As a company, Orkla can look back on a hundred-year history. But the Orkla Grube-Aktiebolag (Orkla Mining Company) that was founded in December 1904 was based on several centuries of activity at the Løkken Works.
Some perspectives on Orkla’s history
by Trond Bergh
Orkla took over and further developed an enterprise that others had established and operated almost without a break since mining at the Løkken field, one of the biggest deposits of chalcopyrite in the world, began in 1654.
Long-lived mine: 333 years
The new company kept it going for another 83 years, until July 1987. Operating over a time-span of 333 years, the mine was one of the most long-lived, important players in Norwegian mining history, alongside the Kongsberg silver mine (1623–1958) and the Røros copper mine (1644–1977).
The winding up of the Løkken Works, which was a process that lasted for several decades, was the starting point for Orkla as we know it today which, in industrial terms, is far removed from the old mining company.
Orkla’s history is an interesting example of a company that has pursued long-term stability and continuity and wanted to stick with what it does best, but has also demonstrated its willingness to break with the past, to reinvent itself and become something quite different.
Continuity and changes
Neither the continuity nor the changes came unaided. While it is true that the deposits at Løkken were extremely large and rich, the technical and logistical challenges were numerous and comprehensive. Moreover, the markets for the mine’s products were highly sensitive to economic cycles and vulnerable to competition.
A long life was not a matter of course for a Norwegian mining company; nor were the changes that followed. In Norwegian and Nordic historical terms, Orkla is one of the few examples of a company that, successfully and in the course of a very few years, has undergone fundamental industrial restructuring.
A new Orkla - after 1980
The “new Orkla”, which was created in a surprisingly short time from the early 1980s onwards, laid the foundations not only for the company’s continued existence but for growth that in size and profitability has few parallels in Norwegian corporate history. It is factors such as these, related to both continuity and change, that make Orkla’s history worth studying.
Change and adaptation to new challenges and operating parameters permeate Orkla’s entire history. The history of the Løkken mine before Orkla’s time was for many years concentrated on extracting copper from the ore. During its most productive period towards the end of the 17th century, the mine produced approximately 2,500 tonnes of copper a year.
Not only mining but also smelting took place in the Løkken area. Gradually, the remaining known deposits contained less copper and in the 1840s the history of the Løkken Copper Works appeared to be drawing to a close.
New activities instead of closing down
Instead of closing down, however, the company managed to reorient its activities towards extracting sulphur from the pyrite. Spurred by rising prices, a sulphur period was introduced to follow the copper period. It was on the basis of this product that the Orkla Grube-Aktiebolag was established in 1904.
The new company’s success was not inevitable. Operations at Løkken had been closed down in 1891, partly due to falling prices, which made the mine uncompetitive. Re-starting operations would require a considerable amount of capital and present technological and logistical challenges.
A railway would have to be built down to the port in Orkanger and a new foundation would have to be laid for more competitive production. The people who had faith in restarting operations and got the whole thing going again were financier Christian Salvesen, who had bought the Løkken mine in the 1890s through his Örkedals Mining Company, and the versatile industrial entrepreneur Christian Thams, who was the driving force behind the actual establishment of the new company.
The Wallenberg family
With the necessary support of Norwegian and foreign interests, the first statutory general meeting was held on 7 December 1904.
There were grounds for a certain amount of optimism because it was highly likely that there would be a strong increase in demand for sulphur, especially from the growing wood processing industry. The new “second industrial revolution” was a fundamental prerequisite for the renaissance that took place in the Norwegian mining industry.
However, the company had serious start-up problems. In 1913, concurrently with the discovery that the deposits were significantly larger than first anticipated, the Wallenbergs, a Swedish family of financiers who had been involved since the beginning, took over control of the company, with Marcus Wallenberg as Chairman of the Board. Only from that time onwards did Orkla become a large, profitable company.
The shift of power in 1913 was the introduction to a long period in which Orkla was a “foreign” company. In terms of ownership, this period lasted until 1977, when the Norwegian DnC bank “brought home” the Wallenberg family’s shares. The family is unlikely to have considered this transaction particularly problematic at the time, and the Norwegians wanted to take over so that they could continue to develop the company.
The foreign shareholders, who had been crucial to the establishment and development of Orkla as a large, important mining company, had become an obstacle. The Wallenberg family’s interest in the company had gradually declined over a fairly long period of time and the Norwegian shareholders had gradually taken over more control from the 1930s onwards.
"Norwegianisation" of Orkla
Among other things, this “Norwegianisation” was reflected in the appointment, in 1938, of Thorry Kiær as Orkla’s first Norwegian Managing Director since the very early years when Christian Thams sat in the MD’s chair. Subsequently, in 1942, Norwegian shipowner Thomas Fearnley Jr., succeeded Marcus Wallenberg as Managing Director.
Orkla’s golden age as a mining company came in the 1930s, when it was one of the country’s biggest industrial enterprises in terms of both turnover and manpower. The 1950s were also a good period, with a high rate of production and sometimes very good profit. This golden age was largely due to strong international demand for sulphur and pyrite. However, Orkla itself had played a decisive role in creating the basis for the company’s competitiveness.
One crucial factor was that in 1931 Orkla had begun to process the pyrite at the smelting works that were built at the port, Thamshavn. This was possible thanks to “the Orkla process”, new smelting technology that had been developed by the company in the 1920s.
The company was able to reap considerable benefit from the in-house metallurgical expertise that it had built up. Particularly in the 1950s, it was clear that Orkla would have experienced considerably greater difficulties if it had merely exported unprocessed pyrite.
Towards the end of the 1950s - uncertainty
Towards the end of the 1950s, when it became obvious that Orkla’s own smelting was no longer competitive, the situation became considerably more uncertain. Although, thanks to good marketing, Orkla did fairly well throughout the 1960s as a pure exporter of pyrite, this was the beginning of the end for Orkla as a mining company.
Downsizing and workforce reductions began. At the same time, Orkla demonstrated considerable determination to find a new basis for continuing operations for as long as there were still exploitable pyrite deposits left at Løkken. As the pyrite market disappeared, in the first half of the 1970s Orkla invested a great deal of time and money in restructuring its mining operations from sulphur to copper and zinc production. This venture was unsuccessful, however. As early as 1975 copper prices fell dramatically, giving rise to serious, market-driven uncertainty about Orkla’s future.
Despite this, by means of rationalisation, a certain amount of new investment and substantial government support, energetic efforts were made to prolong Orkla’s life as a mining company and the Løkken Works as a mining community. Nevertheless, the 1970s marked a turning point. Efforts were initiated to create new jobs in the municipality, and in 1981 Orkla partially broke its ties with Løkken by entering into a 50/50 joint venture with the wholly integrated Finnish mining company Outokumpu for the mining operations.
This provided more freedom to develop the company in new directions.
Orkla as something else - Jens P. Heyerdahl d.y. arrives
The question of how Orkla could continue to operate as something other than a mining company had been put on the agenda by the company management as early as the mid-1970s. People were recruited from outside the organisation to concentrate mainly on new projects and restructuring.
That is how Jens P. Heyerdahl d.y., who was to head the company for more than twenty years, arrived at Orkla. Some steps had been taken already. In the 1960s Orkla had established itself as a manufacturer of ferrosilicon. One possibility was therefore to seek a future as a serious player in the important Norwegian ferro-alloy industry.
However, this ambition was abandoned in the mid-1980s. Around the same time as the mine was closed, Orkla sold its interests in the business (Thamshavn and Bjølvefossen) to Elkem when it proved impossible to achieve the national industrial structure that Orkla believed was necessary for its continued participation.
New, stable sources of income
Its industrial roots had thus been severed, but Orkla had a historical heritage that would prove decisive for the company’s future direction. Since the early 1940s, Orkla had invested some of its profit in a selection of Norwegian listed companies, primarily in the industrial sector. Its main purpose had been to acquire new, more stable sources of income to supplement the unstable mining and metallurgical industry that was so vulnerable to economic cycles.
In the early 1970s, the share portfolio had a market value of almost NOK 350 million, which made Orkla an important financial investor in a Norwegian context. Parallel with efforts to guide the mining business through the crisis and gradually implement a slow, considerate winding up process at the Løkken Works, the first major step was taken to restructure the company and further develop and professionalize the financial investments business.
Portfolio with a long-term perspective
A centre of investment expertise was built up as a separate profit centre. As before, the financial investments business concentrated on a small number of large shareholdings in selected Norwegian companies and the portfolio was managed on the basis of a long-term perspective – “the major swings”. Little trading took place. In the early 1980s, the business was expanded to also include real estate management and financial services.
To a very large extent, it was the financial investments division and the very good results it achieved, despite an especially weak period on the Norwegian stock market, that guaranteed Orkla’s profit in the difficult decade 1975-1985. The division became particularly important when the stock market was strongly revitalized after 1983.
Moreover, it became an important dynamic centre in the company. As a result of the analytical expertise and market insights provided by the financial investments division, the company built up know-how that came to be extremely important for its new industrial orientation.
Financial investments give Orkla freedom to invest in industry
Equally importantly, the financial investments division gave Orkla an extraordinarily solid financial base and considerable freedom of action to pursue its new course. This laid the foundation for Orkla’s diversified dual structure, which in many ways has been the company’s chosen hallmark in recent decades.
The idea of becoming a pure investment company was aired but dismissed. However, new industrial orientation was not an easy task in a period when Norwegian business and industry were experiencing difficulties.
Many sectors and companies were declining and future growth sectors were not easy to identify. Orkla’s initial ventures were not very successful either. Its major investment in the contracting and offshore sector through the acquisition of contractors Høyer Ellefsen and Astrup & Aubert in the early 1980s was unsuccessful as a long-term strategy and ended with Orkla selling out at a good profit and leaving the sector.
Acquisitions in the wood processing and power production sector (the Rinde Group) also represented something new, but were not intended to be the main industrial thrust. At the same time the ferro-alloy business was being sold. Industrially, Orkla still lacked any clear direction or any solid foundations in the mid-1980s.
Durable initiative in 1980s: Media and communications
The only new initiative in the early 1980s that was to prove durable and significant was in the media and communications sector. Initially it was defined as a financial investment in cable television and private TV production, but it soon concentrated on old, traditional media such as magazines (Ernst G. Mortensen) and newspapers, Moss Avis being the first newspaper.
Although these sectors had rich traditions, this was a radical new path for Orkla. Since it represented commercialisation of a sector that was important from a cultural policy point of view, the newspaper venture was also highly controversial. Primarily, however, this new focus showed that at the beginning of the 1980s Orkla intended to free itself from its industrial past in the cyclically vulnerable, natural resource-based processing industry.
Ambition: To become one of the leading companies in Norway
This was the beginning of a change in mentality and expertise. The level of ambition was far from modest; in fact it was almost visionary, despite the uncertain prospects. The company that in the mid 1970s had not been among the 200 biggest industrial companies in Norway had by the early 1980s set its sights on becoming one of the leading companies in the country.
The Borregaard merger - 1986
The breakthrough in realising this ambition came with the merger with Borregaard in 1986, where Orkla had gradually, and in competition with other companies, acquired a stake of more than 40 %. Initially, this was not an obvious nor uncomplicated step. They were two very different companies and the synergy effects of a merger were not immediately apparent.
Borregaard’s wood processing business in Sarpsborg did not seem tempting, but by doubting and analysing itself to a positive view of the merger, Orkla made the big industrial transition that has since defined it as an industrial company. Orkla, or Orkla Borregaard as it was called for a few years, became a branded goods company with focus on consumer products, the Borregaard company Denofa-Lilleborg being a particularly important element in terms of both products and expertise.
Thorough, analytical Orkla thus demonstrated its willingness to seize the opportunities that presented themselves.
In addition to investing in the consumer goods sector, Orkla maintained its link to the processing industry through the chemicals-oriented company Borregaard and its Sarpsborg factories. Orkla thereby ended up with its current tripartite structure comprising branded consumer goods (including media), chemicals and financial investments.
The importance of the merger therefore lay not only in Orkla’s increased size but also in its new industrial structure. Many of the old businesses that did not fit into the new structure were sold. Orkla was not to become a conglomerate but to limit its focus to a small number of areas.
The Nora merger - 1991
The merger created a new platform and Orkla’s ambitions were to continue to grow from this new base. The first major new step was taken in 1991 with another important merger, this time with Nora Industrier, one of the biggest consumer goods companies in the country.
Orkla thereby significantly strengthened its position in the Norwegian consumer goods sector. The merger with Nora was also important as it was the beginning of further internationalisation of the company. The merger gave Orkla sufficient size and financial strength for targeted international expansion after the growth potential in important areas in Norway began to be fully exploited.
Internationalisation - Chemicals business, Volvo, Pripps and Carlsberg
Up this point, Orkla’s branded consumer goods business had been conspicuously limited to the Norwegian market in terms of both production and sales. At about the same time, Orkla also embarked on further internationalisation of its chemicals business.
In the 1990s, Orkla’s internationalisation in the branded consumer goods sector originally had a Nordic horizon. The big step in this area came with two agreements with Volvo, concerning the acquisition of Volvo’s food and beverages operations (Procordia Food, Abba Seafood and Pripps) in 1995 and 1997.
Orkla became by far the biggest manufacturer of a wide range of grocery products in the Nordic area. With the takeover of Pripps, Orkla also gained its first foothold in the consumer goods sector in Eastern Europe, with a 50 % stake in Baltic Beverages Holding (BBH).
The company’s international orientation was further strengthened in 2001 when Orkla and Carlsberg A/S merged their brewery activities in the newly-established company Carlsberg Breweries, in which Orkla had a 40 % stake.
Orkla Media in Poland and Denmark
The media business, which for a short period after the merger with Nora was not defined as a main area of focus, was also strongly internationalised with the acquisition of newspapers in Poland and especially the takeover of Det Berlingske Officin, Denmark’s biggest newspaper group, in 2000.
Apart from this, the company also expanded strongly in Norway by acquiring a number of local and regional newspapers. In the 1990s Orkla became one of the country’s biggest media groups.
Financial investments with excellent earnings
The financial investments division was also further developed and, to a certain extent, internationalised, although not as much as the other areas. Its relative position in the company changed little in the 1990s and its earnings were excellent.
The financial investments division was not to have the fundamental, decisive role it had held until the mid-1980s, when Orkla was having problems on the industrial front, and it appears to have been given less priority recently.
Today, Orkla’s thrust, both national and international, from the mid-1980s onwards appears to have been successful. In some cases, it has been extremely profitable and substantial value has been created.
Reasons for success: The duality of industry and investment
The reasons for this success must naturally be one of the main themes in an account of Orkla’s recent history. One important aspect of Orkla’s success is its dual nature, as both an industrial company and an investment company. 
Among other things, this duality appears to have been very important, in both financial and analytical terms, for the acquisitions and mergers that have been Orkla’s most important means of achieving the growth and size that are necessary for success and profitability.
Orkla - a culture driven company
Another aspect is the historically-based organisational and corporate culture, which has been actively and purposefully developed at Orkla since the mid-1980s and has been linked to concepts and qualities such as expertise, adaptability, patience and a long-term approach.
One of Orkla’s strong points is said to be its ability to achieve efficient operations, throrough planning and follow-up of new acquisitions, expansion with structural refinements, specialisation and competitive market positioning, and continuous product development. The decentralised corporate model and simple form of governance, which replaced the old, strongly centralised management style of the mining company, must also be included in an explanation of Orkla’s success.
The same applies to the influence of individuals and the central management team.
During the later years - unrest despite success
Despite its obvious success, Orkla’s situation and development are not uncontroversial. In recent years, there has been unrest in connection with Orkla’s management, which may be rooted in alternative views of the company’s structure and future development.
In many ways, and Orkla believes this itself, Orkla has “gone against the flow” in Norwegian business life. Orkla has often been and done the opposite of what is usual and expected. This approach can give rise to both admiration and criticism.
Hopefully history can tell whether or not Orkla should continue to follow its own paths as they have now been defined.