the leading manufacturers in the world. The product program included lead and dry batteries, car batteries, uninterrupted power, emergency power for hospitals, batteries for submarines and tractors.
The easily installed Thermopanel radiators, launched in 1969, were highly successful and helped make the Radiator Division Europe's largest manufacturer of steel hot water radiators. Further development with thermostatic heat control was also highly profitable. The oil crisis made AGA's heating expertise attractive in many markets.
Winding Up and New Heating Acquisitions
In 1974 AGA sold its mobile radio operations to AB Statsföretags subsidiary Sonab. The previously so expansive dry battery market stagnated and Tudor's manufacturing operations were merged with Danish A/S Hellesens. Tudor focused on industrial batteries.
AGA increased its shareholding in Bacho to 35% which provided opportunities for cooperation between AGA-affiliated Coronaverken and Bacho within air-borne heat and ventilation.
In 1974 AGA built Europe's largest and most modern acetylene factory in Switzerland. The following year a number of AGA companies started doing business with carbon dioxide, a gas in increasing demand mainly for welding and food applications. AGA still had very limited own production. In 1975 Gas Metal Plasma Arc-Welding (GMPA) made its industrial debut. This AGA process provided unique opportunities to weld stainless steel in layers on carbon steel which was used in nuclear power plants, the petrochemical and other industries. PS 40, new plasma cutting equipment launched at the same time, was also very well received. AGA Divator was successful with its breathing equipment for firemen, deep-water diving and aircraft use. The products were launched in the U.S. and West Germany in 1975 and a subsidiary was set up in the U.K.
The next significant reorganization took place in the same year. AGA Gas AB, which in future was to account for marketing and product supply in Sweden, was hived off from the parent company and a separate company, AGA IGE, was formed to handle the intensive investment program with planning, engineering, design, etc. AGA Specialgas was formed to handle the expansive Nordic specialty gas market.
AGA became the largest single shareholder in AB Bacho and the companies in the Corona Group became incorporated in AGA. CTC AB, Thermiaverken, and others became part of AGA's heating section and provided a considerable boost to competitive edge in the wake of the energy crisis. The company entered a period of significant activities in the heating industry with new plants, product development and acquisitions. A lot of development work was devoted to alternative types of energy such as solar and geothermal energy. Through the Corona Group AGA also acquired the security company EA Rosengrens AB, whose products included safes and bank boxes.
AGA-CTC försäljnings AB was formed in 1976. Thermiaverken launched a highly promising system for the production of geothermal energy. A few years later approximately 3,000 geothermal systems were in operation. Hydrogen also became more important to AGA. In 1976 a new plant was opened for the manufacture of hydrogen and nitrogen for Pilkington's floatglass factory in Halmstad.
Strategy for Success
AGA intensified its own research and development, focusing on new applications for gas. Special efforts were made in processes which can be used as a replacement for oil-based products. In the first half of the 1970s AGA's gas operations rose by a steady 18% per year.
It was decided to concentrate operations on areas in which AGA possessed such advanced technical and market expertise that international expansion could be achieved hand in hand with profitability and financial stability. A first new step into the Norwegian market was taken through the formation of GasNor A/S in partnership with Norgas. AGA's share was 40% and Norgas held 60%. Military electronics production was sold to Bofors in 1977 and the remaining battery operations were transferred to ESB Inc., one of the largest battery manufacturers in the world which was expected to strengthen Tudor's long-term potential.
In 1977-78 AGA made a number of investments which were to have future significance. Frigoscandia, a world leader in food freezing, cold storage/transport and the manufacture of freezers was taken over. AGA gained considerable know-how in the expanding food sector and became the only gas company in the world with expertise in both conventional and gas freezing technology. AGA also acquired the American gas company Burdox with production, sales and distribution in the ten most highly industrialized states in the U.S. The strategically important wish to break into the American market had thus been granted.
That same year AGA launched the unique patented shielding gas mixture Mison, which marked a significant step towards a better work environment for welders. Mison reduces the ozone content in the air breathed in by the welder by 50-90%. But total welding demand decreased as a result of recession and the crisis in the shipyards. AGA discontinued its production of electrical welding equipment while gas welding and cutting operations were transferred to the newly formed equipment company AGA Welding.
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Extensive Restructuring
. | In 1978 AGA had three main operations: Gas/Frigoscandia/Heating which it conducted along two lines. |
One was the operations with local process-oriented gas and cold storage production and extensive investment. The marketing and demands for costly, other was the export-oriented engineering heating and industrial group with companies with and marketing through the main production in Sweden subsidiaries and agents around the world.
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AGA now produced its strategically important oxy-fuel technology in partnership with the Smedjebacken steelworks. This technology is used in arc furnaces instead of electrical energy and provides high productivity for a low investment. Oxy-fuel technology was progressively further developed and also became a successful application in the glass and mineral wool industries.
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After a number of years of declining demand, AGA sold its radiator manufacturing operations to Metal Box, one of Europe's leading radiator manufacturers, in 1979. That meant leaving a product area which had been a key part of AGA's activities since the 1920s. The merger with Metal Box subsidiary Stelrad made the new company one of the world's largest in this field. In the same year the Industrial Group was formed by AGA Geotronics, AGA Infrared Systems, AGA Optical, EA Rosengrens, Kemiska AB Candor, AGA Navigation Aids, AGA Spiro, AGA Medical, AGA Kraftelektronik, Thermia-verken, AGA Gasmekanik and AGA Industrifastigheter - all companies whose products had been developed within AGA and which traditionally had close ties with AGA. This new organization was intended to give the companies greater flexibility and better opportunities to cooperate with companies outside the AGA sphere.
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. | The 1980s began with a stock exchange introduction for AB Pharos which had been formed with the Industrial Group as its core. AGA retained 60% of the shares until 1982 when these too were sold. |
This marked the end of an era starting with the very first Dalén-inventions at the beginning of the century and closing with AGA leaving the lighthouse market. In 1980 operations within medical technical apparatus were transferred to Siemens Elema. This product area had been among AGA's key activities since the mid-1930s.
Result of Streamlining
In terms of volume AGA grew faster than the general growth in the majority of gas markets. Gas production increased more than six times over between 1970 and 1980 and AGA became totally self-sufficient in gas. At year-end 1980 Sven Ågrup became Chairman of the Board following the death of Rune Höglund, who had been AGA's chairman since 1967. Marcus Storch, formerly head of the Gas Division, became president in 1981.
In 1980 AGA inaugurated a new air separation plant in Dayton, Ohio, the Group's largest so far. In the U.S., AGA achieved tremendous success with a number of energy saving gas applications for the glass industry. These experiences were later transferred to other companies. Demand for acetylene continued to rise in Latin America while a fall in demand was noted in Western Europe and the U.S. AGA built one of the biggest acetylene factories in the world in Brazil for deliveries to the shipbuilding industry.
Operations in the heating sector were further streamlined when the CTC Group, with its focus on boilers for oil, electricity and solid fuels, oil burners, water heaters and heat exchanges for district heating and industry, was formed in 1980. Following yet another period of low housing starts and considerable uncertainty surrounding future energy policy, the CTC Group was sold in 1984 to Saab-Scania and incorporated into newly formed Saab-Scania Enertech. For AGA this sale marked the final stage of restructuring into exclusively a gas company and a definite retreat from manufacturing industry.
A number of attractive new products were launched in 1981. AGA's Gas Division and Frigoscandia in cooperation introduced new equipment for cryogenic freezing using liquid nitrogen or carbon dioxide in a number of markets. A new effective cutting jet for acetylene, JETEX was also launched successfully. JETEX provides better average quality, fewer production stoppages, and increases cutting speed by 30%. AGA continued to build up advanced resources for product development and to launch new products such as a nitrogen gas cover to protect the wine in Vin&Sprit-centralen's storage tanks, production enhancing carbon dioxide enrichment of the air in greenhouses, plastic bottle manufacture using nitrogen gas, nitrogen gas protection against fire and explosions in different facilities.
Steel and Food Technology
Significant steps were taken in 1982 when AGA's first Swedish carbon dioxide plant went into operation and in 1983 when AGA signed an agreement with The Timken Company in Canton, Ohio. An air separation plant was built adjacent to Timken's new steelworks which were provided with oxygen, nitrogen and argon. This agreement was seen as AGA's genuine acceptance by the tough American market. In 1983 AGA also became established on a broad front in Norway through acquisition of Norgas' gas division, the biggest single transaction thus far in AGA's history. AGA's gas production capacity was now eight times greater than in 1970!
1984 was a record year for Frigoscandia. By the end of the year over half the West's production of packaged, frozen food had been frozen using equipment from Frigoscandia. In the same year AGA-CRYO started manufacturing tanks and tanker vehicles in Brazil to meet growing demand on the Latin American continent.
In autumn 1984 AGA raised its 22% shareholding in AB Tresor and became majority owner in the company whose greatest assets was a significant stake in the Uddeholm Group. Having acquired 96% of the shares in Uddeholm AGA was able to incorporate both Tresor and Uddeholm in the Group in 1985. With Hagfors Järnverk as its main production center, Uddeholm was a world-leading manufacturer of tool steel with three operating areas: tool steel, worldwide specialty steel trading through ASSAB, and electric power production. The acquisition of Uddeholm doubled total assets within two years and made a trebled investment volume possible. Between 1985 and 1989 AGA invested SKr 2 billion in acquisitions and SKr 6 million were invested in the distribution network and in new production facilities. Europe's leading carbon dioxide company, the Rommenhöller Group with large market shares in countries such as West Germany and the Netherlands, was acquired in 1986. This acquisition rapidly provided AGA with access to the European
carbon dioxide market. In the same year Frigoscandia complemented its operations through the acquisition of Stein Associates Inc., the world leader in processing equipment for ready-made food.
AGA also launched a new welding process which utilizes plasma technology for regular steel. Manufacturing industry thus gained access to a faster welding process which provides stronger and more attractive joints and reduces the need for post-processing. A new water treatment technology using carbon dioxide to improve the quality of the water and keep it fresher for longer periods in the pipelines was also ready for commercial use.
Truly Worldwide
In 1986 AGA became the first Nordic company to be listed on the Tokyo Stock Exchange and also became listed on the Swiss exchanges. The share was already listed in Stockholm, Helsinki and London, while in the U.S. trading took place through ADRs. The electronics industry became an increasingly attractive customer category. Manufacture of semiconductors and integrated circuits involves significant gas consumption. To consolidate its market position AGA concluded a technology agreement with Japanese Nippon Sanso, the world's leading electronic gas manufacturer.
AGA freed itself from L'Air Liquide in West Germany and the Benelux countries. The strong position which the cooperation agreement had been designed to achieve had been reached and the company now had the resources to expand further in Central Europe using its own judgment. In 1987 AGA bought the gas company Duffour et Igon and thus gained a significant position in the French market as well. AGA Welding was detached from the AGA Group and transferred to Gas Control Equipment, a recently started company owned jointly with ESAB.
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. | A continued focus was made on electric power which was considered to have favorable future prospects and market conditions similar to those applying to gas operations. |
Following a number of new acquisitions and disposals, these operations were concentrated in Uddeholm Kraft AB and AGA became the sixth largest power supplier in Sweden.
Applications expertise became increasingly advanced. More and more of AGA's new applications for gas were given names and registered as trademarks or patents were taken out to protect them. The development within applications also led to an increased need for new gases. AGA built hydrogen gas plants in a number of countries.
In 1988 AGA decided re-focus on its core business. Uddeholm Tooling and ASSAB were considered to have better development opportunities under a new owner and were sold. What remained was gas, Frigoscandia and the energy operations. The course was still firm. "AGA is and will continue to be one of the world's leading suppliers of industrial and medical gases through its own technology in combination with the processing expertise of its customers." A sales company was established in Italy and a filling station in Aberdeen marked AGA's first step into the United Kingdom and the rapidly expanding offshore industry in Scotland.
Expansion in the new Old Europe
The fall of the iron curtain gave AGA an opportunity to return to several of its old East European markets either by acquiring gas companies or by establishing new ones. First came Hungary and eastern Germany followed by Estonia, Latvia, Lithuania, the Czech Republic, Slovakia, Poland, Russia and Romania. By acquiring 38% of the share capital in ISAGA, AGA also staged a comeback in Iceland.
In 1992 AGA transferred its shareholding in Uddeholms Kraft to listed Gullspångs Kraft in exchange for shares in Gullspång. The company had 200,000 power customers in central Sweden. AGA expanded further in the U.K. by setting up both air gas and acetylene production and Bolivia became a new AGA country through company acquisitions. In 1994 the time was ripe for a stock exchange introduction for Frigoscandia which thus left the AGA Group. In 1996 AGA established gas operations in Romania and ended its involvement in the power industry through the sale of the shares in Gullspångs Kraft.
The strategy from 1970 has borne fruit. AGA is a strong, innovative gas company with a stable financial base. Every day AGA's employees take up the challenge of solving customer problems and constantly finding new applications for gas. And they do this successfully.
AGA's International Expansion
By 1915 AGA already had subsidiaries in seven European countries and in the U.S. and Brazil. The demand for acetylene for lighthouses, lighting and welding which was created during World War I resulted in the formation of subsidiaries for the manufacture and sale of acetylene and acetylene-based products in a further 14 European and Latin American countries by 1928.
1904 Sweden 1908 Norway (sold and repurchased 1984)
1911 Germany (gas company 1914) USA (discontinued)
1913 U.K., France, Russia ·1915 Brazil (gas company 1926), Denmark (gas company 1919)
1916 Netherlands, Hungary, Austria (gas company 1932)
1917 Finland (gas company 1919), Switzerland
1919 Iceland (sold and repurchased 1991)
1920 Argentina, Chile ·1921 Estonia, Mexico
1926 Latvia
1927 Spain, Czechoslovakia
1928 Poland
1929 Yugoslavia
1936 Lithuania
1938 Colombia
1947 Uruguay
1948 Turkey (sold in 1970s), Venezuela
1951 Greece (sold in 1970s), Peru (gas company 1953)
In the 1940s a number of companies were lost as a result of nationalization in Eastern Europe. On its 50th anniversary in 1954, the AGA Group comprised some 80 subsidiaries and their subsidiaries around the world. Including companies which had been added, prospered and phased out the figure was more than 100 companies. The 1980s and '90s brought renewed international expansion for AGA's gas operations including a return to countries the Group had earlier been forced to leave.
1956 Ecuador (gas company 1959)
1977 USA ·1984 Norway (also owned by AGA 1958-1979)
1987 Belgium ·1988 Italy ·1989 United Kingdom (sold in 1999)
1990 Iceland (back in AGA's ownership), Hungary
1991 Estonia, Poland, Czech Republic
1992 Latvia, Lithuania, Slovakia
1993 Russia
1994 Bolivia (sold in 1999)
1995 Dominican Republic
1996 Romania
1996 Puerto Rico
1997 Ukraine
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