AQ Group – 25 years of profitable growth
In October 1994, Swedish entrepreneurs Per-Olof Andersson and Claes Mellgren created AQ Group. 25 years later, turnover is above 500 MUSD and the company has delivered 100 consecutive quarters of profit. The journey started with Per-Olof taking over an injection molding business in Västerås, Sweden and Claes was offered a similar opportunity, taking over a transformer plant in Enköping. Together, they merged the two companies into a joint group to become stronger than if each had worked individually.
The first years were challenging, the general business cycle was down, and a lot of effort went into cost cutting, finding new business and negotiating with customers. Early on, there was a need to find manufacturing capacity in lower cost countries. An important step for AQ was the acquisition of a transformer factory in Godech, Bulgaria in 1996.
It also meant hard work from AQ employees both in Sweden and Bulgaria. AQ was early into Bulgaria and it was not without risk. “This is one of the things that makes me most proud”, says Claes Mellgren – “To see the fantastic development that can be achieved by people locally in a factory if you give them trust and the right toolbox, is very rewarding”. This pattern has been repeated in most of the 41 manufacturing units that AQ now is operating around the world
Next step was electrical cabinets. AQ acquired automation board panel builders in Lund, Surahammar, Uppsala and Örnsköldsvik , in addition to another Bulgarian company in Radomir. There is still a strong local Swedish presence in this field providing customer support and winning new business. At the same time, we run high volume serial production in Bulgaria, China and India. “AQ is one of the few international panel builders that can follow their international OEM customers into North America, Europe, China and India. We also have the capability to make custom built, high-spec sheet metal enclosures close to the panel assembly”, says Anders Carlsson CEO of AQ Group.
AQ entered into sheet metal fabrication between 2004 and 201 by acquiring companies that had ended up in financial difficulties in Valdemarsvik, Vaggeryd, Anderstorp, Pålsboda, Eskilstuna and Lyrestad. Early on, AQ invested in additional sheet metal and welding capacity in Pärnu, Estonia. One of these acquisitions also gave an entry ticket to China, as the company from Anderstorp had a sister company in Suzhou. “Most sheet metal acquisitions started to make money at an early stage after takeover”, says Per-Olof Andersson. The last years have seen additional sheet metal acquisitions in Sollefteå, Mjällom, Västerås, Nivala, Jüri and Viimsi where AQ has acquired more stable and profitable companies.
AQ Group has a history of both organic growth and acquisitions. These two ways of growing the business are interlinked. “You need both to win new customers in existing factories and then open up for new markets and customers from acquisitions” says Anders Carlsson. One of the few greenfield investments AQ has made is the plant in India where we followed a couple of our main customers into the Indian market.
A little less than 10 years ago, Per-Olof and Claes sat down together with the management team and tried to document what had been the success factors in AQ Group. The outcome was the AQ Core Values, a set of business principles designed to guide management and employees in each AQ company in their daily work. The Core Values are customer focus, simplicity, entrepreneurial business, cost efficiency and courage and respect. “Every company in the world claims they are customer focused” says Anders Carlsson. “The moment of truth if you really are customer focused comes every day in every action you do, by every employee when you deliver and interact with your customer. It is very easy for companies to be preoccupied with internal activities that takes time away from the customer.
As with all companies there are also occasional setbacks. AQ has seen declines in the business of our customers and in some of these cases this has led to the unfortunate need to close a factory. In most other cases, AQ is proud that it has managed to successfully find new business. There is also one acquisition where AQ worked for nine years to turnaround and improve a company but then had to give up. In this case there has been a lot of learning in order to make sure it doesn’t happen again.
AQ means Aros Quality. Aros is an old name for Västerås and Quality is at the heart of the business concept. “AQ loves demanding customers and we will deliver total quality to these demanding customers. Total quality means on-time-delivery and quality together with the attitude and willingness to improve. “If AQ succeeds in delivering total quality to our customers we have a chance to stay with them long-term and be a reliable supplier that contributes to their success”, says Anders Carlsson.
Another key strategic move for AQ Group was a major step into Wiring harness business in 2010, 2012 and 2016. AQ acquired two Swedish and one Norwegian company with manufacturing presence in Lithuania, Mexico and Poland. The same model was again applied. AQ believed in the local talent in the plants and the decentralized management based on core values. AQ is a now a leader in wiring harnesses for commercial vehicles. In 2018, AQ also followed one of its main wiring customers into North America, acquiring a wiring harness manufacturer present in both Canada and USA.
A good example of entrepreneurship is AQ's System Products business. AQ has moved up the value chain and gone from making simpler components to building automation cabinets and ultimately building entire machines for its customers in places like Uppsala, Falköping, Gävle and Radomir.
AQ Group started in 1994 with injection molding and inductive components. “We are pleased to see that we still are active and develop these original business areas”, says Claes Mellgren. In 2015 AQ Group acquired a technically strong injection molding and machining company in Hungary and in 2019 AQ Group acquired Trafotek complementing AQ very well in inductive components. AQ is thus well exposed to the ongoing electrification in the world in both this and other business areas.
AQ Group started small in 1994 and has for 25 years developed into an international 500 MUSD Group with profit over 100 quarters. “We know that the AQ core values and the way we operate is a well working model. We will continue to grow both organically and from acquisitions, by being a “Reliable” supplier to our demanding customers”. says Anders Carlsson.
There will also be a lot happening in sustainability. AQ will continue to work with sustainability both internally within the Group and by contributing to the sustainable solutions that our customers develop and deliver. With this, AQ Group looks forward to another 100 quarters of profitable growth in a more sustainable world.