ABU History Book
Prologue
By Bertil Torekull,
Founder of two of Sweden’s most successful business magazines:
It is with delight and fascination mixed with great anger that I have read the book you have just opened.
Delighted to find a non-hypocrite family company owner’s simple confession about an entrepreneur’s torment and happiness, fascinated about a small Swedish manufacturing company’s exhilarating up-and-down ride to global fame and terribly furious over the fact that companies with such creative individuals have been driven out and still are being driven out of Sweden by perverse taxes.
For these reasons this book is first and foremost a piece of unusually thrilling Swedish and American present time- and industrial history. It is also a most enjoyable experience for all the people who love to fish. Here you will learn everything about how a sport fisherman’s hobby to fish for salmon and set simple fish traps was transformed into big business and how his village genius design of some simple casting reels at the end evolved to be the world’s best selling casting reel – the Ambassadeur. It is with over 100 parts a mechanical jewel still manufactured in Sweden in a volume of over one million every year; now under ownership of an American company “Pure Fishing”.
It has been my life’s professional work to try to understand the powers and coincidents that create the wonder called entrepreneurship. As hired entrepreneur in business journalism and founder of two major Swedish business magazines, I have spent 40 years meeting all kinds of entrepreneurs. It might be powerful, big finance, like Wallenberg or stubborn eccentrics like Kamprad, the founder of IKEA, but most of all I have felt very close to the different kind of people living in certain parts of southern Sweden, where people and companies like dandelions in asphalt have managed to root themselves with great enthusiasm and success in spite of negative odds.
In the little town of Svängsta by the great Mörrum River, a typical such company was founded 1921. AB Urfabriken (ABU) was a left-over product from the proud Halda watch-making company created by the technical genius Henning Hammarlund in the 1870’s and famous for fine pocket watches and taximeters. That company went into bankruptcy in the wake of World War I and was broken up. Part of it such as the watch production parts and machinery, was bought by his bright production manager and watchmaker, Carl August Borgström, who also hired his dyslexic but very handy son Göte, the founder of the modern ABU.
In this man’s life, there was a very symbolic moment, which discloses what a true entrepreneur really is. The year was 1939. Göte had taken over the leadership of ABU five years ago, when Carl August, designer of some of the first taximeters in the world, had suddenly died. Under pressure from banks, smart competitors and a hopelessly old-fashioned product like pocket watches, Göte had designed a brand new taximeter in his father’s spirit. Then WW II started - and the market disappeared!
The young entrepreneur with debt over his ears had to choose between trying to save the company and accepting an offer to become local manager for an insurance company. He had worked for this insurance company in his spare time to make ends meet and to help finance the development of his new taximeter.
Göte Borgström decided to sacrifice his future security – in passion for his company. The war killed his dream taximeter but saved him at the same time, as he now made a business of his second great passion – fishing! The fishing reels at this time came basically all from the US, but during the war there were no imports to Sweden. Borgström designed a few rather primitive but working Swedish casting reels and created the foundation of the world success of quality fishing tackle sold under the ABU brand.
It is hard to better explain the difference between an entrepreneur and others; the passion, the stubbornness and courage to create with his own hands and imagination his own world, the adventure to build at the price of his own personal future security; all this mixed with the ability to take advantage of obstacles coming his way. The parallel with the Swedish furniture giant IKEA is sometimes stunning.
Lennart Borgström, in management of ABU for two decades and still though retired, a passionate entrepreneur, has in this book engraved a beautiful memorial over his father’s industrial pioneer deeds. Read it as a manual in company management, it is full of true pictures of the life in the business world – everything from bizarre controversies with the Labor Union to the meetings with the strange brotherhood of fishermen like the King of Sweden, the President of Finland, John Wayne and many other famous people from all over the world.
One simple detail in the ABU strategy: a genuine interest in making their employees fishermen by creating possibilities for the employees and their families to fish both in the Baltic and in the Mörrum River, made these people a fishing R&D department. The experiences from the weekends fishing gave new impulses to new and better products.
The story is also a kind of work of mourning over how destructive Swedish tax laws and clumsy management by different conglomerates pushed one of Sweden’s most interesting companies out of the country. It makes sense to think about this a little.
When Göte Borgström died unexpectedly 1974 at only 70 years old, Lennart owned 56 % of the stock in the company after having bought stock every year from his father at the established tax value. With a personal income tax of 85 % and with the necessity to also buy his sister’s part of the inheritance (she would otherwise be burdened with an unrealistic tax burden), he would have to draw 10 million from the company for every 1.5 million he would have to pay in inheritance tax. Such plundering would probably have killed the company. That is how ABU was sold to the Wallenberg Group company Incentive, and Lennart Borgström himself was in his own eyes transformed into a traitor of both his employees and the community of which ABU was an integrated part. Even today he cannot see how he could have done anything different. Even if he at that time had an astonishing meeting with the then Minister of Finance Gunnar Sträng, who offered him a state loan to pay the tax!!!!
Life in the Wallenberg-owned Incentive, which bought the company, did not offer much security for the company or its employees.
Sten Gustafsson, who was the president of Incentive when ABU was sold, was a very wise man. After him came a new president with no knowledge about consumer goods and no regard for a small company’s family traditions. All the visions, which could have elevated ABU into a world-dominant Swedish company, were swept away. Now was time to make a quick buck, and soon the company was sold again and again to eventually end up in American hands.
The ABU case is only one part of the true puzzle about how a socialistic government with the world’s highest taxes and a marriage to the Labor Unions, in companionship with Big Capital, let the ideology go crazy crushing small growing companies. The same reasons that drove the owner of the most important company in Svängsta to leave Sweden are still pushing hundreds of excellent entrepreneurs out of the country. For similar reasons, the founder of IKEA as well as the owners of Tetra Pak left Sweden. Professors of Economy shall one day, in real numbers tell what these political blunders and taxes based on envy has cost the Swedish nation in terms of lost innovations, employment, visions and development. It will not be pleasant reading!
The fact that ABU today after several miserable experiences at last is again part of a well-managed family company is really not much consolation for my true Swedish heart. ABU was needed in Sweden. It could have been an interesting Swedish company on the stock exchange. The factory is beautifully located right by the Mörrum River in Svängsta. Across the river from the ABU factory is the remains of what was once the proud watch- and taximeter factory and the first Swedish typewriter factory, all originating in the brain of Mr. Hammarlund. Several small often unknown companies now occupy the large factory space as the energy of entrepreneurship is under constant and astonishing development.
It is strange that the Swedish government and parliament in their deeds will not realize that it is this furious power that creates wealth and makes the Welfare State possible. This story about ABU is an alarm clock for everyone who does not yet realize what is at stake.
Bertil Torekull
Author, entrepreneur and founder of business magazines.