Internationalisation will continue to play an important role in the company’s growth strategy in the 2020s as well. Every year, Tepcomp delivers approx. 5,000 shipments to one hundred different customers all over the world. The production plant in Kuressaare (Estonia) was commissioned in 2014 and sales office in Sweden opened in 2017.
Tepcomp’s story constitutes a significant chapter in the history of Finnish electronics industry. Learn more about how Tepcomp has grown over three decades into a leading Finnish electronics contract manufacturer and pioneer in LED business operations development.
It all started at Vajossuontie in Turku
Tepcomp’s history dates back to 1984, when Henry Sahonen and Heikki Mustonen established Turun Elektroniikkapalvelu Oy. They knew each other from Teleste, where Henry was employed as a Materials Supervisor and Heikki as a Quality Supervisor.
Both knew a lot about electronics business and had the courage typical to entrepreneurs to put their ideas into practice. Above all, they both strongly believed that the significance of contract manufacturing of electronics would grow.
The actual business started in 1985. The initial premises consisted of 100 m² of rented accommodation on two floors in Turku, at Vajossuontie 3. In their small workshop, the duo manufactured their first products for Wallac, which to this day has remained a customer of the company.
Henry Sahonen started as the Managing Director of the company. The company gained extra momentum when Lenita Lund was hired to promote the production. The company made its first major investment in a wave soldering machine.
After two years of operation, the company already employed more than ten employees. Tepcomp’s good reputation as an employer is well demonstrated by the fact that by 2020, in addition to Lenita, many of those who joined Tepcomp in the first few years are still working for the company.
Work was almost non-stop
In the early days, we literally took work home with us. There was a lot to do and only few people to do it. Also, many tasks now performed automatically by machines had to be done manually at the time. At the end of the working day, people often filled the boot of their car with electronics components and continued their work at home. Hard work yielded results and our operations progressed with the flow of income.
In 1987, the company became even stronger by hiring Heikki’s wife Ulla Mustonen. She was responsible for managing the expanding business. In 1988, Henry Sahonen left the company and sold his share to the Mustonen family.
Towards the end of the 1980s, the company experienced growing pains, the main problem being insufficient production facilities. Ulla and Heikki vigorously sought to bring some order to the premises filled to the brim with new machinery and people. Eventually, the company commenced construction of its own 500 m2 industrial hall in Oriketo. At the same time, Heikki moved away from the production to focus mostly on the management of the company.
Challenges and big moves
By the dawn of the 1990s, the six-year-old company already had 20 employees and had made something of a name for itself. Tepcomp’s new workshop was commissioned at the very beginning of the decade. Heikki Mustonen was now more convinced than ever that in-house product design would strengthen the foundations of the company and make it stand out in the market.
In 1991, Tepcomp added in-house design services to its portfolio and hired Juha Koivisto as an electronics designer. Thirty years later, he, too, is still working for the company.
Thanks to product development, the company designed and produced more customized products. The company’s name was changed from Turun Elektroniikkapalvelut to Tepcomp Oy, which was easier for customers to remember and more convenient when filling in forms.
In the autumn of that year, the Finnish currency, Markka, had to be devalued, and the next year it was floated. The following years were not easy for Finnish companies. Tepcomp’s new factory building was financed with a foreign currency loan; in practice, the loan was doubled as a result of the devaluation, which turned the business upside down in one fell swoop.
Heikki Mustonen spent the entire year of 1992 and the beginning of the following year travelling around Finland in search of new customers. It was not an easy period for Tepcomp, but the withered business survived because of a wide customer base acquired from different industrial sectors. The crisis proved that a varied customer base is a good remedy against unexpected situations. This lesson and strategy have remained firmly implanted in the minds of Tepcomp’s management to this day.
Even though the economic collapse and the subsequent chaos in the business world may have seemed insurmountable to many, Heikki Mustonen was clever enough to predict the future. During his numerous customer visits, he noticed that there was demand for traditional manual setting. However, due to fierce price competition in Finland, the work could not be undertaken cost-effectively.
Heikki was aiming for increased efficiency in the production chain, and in 1993, production was launched in Russia, in the small village of Wärtsilä, by way of subcontracting. Used production machinery from Finland were transferred to premises rented from a local sawmill. Ulla’s brother Sami Norppa, who was persuaded by Heikki to take up new challenges across the eastern border, was made responsible for the operations in Russia.
Sami moved from Kuopio to Joensuu, from where he visited Russia some 2,000 times over the next eight years. The materials for the products manufactured were transported by road to Joensuu, where Sami loaded them onto a trailer and departed for Russia, returning to Finland with finished products by night.
At first, operating in Russia was not easy, but in two years, we learned the local ways and managed to handle the bureaucracy and paperwork with professional precision. The production in Russia grew very quickly; eventually, out of the 3,000 inhabitants of the small Wärtsilä village, as many as 50 worked for Tepcomp. Local people were appreciative of the company and the economic benefits it brought to the region. In retrospect, the operation in Russia can be described as very dynamic.
Launching of LED operations
Whenever it came to big decisions, Mustonen sported a centralized management style, although he did carefully listen to the opinions of the company’s employees. During his term as the Managing Director, Heikki learned how to make quick decisions and respond to changes with the right moves.
In 1997, there was a major change that dictated a new direction for the company’s operation. Tepcomp commenced the development of LED products, for which Mustonen had high hopes.
The very first LED customer solutions consisted of front and rear lights for bicycles. In addition, Tepcomp initially supplied bus side marker lights, which were largely designed by our own design team. The product design and development unit was a beneficial partner for many customers, since LED technology had little in common with conventional bulbs. That same year, the company employed the first full-time purchasing agent.
In the 1990s, surface mount setting works were largely carried out manually at Tepcomp. In 1998, the industrial hall in Oriketo was sold due to insufficient space. New premises were found at Virusmäentie 65, which had more floor space and better facilities for new machinery.
In the next year, Tepcomp invested into a Mydata pick-and-place machine and a reflow oven. Initially, the machine was operated in two shifts and the entire personnel learned how to use it. In practice, the machine never had a day off.
The 2000s: time for investment
In early 2000s, Finland was overtaken by Internet fever. On either side of the millennium, business evangelists preached about the onset of new economy. Eventually, it led to bursting of the IT bubble, which also had an impact on the electronics industry.
This time, recession did not hit Tepcomp as hard as a decade before. There was substantial series production by volume, but in smaller batches. In case of both economic downturns, the saving grace was that the company was not “married” to the telecommunications cluster. Around the turn of the millennium, at least some customer sector of Tepcomp was always doing well, and so did Tepcomp’s business.
This also showed on the investments side. After all, five years before, Heikki had not put his hopes in LED technology without careful consideration. The share of LED products in total sales increased year by year and the business became profitable in the early 21st century.
In 2001, Tepcomp acquired a HEEB pick-and-place machine for the composition of stand-based LED products and a new wave soldering machine. In the next year, another Mydata pick-and-place machine was acquired; along with an increase in production capacity, it brought extra supply security and flexibility.
Tepcomp’s business had reached a point where it needed to take a step up from being a small company. Introduction of a quality system was a necessary upgrade. Heikki was responsible for the project and produced a major part of the content for our ISO 9000:2000 and ISO14001 compliant quality system.
In 2003, the company’s operation system got certified. In addition to the business plan, the company’s management updated the technological strategy for LED products. In quality control, Tepcomp introduced an optical LED product inspection system developed by the company itself.
Development of the equipment fleet in the 2000s enabled more efficient operation and more advanced product components. For example, the manufacture of circuit boards for bus LED side marker lights was now carried out using the new surface mounting machinery. In Russia, the production continued until the beginning of 2003, but as the customs bureaucracy increased, the company decided to let it go. With our new machinery, we were now able to compete at a sufficiently high level in Finland, and the company was not financially affected by the closure of the Russian production plant.
The LED segment continued to develop, but as regards turnover, contract manufacturing of electronics remained the company’s most significant business long into the 2000s. The share of LED production in the turnover was about 20%.
A lot of LED-related pioneering work was done at Tepcomp, which resulted in numerous prototypes. The company was ahead of its time in LED technology and the markets were not yet fully ready for new solutions. Though the customers were interested, most of them were yet hesitant about incorporating the technology into their products. This was partly due to that in many cases, it would have been necessary to make changes in product design.
Owing to various projects, Heikki had become a real LED ‘guru’ and a sought-after speaker at seminars. Therefore, in 2004, Sami Norppa took over as the Managing Director of the company and Heikki focused fully on LED projects – a clear indication of the strategical emphasis.
Contract manufacturing and LED product sales were separated from each other, and Tepcomp contributed more to technical support. Particularly in LED customer service, it is an important domain.
In 2005, the financial year was aligned with the calendar year. In the same year, the personnel were trained in lead-free manufacturing, which was to apply to all our components. In 2006, Tepcomp acquired a new wave soldering machine and a reflow oven for lead-free production.
In the same year, Heikki and Ulla Mustonen were awarded the Millennium Technology Prize for advancing LED technology – in Finland, there could not have been a worthier recipient. For a new technology, finding its way into products takes time, and LEDs are not an exception.
Tepcomp introduced to the market the very first LED lights equipped with their own lens. Additionally, due to a high level of interest expressed at trade fairs, the company set up an online shop for consumers, specialising in LED lights. However, the majority of LED production was taken up by customer products and projects, such as lighting for bridges and buildings. In 2006, Tepcomp was approved as a member of the ’LED Light for You’ network.
In the same year, Tepcomp acquired its first AOI (Automatic Optical Inspector) unit. At that time, the company employed 35 employees, plus a lot of agency workers.
In 2007, investments were once again made in new machinery. The conventional lead-based wave soldering line was replaced, and the setting capacity of stand-based LED products was increased by the acquisition of a Mydata pick-and-place machine. The following year, a new Mydata surface mounting line was commissioned and the reflow oven of the older Mydata surface mounting line was renewed. The year 2008 was extremely busy and business was booming, even though an economic downturn was prevalent at the time.
New strength for new growth
Towards the end of the decade, Heikki and Ulla Mustonen started playing with the thought of retirement and the sale of their company. Entrepreneurship had given them a lot, but had also taken its toll. The entrepreneurial couple was looking to bring in new blood for the company’s next phase of growth.
In 2010, Tepcomp’s ownership changed through trade sale and Pekka Leppälä became the new owner. Several buyer candidates had expressed their interest in Tepcomp, and so Heikki gave the transaction a lot of thought. He wanted the Tepcomp story to continue in good hands and to ensure commitment to business development in the future as well. Heikki met Pekka Leppälä several times and became convinced that he was the best choice for the new owner.
Pekka has almost ten years of international experience in selling paper machines in different corners of the world. He enjoyed a long career with Valmet; among other tasks, he was responsible for running their sales office in Italy for three years.
After Valmet, Pekka became the Marketing and Communications Director at Finpro, where he was tasked with helping Finnish companies to establish themselves globally. In addition, Pekka has served as the Managing Director and Partner at Entre Marketing. His technical background and solid experience in business management and international trade contributed positively to closing of the trade sale.
Pekka Leppälä took over as the Managing Director and Chairman of the Board on 7 April 2010. To ensure fluency of the transition period, Pekka employed Ulla for two months and Heikki for six months. In practice, Heikki and Pekka spent six months face-to-face in one room, during which time priceless knowledge capital was exchanged.
After the former owners left the company, the organisation was restructured and extra personnel hired. During the 2010s, the company’s design and development unit was strengthened, roles of employees clarified and investments made in the machine fleet.
In 2011, the company moved to new, larger premises at Kaurakatu 46, which used to belong to Teleste. Thus, Tepcomp’s spiritual journey continues in the same premises where the company once started nearly 30 years ago.
Under Leppälä’s helm, Tepcomp’s internationalisation gained momentum. In 2013, Tepcomp founded a subsidiary in Estonia, and in 2014, the company started production in Kuressaare, Saaremaa (Estonia). The level of operations in Estonia has always been upgraded to match that of the Turku plant, and in early 2019, the subsidiary moved to new renovated premises.
A sales office in Sweden was opened in 2017; as at the beginning of the 2020s, Tepcomp had about 135 employees.
Over 35 years, Tepcomp Group has developed into a respected company pursuing continued growth together with our customers. Tepcomp will continue to invest in the right people, technology, and expertise.
Tepcomp’s fine story will continue in the 2020s.