FIFTIES
Honkarakenne Oyj is the company behind the Honka brand. Company was founded during the fifties. This was the time when Finland was being rebuilt in the aftermath of the WWII. Name of the game was speed and new technologies and materials. To stay with the competition, Honkarakenne took hand hewing and started to turn it into an industrial process.

SIXTIES
Industrialization and use of heavy machinery in the production of round logs cemented Honkarakenne’s position as one of the market leaders in Finland. Industrial manufacturing in turn helped Honkarakenne Oyj to increase productivity and that lead into sales expansion towards export markets. After all, Finland is a small market and wouldn’t suffice as a sole market area, thus next big areas of development were marketing, sales and exports.

SEVENTIES
Sales started to pick up and volumes grew rapidly. Increasing home market saturation and also Finnish mark (currency) devaluations were reasons for internationalization. Japan is the first big foreign market.

EIGHTIES
Stock market listing brings cash for the company to really kick-start international operations. Honkarakenne solidifies their status as a leading log home manufacturer and garners strength for future growth.

NINETIES
This decade sees Honkarakenne to complete their internationalization process. Honka brand is now known on all three main markets in Asia, Europe and North America. Subsidiaries are in charge of local business operations.

Honkarakenne expands outside their traditional business area and starts a subsidiary named Honka Holiday that operates cottage-renting business. Company is looking new markets to increase sales.

YEAR 2003
Honkarakenne agreed to build the world’s biggest log home to Russia’s Sochi. House was to cover 4500 square meters and would have swimming pool, several saunas, restaurants and other luxury amenities. This one log building was just a part of bigger project totaling 20 log house cottages.

Year 2003 was otherwise very challenging for Honkarakenne, as they started to rationalize their operations. They had too many manufacturing locations to be truly efficient and downsized as well as closed down their sawing operations.

Cottage renting business, which had been part of the company since 1996, was separated and it started to operate under the name of Honka Holiday – yet another attempt to streamline organization.

YEAR 2004
This year saw one life-changing decision from Honkarakenne. They introduced Aitokoti brand, a line of log homes, which were designed to fit suburban areas. Vacation home building has seen its better growth days domestically and now growth would be in the area of normal home building. This approach worked and is working well in Finland, which might be the reason, why Honkarakenne tested similar features in Germany.

Year 2005
Year was catastrophically dire for Honkarakenne because their sales plummeted in Germany and slowed in Japan. Traditionally these areas have been very strong for Honkarakenne. Moreover their recent investments on Alajärvi and Karstula factories have taken toll on company’s finances and while slowing sales mean less manufactured log homes – modernized factories have not been utilized to the fullest. Technology investments have also included information and process technologies to optimize production and logistics. place at different locations.

Problems in Germany can be pinpointed to the fact that company walked over their sales network and introduced new concept of selling housing packages. This move was aimed to higher visibility and ease of operation and increasing profit margins. In practice Honkarakenne was trying to turn into homebuilder instead of vacation homebuilder. However, German customers are used to unique and personal housing solutions and resulted mess dwindled sales. Now operations have been returned back to previous and sales have picked up. Year 2006 should therefore be much better.

Year 2006
This year has seen interesting developments at Honkarakenne. They have joint-operation with Finwood to manufacture lightwood storage cabins and other light structures. On the other end of spectrum they invested on TimberHeart and that increases their factory utilization plus they will have a shot for new inroads to get design-oriented customers.

In the United States, Honkarakenne decided to switch gears and instead of their subsidiary leading marketing and sales, they now trust in six independent importers to open the market.

21.07.2006 Honkarakenne issued a profit warning. Turnover isn’t developing as estimated and therefore profit is also going to be lower than expected. However, result is going to be better than year 2005 and because third and fourth quarters are the strongest quarters, they still might reach the goal for this year.

TODAY
Today, Honkarakenne has over 150 distributors, agents and dealers worldwide. Two thirds of the production is exported, and Honkarakenne happens to be the only log home and log cabin manufacturer that operates locally on all three main markets – Asia, Europe and North America.

Honka product lines include pre-designed but customer modified buildings and also totally custom-designed log structures. Company has introduced designer models to attract new customer segments.

Company has been trying to develop project building expertise by taking part into new construction projects with builders and investors. Holiday centers, spa accommodation, hotel lodging or vacation areas. These sorts of projects don’t have stellar profit margins but they do generate lots of turn over so they can be very lucrative for big industrial player. Here they have an advantage because not to many construction companies have such material expertise.

More about Honkarakenne Oyj at their website.

SOURCES FOR THE ARTICLE:
Financial statements
http://helecon3.hse.fi/FI/yrityspalvelin/pdf/2002/Ehonkarakenne2002.pdf
http://helecon3.hse.fi/FI/yrityspalvelin/pdf/2003/Ehonkarakenne2003.pdf

NAN financial statements from 1988 to 1999
http://www.nan.shh.fi/corp/Honkarakenne/index.html

Cooperation with communes, construction companies, builders, investors, developers
http://www.kaupunkiuutiset.com/artikkelit/arkisto/artikkeli.php?artikkeli_id=972
http://www.teijo.fi/lomarakentaminen/honkarakenneoy/
http://www.laatumaa.com/page.asp?Section=10&Item=496
http://english.forestindustries.fi/index.html
http://www.maastorakentajat.com/index.php?id=24
http://www.aitokoti.fi/
http://www.kerimaa.net/cottages.php

Process development
http://www.anilinker.com/anilinker/references/cases/honkarakenne.xhtml

Biggest log home
http://newsfromrussia.com/main/2003/10/15/50517.html

News
http://www.arvopaperi.fi/article/id=18695
http://www.yritysopas.com/uutiset/2003-07-02-Honkarakenne-irtisanoo/

Articles
http://www.yrittajat.fi/sy/home.nsf/www/yrittamisenjuhlaa1986_1990/$file/honkarakenne_oy.pdf
http://www.comfortloghouses.com/Honka%20brochere/Born+in+Finland+20060629.pdf

Log homes from Finland is the new category. In this new segment I am going to focus on Finnish log home manufacturers. Finnish companies can provide amazing value for your money. The reason for this is the Finnish mentality – everything should be simple and efficient. Think of a Nokia mobile phone or Finnish design, not too many excess lines there, eh?

One by one I’ll introduce you every single Finnish log home and log cabin manufacturer. There are over 200 such companies here in Finland, so you guys will be entertained or infotained for quite some time. Granted, most of these companies are tiny and probably refuse to export, even we all sign a petition.

Sometimes I do wonder this industry. It seems that our industry exists just because of a freak accident. I am talking about log home industry from Finnish point of view.

LOCATION, LOCATION, LOCATION
Our country is relatively large when compared to population. This means that we have lots and lots of forests. Finland’s location on northern hemisphere gives us lots of pine and fir tree forests. Accidentally these trees, especially pines, make excellent log cabin home raw material. Hence we have abundant supply of log home building material.

FURTHER HISTORY
This is the basic setting. From historic point of view, log homes and log cabins were very popular in Finland until rebuilding efforts after the Second World War. We had to move masses of people away from Carelia, an area taken by Soviet Union (nowadays Russia). To accommodate so many people, in such a sort time was hectic operation. Problems arose from these people having no land, and therefore they had no access on timber. Logs are difficult to transport over distances, unlike saw-processed timber. This resulted into increasing timber frame building.

CLOSER HISTORY
Another historic milestone was the demographic change and urbanization of Finland. People moved to cities from countryside and single-home houses turned into apartment blocks, no timber used at all. Log home building nearly vanished but there was a savior in form of recreational log cabin building.

WAY OF LIFE
You might have heard Finland to be referred as a country of thousands of lakes. All those urbanized people wanted to have a summer cottage by lake. Log cabins came to rescue. Log structure is very solid and can withstand dry, cold and unused winters as well as humid, hot and active summers. Logs also played an important role in bringing some nostalgic atmosphere for this idyllic log home living. Making log cabins provided jobs to countryside, lumber was acquired and cabins built locally. Soon Finland was full of tiny father and son operated log cabin companies. Some of these companies managed to grow.

INDUSTRIAL DEVELOPMENT
Markets in Finland are tiny and soon biggest log cabin rush was over. Some companies had managed to build their operations to industrial level so that machinery was largely used in milling the logs instead of handcrafting. These companies worked hard to build nationwide brands and many of them managed to do this. Among these companies we got our first log home and log cabin exporters. Today Finland boasts with the world’s biggest industrial log home manufacturer Honka and several others that are somewhat smaller.

EXPORTS
Exports of Finnish log homes started with nearby area deliveries – Sweden and rest of the Scandinavia, Russia and Germany. These areas still form bulk of Finnish log cabin and log home exports. True jackpot came from Japanese markets. Finnish log home companies have been able to sell cabins to Japan by thousands. Apparently there is something in Finnish log cabin design that pleases Japanese aesthetics. The look of Finnish log cabin as well as log home is very clean and streamlined, there is something very “Scandinavian design�? in them. One reason for this is that once our log home companies had filled the original market demand for rustic log cabin homes, they had to expand their product slate and offer log homes that fit into suburban setting.

FUTURE
Finnish log homes have not had much success on American soil, because of the lack of rustic feeling. Honka has been trying to educate U.S. homebuyers, but with relatively modest results. More and more Finnish companies are adapting to foreign markets, because tough domestic competition has improved their quality and design. I believe that in the future, Finland will have couple of log home industry giants.