True colours: The penguin story
Thailand managing director Gunnar Thoresen on the Jotun brand
There are no penguins in Norway, but there is a reason for use of the aquatic bird as the symbol of Norwegian paint giants Jotun. And while the company has a very visible presence in home paints in Thailand— with its recognizable logo, yellow with a red stripe and blue lettering on a blue background— most of Jotun’s worldwide sales come from more industrial uses, such as protecting ships and coating the concrete and steel of iconic structures such as the Eiffel Tower, Petronas Towers, Marina Bay Sands and Burj Al-Arab. Despite the vagaries of the marketplace and political upheavals in its various production bases, the company has grown to become the ninth biggest paint manufacturer in the world, with $2.6 billion in annual sales in a total market size of $80 billion. In Thailand, billboard and hoarding advertisements and “Penguinized” sections within paints and hardware shops give it a very high profile. Jotun products have coated the interiors and exteriors of the Rajamangala and Buriram stadiums, the government complex in Chaeng g Watthana, , the Ministry of Defence building, g, Kasikorn Bank, Siriraj Hospital and a multitude itude of condominium high-rises, office e complexes, hotels and shopping centres. While many Thais and expatriates are unaware that Jotun is a Norwegian company, among other mainly low-profile Norwegian internationals it is a branding success story. Thailand managing director Gunnar nnar Thoresen sat down with the Review ew to talk about the operations of Jotun, its 45-year presence in Thailand and “the penguin story”. “Jotun started mainly as a marine coating company supplying paints to the whaling fleet in Norway,” Mr Thoresen says. The family-owned company formed in 1926 and has enjoyed steady growth since then, moving early into Asia and emerging markets. While it has operation bases in every continent, most of its focus is in Europe, the Middle East and Asia. “Manufacturing in Thailand started in 1968. It was a very humble beginning, and Jotun’s first manufacturer in Asia. Thailand was not so structured at that time. We had a representative in Thailand that helped us start in Samut Prakan. The facilities are in the same place but the products have changed and the market is very different.” Jotun currently operates in four main segments, Mr Thoresen explains: decorative paints, for household and interior use; protection coatings, for anti- corrosion protection for steel and industrial structures; marine coatings, for ships; and powder coatings, which includes prote protection for mass-produced metal articles as well as applia appliances such as washing machines, refrigerators and air conditioners. co In de decorative paints, where the competition is great greatest, the company controls only 1.5 percent of mark market share, but is growing in powder and protective
coatings, and in the marine segment it enjoys 20 percent of the global market. “As you know this is a family-owned company. There is one minority shareholder but the company is still controlled by the original family. So that means the strategy can be very different from a listed company; it can be very long-term, it can be stable, and it has been for many years.” The success can be partly attributed to a strong presence in Norway, an emphasis on research and development and internationalization. Jotun’s rise as a global brand is due, Mr Thoresen explains, to its local production, with 70 companies in 40 countries. “We try to ‘ localize’ our presence. We try to source as much of the materials locally. In Thailand we use around 60 percent local materials.” That includes hiring local staff – the 500 in Thailand are nearly all Thai – and having a very international managerial mix. “I was in Saudi Arabia for five years from 2005; we had seven different nationalities in the management team,” he says. The Asia regional head is Singaporean and the country heads are a variety of nationalities. “In the old days all the managers were Norwegian, but it’s becoming more and more international.” Internationalization and localization have coincided with growth. The strategy has been to be early players in a market, like establishing early in Thailand. Now Jotun has begun selling and looking for an operations base in Myanmar, although Mr Thoresen admits that it is unlikely to be profitable for the next five or ten years. “In the ’80s we started a lot of factories, like in Egypt, in Saudi Arabia, in Malaysian and Oman, and they took years to take off, and now they’re part of the backbone of the whole company. “All the other paint companies are merging and buying but for Jotun it’s organic growth. So we can be number 9 because the others are merging. A few years ago we used to be number 20. Growth in Norway and Europe is zero. Growth has been steady in the Middle East and in Asia, but in China, the biggest market for Jotun, the new building of ships has nearly stopped. “During the Asian Financial Crisis in ’97- 98 everything collapsed, especially in Thailand. The property market, the construction market, they collapsed totally. And sales along with it. Many international companies at that time withdrew or cancelled investment plans or scaled down.” Jotun, on the other hand, enjoyed a more substantial relationship with local suppliers, employees and companies that was and remains informal but based on respect and core values, Mr Thoresen says. With Scandinavian growth at a standstill and growth in Asia likely to taper off somewhat, future growth is more likely to be steady rather than spectacular. The company’s two legal entities in Thailand, in charge of separate divisions, will merge this year to streamline operations.
“It’s organic growth” he summarizes. “If there’s a crisis in Europe we tackle that and we grow elsewhere. Every year there’s a big crisis somewhere, whether shipping in China or consumer goods in Europe or the Asian financial crisis, but we maintain a good balance.” A key to that balance, he says, is maintaining high ethical standards for how to conduct business. “In Asia it’s a little harder, but that’s why we have the compliance manual, which we adhere to. We’re not in the huge projects where corruption is a big problem.” While it’s a company that deals with chemicals, it also has a strong “green steps” philosophy, Mr Thoresen points out. Jotun was at the forefront of the industry in Europe in banning hazardous materials and phasing out lead-based products. Cutting out a tar ingredient lost the company a lot of business in Thailand, he says. Disposal is strictly regulated, and conditions at suppliers are monitored to make sure that there are no breaches such as child labour or hazardous condition and that company standards are adhered to. Suppliers that don’t comply are banned. “You can’t phase out lead products, for example, unless you have very good research and development facilities to produce alternatives which are environmentally friendly,” he adds. R&D has helped the company be a leader in technical products such as protective coatings for offshore oil and gas platforms. A new product that will come to market soon is a fire-resistant coating that will help protect structures such as high rises, office towers or offshore oil rigs in the event of fire and thus save lives. So how did the penguin come about? The Jotuns are the frozen giants of Norse mythology, foes of Thor, and the first company logos involved Thor’s hammer. This evolved into the potent Nordic symbol of a reindeer, but the company’s associations with the Antarctic whaling fleet eventually had it choose the penguin. In 1970 this logo grew to include the globe to emphasize its international credentials. The penguin, according to company literature, represents core values of loyalty, care, respect and boldness. With 41 factories on six continents, the family- owned company can survive localized hiccups as it continues to emphasize these core values, localized management and reliance on pioneering research and development, to remain a global leader in its field as well as a trailblazer as a corporate brand.
Gunnar Thoresen [Jotun’s] success can be partly attributed to a strong presence in Norway, an emphasis on research and development and internationalization. Jotun’s rise as a global brand is due to its local production, with 70 companies in...