Atria Group’s main architect: Seppo Paatelainen

As the director of an Ostrobothnian co-operative slaughterhouse, Seppo Paatelainen challenged the traditional co-operative virtues and structures, turning the provincial meat producer into a national market leader. After joining the European Union, Finland did not lose its own meat production as was feared. On the contrary, companies such as Atria Plc, under the direction of Paatelainen, set out to conquer the meat markets in neighbouring countries. Over the years, the production chain had been rationalised to make it competitive.

Seppo Paatelainen grew up on a farm in the municipality of Sumiainen in Central Finland, went to secondary school in a neighbouring municipality and left for the University of Helsinki in 1962 to study agricultural science. He specialised in meat technology and, after a short period as a researcher, took up the post of production manager at co-operative slaughterhouse Etelä-Suomen Osuusteurastamo in 1968. A couple of years later, he transferred to Seinäjoki-based Itikka Co-operative and became its production director. 

In these managerial duties, Paatelainen learned the importance of profit responsibility early on. Mergers were taking place in the meat sector, but at this stage, the changes only affected Itikka by slightly expanding its business area. The company was branching out with plans to acquire a site in Nurmo, beyond the city borders. Meanwhile, Paatelainen was making improvements in sausage-making technology.

When Itikka was looking for a new director in 1987, production director Paatelainen was appointed.

Paatelainen worked hard in his new position and soon contributed to the transformation of the co-operative slaughterhouse business as a whole. First, he challenged the co-operative form of business. In the 1980s, it made obtaining capital for investments difficult. Co-operative slaughterhouses Lounais-Suomen Osuusteurastamo (LSO) and Lihakunta were also planning to register their production operations as private companies, but Itikka was the first to turn this plan into reality. In 1988, it established a limited company, Lihabotnia, and went public. Itikka continued to be responsible for meat procurement.

The next step was the merger of Itikka-Lihabotnia Oy and Lihakunta-Lihapolar in 1990. The managing director of the latter, Paavo Jauhiainen from Kuopio, was also a strong advocate of change. Together, these two men began to pursue the closing down of the central co-operative organisation, Tuottajain Lihakeskuskunta (TLK) [linkki vuoteen 1991: Yhteentörmäys oman keskusliikkeen kanssa]. TLK, which had already acquired a company called Helsingin Kauppiaat (HK), had begun to construct a large meat processing plant in Vantaa. There were suspicions in the provinces that TLK was planning to turn its members into mere suppliers of raw material. After a complex and controversial process, TLK was dismantled in 1991. LSO was given HK-Ruokatehdas, which was about to be completed, and Itikka-Lihapolar Oy inherited the Atria brand. 

Itikka-Lihapolar’s food factory in Nurmo was inaugurated in 1992, in the midst of Finland’s deepest recession and initial preparations for Finland’s EU membership. The destruction of the entire Finnish meat sector seemed on the horizon. Atria, which had operations in several locations, chose a strategy of rigorous reorganisation and concentrated its production in Nurmo.

Paatelainen’s view was that business must not be allowed to stagnate. In 1997, Atria Plc began to look into expanding to neighbouring countries. Sweden’s meat processing industry was in bad shape for the EU, so Atria purchased Swedish capacity and brands. As a consequence, Sweden accounted for almost 40 per cent of Atria’s business in 2002. In Russia and the Baltic countries, Atria was not as successful in Paatelainen’s time, but exports were taken to more than 20 countries. The shipping department in Nurmo was automated and turned into an effective logistics centre in 2000.

Farm owners in Paatelainen’s own province supported him in all situations. His strongest and longest-standing supporter was the chairman of Itikka Co-operative’s and Atria’s boards of directors, Reino Penttilä.

CEO Seppo Paatelainen (b. 1944), MSc (Agriculture and Forestry), retired in 2006. The following year, the president of Finland awarded him the honorary title of ‘vuorineuvos’ (awarded to individuals in recognition of their services in industry). Since his retirement, Paatelainen has served on the governing bodies of several organisations and companies. 

Source: Edited from the original text by Mäkinen, Riitta 2008. The Finnish original is available at http://www.kansallisbiografia.fi/talousvaikuttajat.

Farmers’ trusted man, Atria’s supreme decision-maker: Reino Penttilä

Farmer Reino Penttilä was among those who understood the need to reform the Finnish food industry when it was preparing for the opening up of competition and fighting for its survival in the 1980s and 1990s. The transformation of the sector led to the creation in 1994 of the Finnish meat giant Atria, one of Finland’s best-known food brands. Penttilä was the most senior decision-maker of co-operative slaughterhouse Itikka and its successor Atria Plc in the years 1982–2005.

Nurmo-born Reino Penttilä (b. 1940) was given positions of trust in the organisation of agricultural producers when he was only a young man. He was a forward-looking farmer: in 1966, a 300-head piggery was built at the Penttilä farm, and in 1970, the farm was one of the first to have a broiler chicken house. When Finland joined the European Union in 1995, Penttilä expanded the farm again. He often worked at the piggery early in the morning, then took a train to Helsinki to attend a meeting and was back at the piggery in the evening.

South Ostrobothnian farmers were very devoted to their co-operative Itikka, but the strict territories of the co-operative slaughterhouses made it difficult for Itikka to operate. The central organisation, Tuottajain Lihakeskuskunta (TLK), supervised the member organisations and dictated where they could buy and sell meat. Itikka slaughtered meat but had a limited market – the large consumer centres were located in Southern Finland. Penttilä and the chairman of the board found a new director for Itikka, Seppo Paatelainen. He was more of a businessman than one interested in organisational activity, and he challenged the discipline within the co-operative organisation.

Paatelainen incorporated Itikka’s production into Itikka Lihabotnia Oy and made it public. The co-operative continued to be responsible for meat procurement. In 1988, a limited company and the stock exchange were something new and confusing in the co-operative sector. Itikka’s limited company was the first of its kind among meat co-operatives, the first meat producer to go public and the first listed company in the province. Penttilä, the highest producer representative, accepted the risks and gave his blessing to difficult decisions because the food industry was opening up to competition, export subsidies were being cut and price control was being dismantled. Penttilä and Paatelainen formed Itikka’s two-man team – the doer and the decision-maker. Paatelainen had Penttilä’s trust and Penttilä had the trust of farmers in the region. 

Itikka was put on a collision course with TLK when both of them began to plan a large food factory. Itikka was not interested in contributing to the construction of TLK’s Vantaa plant and becoming a raw material supplier. It announced that a huge EU-era food factory would be completed in Nurmo in 1992. TLK’s walls were cracking as well. In 1990, Itikka-Lihabotnia declared that it would begin to market its products in Southern Finland. The Central Union of Agricultural Producers and Forest Owners (MTK) urged South Ostrobothnians to oppose this, but the regional producers’ organisation supported the co-operative and elected Penttilä as its chairman. He also chaired TLK’s supervisory board, where he tried to prevent the construction of the Vantaa plant.

Itikka Lihabotnia Oy and Kuopio-based Lihapolar Oy, both of which had more meat than they needed, merged almost in secret. Penttilä also began to lead the board of directors of the newly founded Itikka-Lihapolar Oy. Next, the rebellious co-operatives disbanded TLK and simply informed the management of MTK and TLK of their decision in 1990. When TLK, which was established to serve its members, restricted their growth and even competed with them, it had to go. Penttilä had thus contributed to the food industry becoming independent of the back-room politics of the state and organisations, and to moving on to market-based entrepreneurship.

After Finland joined the European Union, prices came down, more expensive products rose in popularity and, surprisingly, Finns began to favour Finnish products. Atria was given the halo of a survivor. In 20 years, the Ostrobothnian co-operative slaughterhouse had grown into the largest meat processor in the Nordic countries and an international group of companies. Penttilä had reassured farmers in tough times, been in the firing line when other companies were attempting to woo South Ostrobothnian producers and justified the investments made in internationalisation instead of producer prices.

Reino Penttilä, chairman and farmer, retired in 2005. He was awarded the Finnish honorary title of ‘maanviljelysneuvos’ (awarded to individuals in recognition of their services to agriculture) in 2000. 

Source: Edited from the original text by Henttinen, Annastiina 2010. The Finnish original is available at http://www.kansallisbiografia.fi/talousvaikuttajat.

Radical reformer of Lihakunta: Paavo Jauhiainen

In the 1950s, a basis was created within Lihakunta for the development of a large Savonian company. A stagnant period followed, during which the co-operative awakened to the future needs for change. The radical reformist spirit needed was missing, but this changed when zealous reformer Paavo Jauhiainen assumed the lead position in 1977.

Up until the mid-1970s, Lihakunta’s growth was based on production investments. However, the management realised as early as the late 1970s that genuine competitiveness was needed in order to succeed. Lihakunta’s competitors included not only strong Finnish players but also foreign companies.

There was a realisation in the 1970s that the company’s development was slowed by the co-operative idea of a basic mission. Previously, it was thought that getting farmers a fair price for meat and, thereby, an opportunity to earn a living was enough for Lihakunta.

It was not enough for Paavo Jauhiainen (b. 1945). He believed making sure that a company was competitive and profitable was the way of the future. Jauhiainen, who had worked as the manager of Lihakunta’s communications and organisational department, was appointed managing director at the age of 32 and began to reform Lihakunta with great vigour.

Jauhiainen set in motion a whirlwind of events within the co-operative. When the dust had settled, Lihakunta had turned into a cutting-edge meat company.

The transformation of the corporate culture started with the training of employees, management and administration. Production was rationalised, but it was also streamlined through heavy investments. In practice, the change meant shifting from the break-even target of co-operative operations to truly pursuing competitiveness and good results. This required knowledge, skills and devotion. Despite his young age, or perhaps because of it, Jauhiainen had all these qualities. In the end, being young was probably more of an advantage than a disadvantage to him. Jauhiainen, a workaholic, began to work 70 hours a week.

The first national mergers took place in the late 1960s. Osuusteurastamo Karjapohjola and Lihakunta merged in 1972. After the merger, Lihakunta’s area of operation at the beginning of Jauhiainen’s term covered about 60 per cent of the country in the east and north. Consequently, Lihakunta controlled the so-called northern dimension.

Although Lihakunta’s productivity grew steadily in the 1980s, it was noticed that this was not enough in Finland. Lihakunta, under the leadership of Jauhiainen, therefore put to use all the tools of the market economy. This decision led to the founding of Lihapolar Oy in 1988.

The next step was the merger of Itikka-Lihabotnia Oy and Lihakunta-Lihapolar in 1990. This had already been planned in the 1980s, but the time had not been ripe then. It was now, and that is how Itikka-Lihapolar Oy, which soon acquired Pohjanmaan Liha Co-operative’s industrial and marketing operations, was formed – in the think tank of Ostrobothnian Seppo Paatelainen and Savonian Paavo Jauhiainen. These two men also contributed to the closing down of the central co-operative organisation, Tuottajain Lihakeskuskunta (TLK). The foundation for the present-day Atria Plc had thus been laid.

When he retired, zealous reformer Jauhiainen said he had a fighter’s soul, a good Samaritan’s heart, a strait-laced Lutheran’s mind and a manic-depressive’s psyche.

“If the post hadn’t been in Savonia, I would have refused,” said Jauhiainen before he was appointed managing director. He promised then that he would stay in Savonia no matter what. And he kept his promise.

Paavo Jauhiainen was born in 1945 and was the youngest of the family’s ten children. He graduated from Kuopio secondary school in 1965 and from the University of Helsinki’s Master of Science in Agriculture programme in 1972.

Meat village in the woods of Nurmo

The majority of the productions that Atria sells in Finland are manufactured in Nurmo, Seinäjoki, in South Ostrobothnia. Nurmo houses the Atria meat village, Finland’s leading meat industry cluster, which is also significant on a Nordic, and even European, scale. 

It is a village of dozens of slaughterhouse, production, warehouse, logistics and administrative buildings that began to grow in the mid-1970s. Today, it offers work for more than 1,500 people and is the largest workplace in the entire region. Over a ten-year period extending to 2007, Atria invested in excess of EUR 500 million in the development and growth of the meat village.

In the early 1960s, Itikka (later Atria) was looking for new premises for its industrial operations. The old premises in the centre of Seinäjoki, in an area called Itikanmäki, became cramped as slaughter volumes increased constantly. As many as thirty municipalities offered suitable plots. The best one was found in Nurmo: 35 hectares – later expanded to 52 hectares – of forest land on hard soil, with room to grow. 

Lithells, for the love of good food

Oskar Lithell was an entrepreneurial man who set up a business in 1907 in a small basement room in Kumla, near Örebro in Sweden. His initial capital totalled 75 Swedish kronor, and the first investment was a manual mincer.

The operations grew fast and the shop moved from the basement to street level within the same building. The name of the shop was ‘Oskar Lithells Kött-, Fläsk- & Charkuteriaffär’ (Oskar Lithell’s Meat, Pork & Cold Cuts Shop). The shop quickly gained loyal customers.

The company soon specialised in sausage-making. The manufacturing of the famous Sibylla sausage began 25 years later and, before long, the company launched the Kumla sausage, a predecessor of the popular barbecue sausage. 

In 1956, the company expanded further and moved to the premises of an old dairy in Sköllersta, also close to Örebro. On the new premises, sausage-making was started on a larger scale, using modern methods, and finally the company grew into Sweden’s largest sausage factory. Today, Lithells continues to operate in Sköllersta.

The next significant development occurred in 1997, when Atria acquired Lithells. Atria continues to cherish Oskar Lithell’s traditions. Both Oskar Lithell and the Lithells owned by Atria share the same passion: a love of good food.

A hundred years of daily and festive meals

Atria’s 100th anniversary gives rise to themes of the future, even institutions: Atria’s Future Seminars, Finnish Barbecuing Championships and the Atria 100 Young Chefs training programme.

In 2003, Atria has been part of the daily and festive meals of Finns for a hundred years. At the company’s 100th anniversary celebration, CEO Seppo Paatelainen says that over the years, the most significant changes at Atria have taken place during Finland’s EU membership. 

“In the future, Atria will continue to seek growth through internationalisation. We will do this alone or with a business partner. I see no obstacles preventing Finnish companies from co-owning enterprises outside Finland. However, as far as I know, there are no such projects in the pipeline,” says Paatelainen.

According to Paatelainen, Atria aims to achieve strong market and operational growth through internationalisation. He also believes that the Finnish processing industry plays a key role from the perspective of producers.           

“Finnish agriculture cannot succeed by producing raw materials for export. Finland is not a country with low manufacturing costs, so we must find strengths other than price. It is hard to imagine that a Finnish food company could succeed globally if it has not been able to build a strong position in its home market.”

Events at Finlandia Hall and VR warehouses

The company celebrates its 100th anniversary by organising a wide range of events for its stakeholders, some of which will live on for years to come and even become independent institutions. 

An example of such an event is the Future Seminar, held for the first time at Finlandia Hall in January 2003, which is organised every year until 2011, a total of nine times. Over the years, the seminar is attended by several ministerial-level guests from Finland and Sweden, policy-makers representing the food sector, decision-makers and specialists from the business sector and professor-level food scientists.

For consumers, Atria sets up the first Finnish Barbecuing Championships in June 2003. People from all over Finland register for the competition. After the qualification rounds, a hundred barbecuers are chosen to take part in the championships held at the VR warehouses in Helsinki. The winner of the first-ever Finnish Barbecuing Championships is Tapu Haro from Helsinki. The family event, which honours cooking and the Finnish barbecue culture, draws a large crowd to the VR warehouses.

The 100 Young Chefs training continues 

The Atria 100 Young Chefs training programme, launched in Atria’s 100th anniversary year, is still going strong in 2015. The programme provides young people with comprehensive and inspirational information that gives them building blocks for developing their careers and skills. Among the key offerings of the training programme, along with networking opportunities, are lectures given by Finnish and international professionals who have succeeded in the food industry.

Trainers invited to the seminars of the programme represent the top of their fields in Finland and internationally. The programme aims to discover young talents who genuinely feel that they have a future in cooking food and creating culinary experiences – young people for whom food is a passion.

The training programme has been headed by the following chefs:

2003 Jyrki Sukula
2004 Aki Wahlman
2005–2009 Jaakko Nuutila
2010–2014 Aki Wahlman

In spring 2005, the Finnish Gastronomic Society awarded the 100 Young Chefs programme a commendation for its efforts to promote Finnish food culture.

From 2003 to 2006, a recipe book entitled ‘Atria 100 Young Chefs’ was compiled at the end of the year containing the best ideas generated during the training programme. The training programme’s 10th anniversary was celebrated in 2012.