ArticleNov 10, 2007
Strategy strengthens global stance
Although the world market for lighters is becoming increasingly competitive,
Swedish Match is maintaining a stable level of profitability in the product
category. Production efficiency, close cooperation with important subsuppliers
and an emphasis on quality, in addition to product development
and innovative marketing, are some of the reasons behind the Group's
ability to defend its position as a major player in the lighter market.
Swedish Match's strategy in the lighters
product category has produced results. The
number of lighters sold is on the rise and
profitability has been stable in recent years.
"Considering the increased competition,
primarily from large manufacturers in Asian
countries such as China, the profitability of
lighters was favorable during 2006," says
Lennart Carlsson, Vice President Lights
Operations for Swedish Match. "I believe the
situation will remain stable in the foreseeable
future, despite the competitive
environment."
Carlsson also explains
that lighters are an
important product for
the Swedish Match
sales teams around the
world. Lighters are
sold in large volumes to
businesses and, together
with matches, form a
solid foundation to support sales of Swedish
Match's other products.
"Our strategy is to produce high-quality
lighters, to be innovative in design and
marketing, and to constantly strive to
increase efficiency in our production units,"
he explains.
New legislation in the EU
Swedish Match's competitive advantages when
it comes to quality are that its lighters are ISO
certified and have a heat-resistant nylon casing
and a fixed flame, among other features. They
are also child resistant, meaning they are
equipped with a mechanism that makes them
difficult for children to operate, in accordance
with the requirements put into effect in the
EU this year. In the US, Canada, Australia and
New Zealand, child resistant mechanisms have
been mandatory for more than 10 years.
"It is too early to see the effects that the
legislation on child resistant lighters will have
in the EU, but we believe that it will prove to
be an advantage for Swedish Match. Because
we have been active in the American lighter
market for quite a long time, we have solid
experience of manufacturing child resistant
lighters. As a preparation for the introduction in Europe, we have developed a new solution
that is very user-friendly. We believe that we
have the best child resistant solution and a
number of Asian manufacturers will probably
not be able to meet the demands."
Production around the world
Lighters are manufactured in Swedish
Match's production units in Assen in the
Netherlands, Manila in the Philippines and
Manaus in Brazil. For all units, the goal is to
increase the number of lighters
produced per employee.
In the Netherlands,
Swedish Match has
long worked to increase
efficiency through "lean
manufacturing," a project
that, according to Lennart
Carlsson, has led to
improved productivity
and better control over
such matters as tied-up capital.
In the Philippines, preparations are under
way to move the manufacturing of lighters
from one area of central Manila to a modern
industrial park outside Manila, which will
lead to improved cost effectiveness, among
other results. One advantage of production
in the Philippines is the proximity to subsuppliers
of components that are primarily
located in Asia.
"We were forced to move within Manila
because the authorities will no longer allow
industrial manufacturing in the area in which
the old production unit is located. But this
suited us just fine since we were already
beginning to outgrow the premises. Now we
get the opportunity to further improve the
production flow at the same time. It will be
a modern production unit, prepared for the
future," Carlsson explains.
Bright future
"As mentioned, the competition is getting
tougher, but our profitability is strong at the
moment. Despite rising raw material prices,
which affect all manufacturers of lighters, our
plants have succeeded in reducing production
costs in recent years. We have strengthened our competitive ability, expect further volume
increases and will continue working to improve
productivity. As of the beginning of next year,
we will also have a modern, cost-effective plant
in Manila. We are also continuing our work on
product development. An exciting area that
we are looking at right now is how to apply
our unique technology for lighters to other
products in the future. The future looks bright
for Swedish Match's lighter operations, but
it will take continuous hard work to further
strengthen our position in the world market."