Interview with Peter Seligson, Chairman of Antti Ahlström Perilliset Oy.

What are the signs that an industry is in decline? When is it time to divest from underperforming products and holdings? How does one know that such a drastic decision is the correct one?

For family businesses, especially those that have made their fortunes from a particular product or industry, it can be difficult to know when to ask the tough questions about the state of their companies. As generations of the family embed themselves into years of business tradition, it can become increasingly difficult to extract oneself from entrenched mindsets and objectively assess whether the time has come to part ways with what may be a dying industry.

Ahlström is a Finnish company whose origins can be traced back to 1851 when Antti Ahlström started a shipping business in the port city of Pori. Today, it is one of the largest enterprises in Scandinavia and is among the world’s leaders in fiber-based materials, which include nonwovens and specialty papers used in everyday products, such as filters, wipes, flooring, labels, and tapes.

The significance of the Ahlström’s story isn’t just that it boasts a tradition of entrepreneurship and business acumen that stretches back more than 170 years but that throughout its journey from a 19th century shipping company to a 21st century sustainable technology innovator, it has had the foresight to challenge not just its own business performance, but the overall direction of the very industries it was operating in. This foresight has led the company to on multiple occasions to divest from a number of business operations, often in key activities with years of history.

This adherence to cool logic and common sense is easy to see in Peter Seligson, chairman of the Board at Antti Ahlström Perilliset Oy and fifth generation family member. In this interview, Peter Seligson discusses the evolution of the Ahlström business, why family businesses can better avoid “quarterly amnesia”, and the role common sense plays in their business decision-making.

Peter Seligson, courtesy of Ahlström
Peter Seligson, courtesy of Ahlström

How did your own journey with the family business begin?

In the late 1980’s, and early 90’s, I was working with our subsidiaries in the packaging industry. And then in 1999, I joined the main board just at the point when we started to rethink our group structure. In the early 2000’s we create a private equity type holding company called Ahlström Capital.

We’ve always been business developers rather than guardians of the one single business. We continued with that mindset very strongly while we developed our core industrial operations, Ahlström-Munksjo.

I became Chairman in the midst of the financial crisis in 2008. We had made a series of overly-optimistic investments. So, we were actually in bad shape back then. But we knew early on that natural fibres would be the future. And so, we stuck to that vision as we built Ahlström-Munksjo over the last ten years.

FEATURES: Ahlström – The Triumph of Common Sense
Image courtesy of Ahlström

As owners of a paper company, were you acting on what everyone was saying that the time, that we would soon be a paperless society?

We had already sold off all our printing paper business by 1987. Because we knew at that time, that the printing business is a commodities game. we would eventually be commoditised when technology caught up. So, for strategic reasons, we wanted out of the business. We sold all our commodity paper businesses in 87’, and focused on speciality materials. Since then that has been our main business at Ahlström-Munksjo and have developed it globally; today, we have 50% global market share in automotive engine filters.

We have built the papers; we are fifty percent global market share in car oil filters, engine filters. We do coffee pods. We do tea bags. We do all these things that you wouldn’t think of as paper. And the great thing is that most of the products are completely biodegradable – very modern. Plastic has to go. You know, we’re killing our planet. And much of our R&D is focused into replacing plastics. With packaging materials and in a lot of different applications, we have the natural alternative.

Ahlström has faced many industrial revolutions. Is the fourth industrial revolution we are going through different from its predecessors and how does your family business cope?

I’m a contrarian. And I think family businesses to a certain extent can be more contrarian than others. I know that people say everything is changing, and it’s so different. But I’m not so convinced about that. Change is a constant, and it is natural. And actually, at the moment, change is pretty slow.

120 years ago electricity conquered the world in a few years. We went from horse to Cars in New York city in 10 years. Those were fast and radical changes.

And I believe it’s changing slowly because there are so many vested interests that hold back change. Getting back to the plastics discussion, you see how clear it was to us 15 years ago that the planet is drowning in plastics. People and animals are dying every day, from plastics. It’s taken 15 years for other people to realise it, and still, they haven’t fully grasped it. Only now people are starting to talk about it.

Obviously, when you are involved in business, you will always be in flux. Change is in Ahlström’s DNA. We push forward in all our businesses and try to keep up. Not only are we trying to keep up. But we’re trying to keep ahead of the competition.

FEATURES: Ahlström – The Triumph of Common Sense
Image courtesy of Ahlström

You’ve always been diversified, and then you started globalising, becoming internationally active. Can you tell us more about that pivotal moment and how it impacted the culture of the company?

When Antti Ahlstrom started in shipping, his ships went to Thailand in the first ten years of his operation. That was over 160 years ago.

Globalisation in a way is very natural because we have always thought that way and Finland is a very small country.

We have always focused on the things we were good at. This brought us possibilities around the world. In 1961 we bought an Italian mill, making us the first Finnish industrial company to make a foreign acquisition.

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Family ownership has its pros and cons, and one of the maybe sometimes difficulties is the emotional attachment we have to a core business or something that we’ve always done. Do you have a method in Ahlström with which you realise when it’s time to let go of activities?

It’s called common sense. There are a hundred different methods you can use to try to evaluate where you are at. At the end of the day, it’s basic common sense that matters. Do we have the money? Do we have the people? Do we have the competencies to do this? If you don’t, find another way.

Family businesses are different in one important way. They don’t have what I call ‘quarterly amnesia’. I think the short term-ism of today’s world leads to this kind of crazy idea that this time around everything is different, and things are changing more drastically than ever before. If you live three months at a time, the beginning of the next quarter means everything is new again. Everything is fantastic. “I’ve never been here. I’ve never seen this before.” So, it’s kind of natural that corporations get very short-sighted.

Family businesses are in it for the long run. You don’t have to forget your history every quarter. You can leverage on it. I am not saying that the short-term doesn’t matter, or that you shouldn’t pay attention to it. But it is an asset to family businesses that they think about creating more sustainable competitive advantages.

Of course, the negative side to family businesses is a tendency to fall in love with their business. They define themselves through “what they have always done,” and it can trap them. But for us the family business is so much more than that particular mill, or a trade. Every machine eventually will be obsolete, every industry will change. And so must we.

FEATURES: Ahlström – The Triumph of Common Sense
Image courtesy of Ahlström

How do you approach the next generation discussion in Ahlström? Is there a plan for keeping it in the family?

We tend to get back to this discussion every ten years. Last time around, we called it the G20, now we call it the G20-plus because we are more than twenty people around the table. This process keeps us focused and keeps us also, in a way, relevant. We have to sit down together and ask ourselves, “What do we want? Where are we going? Who wants to do what?”

I think we are pretty much aligned in our general outlook. It helps that we have a very tiered process as part of the governance structure that we have today. Business-wise, we have three different layers where we discuss this. I’m Chairman in two of the three layers – our governance holding and Ahlström-Munksjo.

One thing we’ve learned is we always have to keep the balance between long-term and short-term objectives. We realised over twenty years ago that if we want to feed a growing family, we need to focus on the profits now. But our culture will always be about creating long-term, strategic opportunities that provide growth for generations to come.