Newsletter August 2022

The first half of 2022 is now behind us. Once again it was full of surprises! Just as COVID-19 began to ease and the Western world opened up, war broke out in Ukraine. It hit Europe’s energy and raw materials markets hard and fast. As a result of the war, the availability of raw materials was substantially reduced and prices instantly rose to a whole new level. At the same time, it became even more difficult to predict future developments. After the initial confusion, the situation has levelled off somewhat, but the coming autumn and winter are full of threats. The biggest threat is of course energy sufficiency and its price. It is not possible to make major changes in energy production and supply before winter sets in, so the only option may be some form of energy rationing. This would have a significant impact on the economy as a whole.

So far, however, our industry has managed reasonably well despite the difficulties. Order books are long and manufacturing volumes have been good despite shortages of raw materials and components. Unfortunately, profitability has suffered to some extent because not all the increased costs have been passed on up the chain. The reason for this has been either long contracts or a long order backlog. The situation for Jame-Shaft is identical, costs have risen faster than they have been passed on to our sales prices. However, thanks to good volumes and recent investments, our productivity has remained at a reasonable level, partly offsetting ever-increasing external costs. Much of the credit for this goes to the significantly increased unmanned use of machines, which already accounts for more than a quarter of the working hours.

In the last financial year (1.7.2021-30.6.2022), our turnover increased by about 40%, exceeding EUR 28 million. This was well above our original budget, which had to be revised upwards twice. Of course, such a large increase did not come without problems, and we apologise for any delivery delays along the way. Despite the good volume, our profitability turned to a slight decrease as costs rose quickly, but the result for the entire financial year was still reasonable. The number of personnel also increased significantly, ending up at around 120 people. At the moment, the situation in terms of orders and capacity is balanced and the autumn can start with a tolerably small backlog. It can also be concluded that it is currently due to the lack of raw materials or their arrival significantly late. Because of this, we have to constantly look for and test alternative procurement channels.

The outlook for the coming autumn is exceptionally difficult to predict. According to the worst-case scenarios, we are already on the verge of a recession. On the other hand, it is predicted that demand in the machinery industry will continue to be good and remain at the current level. Our customers’ forecasts are even better than this and predict that the growth will continue. On this basis, our budget is also slightly increasing, forecasting a turnover of around €30 million. If situations change, please keep us informed so that we can take the right measures regarding capacity.

Despite the uncertainty, our faith in the future is strong. This is evidenced by the continuation of investments without interruption. During this year, we have invested especially in our special expertise, i.e. heat treatment. During this year we have made investments in our entire heat treatment services. The first new induction hardening machine, equipped with a robot for unmanned operation was introduced in the spring. The old machine will be used mainly for small series in the future. The next step was the new nitriding furnace, which was installed in working order during the summer. This third furnace is identical to the nitriding furnace purchased a few years ago. The last one is the new carburizing tempering furnace, which will arrive at the first quarter of 2023. This fourth furnace of ours will be installed in the place reserved for it in advance in our carburizing line. All these purchases represent state-of-the-art technology and have been selected with particular emphasis on the most efficient use of energy in the process and other environmental factors, not forgetting, of course, efficiency and quality performance. The waste heat from the furnaces is used to heat the property. This new equipment will add significantly to our heat treatment capacity and provide a buffer against potential disruptions. In addition, the latest technology and improved process control ensure better and more consistent quality and a trouble-free automated operation.

In addition to production investments, other development activities and investments will continue. New tools have been developed for production control and fine-tuning to improve work queue management and incident reporting. In addition, 16 charging points for electric cars have been built in our yard during the summer, which are available to our guests and staff. If you are visiting us and your car needs charging, you can ask your host for the necessary identification key.

An important component in the successful capacity increase has been the recruitment of personnel. We have succeeded quite well in this, and in addition, the turnover of new personnel has also been low – so they have enjoyed their new job even though many had no previous experience in the metal industry. Thanks to active training, new staff have developed rapidly and have become skilled members of the JAME team. We have increased the visibility and interest in our company as an employer with the help of various magazine articles, school visits and even an outdoor billboard. Our latest event was the Metal from Salo event at the Salo evening market. Popeda ( well-known Finnish band ) attracted 17,000 visitors to Salo market square, so not everyone could fit on our stand! It should also be mentioned that we had more than 20 summer employees working during the summer, most of them either studying the field or intending to do so.

A particular concern and uncertainty for the future is the availability of raw materials. The rise in prices now seems to have abated, at least temporarily, and over the summer the price level has remained fairly stable. The price levels and availability of raw materials in autumn and winter are most affected by the availability and price of energy. However, there is no firm forecast to rely on. We have to be ready for all kinds of options. Thanks to our good supplier relationships and longer contracts, we are in a slightly better position than smaller machine shops, but nothing is certain. There is no sign of a rapid turnaround, although it is a fairly common assumption that the situation should start to stabilise next year.

Let’s hope that the positive developments in our sector continue. By working together and reacting quickly to changing situations, we will overcome the challenges ahead as winners. I hope we can also meet in person as soon as possible. We are particularly keen to showcase our factory, and sadly very few of you have been able to visit our factory in the last two and a half years due to COVID restrictions. During this time our factory has evolved and changed tremendously, welcome to see for yourself the progress we have made.

We wish all our customers a successful and fruitful autumn 2022!

Best regards,

Mika Tuunainen
Managing Director
Jameshaft Oy

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