INTRODUCTION METALS AND ENGINEERING INDUSTRY SHOK: FIMECC LTD.

Transcription

1 Annual report 2010

2 ANNUAL REPORT (26) INTRODUCTION This annual report summarizes 2010, the third operational year of FIMECC Ltd. FIMECC Finnish Metals and Engineering Competence Cluster Ltd. is not a listed company and the form of annual report primarily supports the documentation of primary research and innovation activities. Economic analysis is not in focus because the objectives of FIMECC Ltd. are in long-term change of companyuniversity cooperation, knowledge creation, and innovation system rather than in financial perspective. METALS AND ENGINEERING INDUSTRY SHOK: FIMECC LTD. In metal product and mechanical engineering area, the Finnish strategic centre for science, technology and innovation (SHOK) is FIMECC Ltd. FIMECC activities can be positioned by utilizing the traditional Matthews curve that describes the risk level and monetary funding. Traditionally, companies input increases while the market orientation increases. FIMECC activities are positioned between pure academic research and new product development (NPD) oriented applied research. The project portfolio of FIMECC consists of several projects, some of them being more application oriented than others. On average, the portfolio will be Gaussian distributed in the Future so that strategic long-term research projects form the majority. FIMECC is a way to carry out mid- and especially long-term strategically focused pre-competitive research by setting goals and managing research actively. FIMECC does not operate in the area of companies NPD projects. The most important FIMECC activities can be described as strategic platform research, in which the participants openly cooperate. The time frame for activities is 3-10 years before market launch. From this set of platform research, applied research initiatives are evolutionary created. Here, some but not all the FIMECC participants form horizontal consortiums consisting of companies that jointly carry out pre-competitive applied research. In FIMECC, research activities can also be built around vertical supply chains, through which complete value chains can participate from the very early phase of creating new cross-industry innovations. The total turnover of metals and mechanical engineering industries in Finland was 31 B in 2009 representing 27 % of the overall industrial output of the country. The value added in these industries was 9 B and the value of export was 19 B. The export of these industries is one third of the total export of Finland. In 2009, the number of employees in these industries was which represents one fourth of the total industrial employees in Finland. The industry s impact on Finnish national economy is significant. The R&D investment of the companies in the industry was 445 M representing 1.4 % of the turnover. In addition to this, public R&D investment in universities and research institutes was about 40 M. In 2009, the total investment in the research related to these industries in Finland was thus almost 500 M representing about employees annual R&D input.

3 ANNUAL REPORT (26) The industry experienced high growth but since October 2008 global economy has suffered from severe crisis meaning that the volume figures from 2009 are from a rather weak year was a good growth year again on average, but variance between companies increased. The Finnish ministry of employment and the economy gave FIMECC the SHOKstatus on January 23 rd, This status can be given to only one organization at time and the status depends on the quality of research activities planned and later carried out. In 2010, five other sector SHOK-companies operated in Finland. For FIMECC, 2010 was a year of building and implementing research portfolio management tools and enlarging the research portfolio towards the 300 M research base target. The vision of FIMECC: World Class Platform for Science-Based Competitiveness. FIMECC will create new international research networks, new top science, and new application-driven research contents. The competence and knowledge in selected focus areas will be raised to globally leading position. The research activities are based on ambitious target-orientation, openness, dynamics, and true internationality. The primary targets of FIMECC: Revolutionary Engineering Perceiving Customers Needs First. Finland-based companies will make a difference in the global markets through utilizing new excellent knowledge of FIMECC especially in customer needs understanding, breakthrough market launching, and successful customer solution piloting and implementing. The objectives of FIMECC are: 1) To boost the industry s strategic research by being an innovation platform and by reducing the time-to-market through wide synergic cooperation. 2) To double the metals and engineering industry s relative R&D investment by the year This will be done step by step through implementation of SHOK activities in successful pilot programs after which more companies will be interested in participating into the activities. The increase of funding includes the objective of increasing also the absolute monetary R&D investments. 3) To create one research consortium consisting of public and private actors in all five selected research themes (see Research Activities), that reaches the scientific level required from the Academy of Finland Centre of Excellence. 4) To create a unique combination of scientists and practitioners in order to boost innovations. This is done by increasing interaction between actors that have traditionally not had culture or incentives in cross-disciplinary discussions.

4 ANNUAL REPORT (26) Achievements until December 31 st 2010: Status of the four primary objectives (see previous page): 1) Wide synergic cooperation of more than 120 organizations has been created. There are many companies in this group that as a strategic decision run most of their applied research projects within FIMECC. First about 20 results were presented in 3 rd Annual seminar on November 24 th. 2) FIMECC runs eight research programs having total value of 238 M (42M in 2010). The average R&D investment in metals and engineering industries has increased from 1.2% in 2007 to 1.4% in ) FIMECC has EFFIMA program consortium in Intelligent Solutions theme, which reaches the Academy of Finland Centre of Excellence scientific standard (GIM from TUT and Aalto University). 4) According to a measurement in Spring 2010 shareholder & participant questionnaire, the interaction and cooperation between persons working in different organizations have increased. Other achievements: Strategic research cooperation agreement with Politecnico di Milano and VTT Competitors cooperate in same programs Common management practices and consortium agreements are stabilized and widely accepted Programs attract new participants when proceeding from period to next one Larger investments from earlier participants as they proceed from first to second period More than four full work years international research exchange Cooperation between six SHOK-companies was significantly increased and institutionalized through SHOK Summit, joint legal counsel, and continuous strategic & operative management meetings. Examples of research results in this annual report

5 ANNUAL REPORT (26) SHAREHOLDERS 2010 SHAREHOLDER POSTAL ADDRESS N. OF SHARES % Aalto-yliopisto (Y-tunnus ) PL Aalto 40 1,9% ABB Oy (Y-tunnus ) PL Helsinki 120 5,7 % Andritz Oy (Y-tunnus ) Tammasaarenkatu Hki 50 2,4 % Boliden Kokkola Oy (Y-tunnus ) PL Kokkola 50 2,4 % Cargotec Oyj (Y-tunnus ) P.O.Box Helsinki 120 5,7 % FIMA Forum for Intelligent Machines ry Hermiankatu Tampere 120 5,7 % Finn-Power Oy (Y-tunnus ) P.O.Box Kauhava 50 2,4 % Helsingin kauppakorkeakoulun Holding Oy PL Helsinki (Y-tunnus ) 40 1,9 % Hermia Oy (Y-tunnus ) PL Tampere 40 1,9 % Juridiska Personen Åbo Akademi Tuomiokirkontori 3, Turku 40 1,9 % Jyväskylän yliopistorahasto PL 35, Jyväskylän yliopisto (Y-tunnus ) 40 1,9 % Kone Oyj (Y-tunnus ) PL Helsinki 120 5,7 % Konecranes Abp (Y-tunnus ) Koneenkatu Hyvinkää 120 5,7 % Kumera Oy (Y-tunnus ) Kumerankatu Riihimäki 50 2,4 % Lappeenrannan teknillinen yliopisto PL Lappeenranta (Y-tunnus ) 40 1,9 % Laurea ammattikorkeakoulu Oy (Y-tunnus ) Metropolia ammattikorkeakoulu Oy (Y-tunnus ) Ratatie Vantaa Kalevankatu 43 G Helsinki 40 1,9 % 40 1,9 % Metso Oyj (Y-tunnus ) PL 1220, Helsinki 120 5,7 % Oulun yliopisto (Y-tunnus ) PL Oulun yliopisto 40 1,9 % Outokumpu Oyj (Y-tunnus ) PL Espoo 120 5,7 % Outotec Oyj (Y-tunnus ) Riihitontuntie Espoo 50 2,4 % Rautaruukki Oyj (Y-tunnus ) PL Helsinki 120 5,7 % Raute Oyj (Y-tunnus ) PL Nastola 50 2,4 % Stiftelsen Svenska Handelhögskolan Arkadiankatu Helsinki (Y-tunnus ) 40 1,9 % STX Finland Cruise Oy (Y-tunnus ) P.O.Box Turku 120 5,7 % Taideteollisen korkeakoulun tukisäätiö Hämeentie 135 C Helsinki (Y-tunnus ) 10 0,5 % TietoEnator GMR Oy (Y-tunnus ) PL Espoo 120 5,7 % TTY-säätiö (Y-tunnus ) PL Tampere 40 1,9 % Vaasan yliopisto (Y-tunnus ) PL Vaasa 40 1,9 % VTT (Y-tunnus ) PL 1000, VTT 120 5,7 %

6 ANNUAL REPORT (26) BOARD OF DIRECTORS Board of directors was elected in the annual general meeting in March 30 th, The board had eight meetings in New chairman was selected in the meeting of April 6 th. Attorney-in-law Essi Heinänen was present in board meetings. Members Deputies Markku Koljonen (Rautaruukki Oyj, v.c.) Niilo Suutala (Outokumpu Oyj) Jussi Oijala (Kone Oyj) Kaj Lindh (Andritz Oy) Jukka Ylijoki (Metso Oyj) Jukka Hämäläinen (FIMA ry) Aki Mikkola (Lappeenranta U. of Tech.) Kauko Leiviskä (U. of Oulu) Matti Pursula (Aalto University) Risto Kuivanen (VTT) Tapani Kiiski (Raute Oyj) Tomas Hedenborg (Finn-Power Oy) Asmo Vartiainen (Outotec Oyj) Ari Kiviniitty (Konecranes Oyj) Patrik Rautaheimo (STX Europe) Ari Järvelä (Tieto Oyj) Matti Sommarberg (Cargotec Oyj, chairman) Juha Ylä-Jääski (Fed. of Fin. Tech. Ind.) In 2010, the remuneration paid to board members was 150 /meeting (200 for chairman). The commitment of the board was high. In board meetings, the basis for management culture and strategic planning and goal setting were discussed. After 2010, FIMECC shows credibility in research volume ramp up, research portfolio adjustment, and national industry participation. FIMECC is capable to start international activities as well as the enlargement of program portfolio. DECISION MAKING BODIES The organization of FIMECC is presented in the left hand figure. R&D Council has five roles in FIMECC: to operate as a shareholders platform for open innovation to act as a body and persons to be taken into account when management decides on future research directions (e.g. SRA process) to evaluate the research proposals received through open research calls (to be included into a research program) to act as an information channel towards shareholders and selected stakeholders (Tekes, Sitra, the Federation of Finnish Technology Industries, Academy of Finland) to be available for FIMECC management s support in special tasks

7 ANNUAL REPORT (26) In 2010, R&D Council had two meetings. They focused on designing the international role of FIMECC (Spring) and new revolutionary targets and forms of operations (Fall). Following persons from following stakeholders were members of R&D Council: Aalto university, School of art&design Turkka Keinonen Aalto university, School of economics Kristian Möller Aalto university, School of technology Simo-Pekka Hannula ABB Oy Kimmo Forsman Åbo Akademi Kim Wikström Academy of Finland Ritva Taurio Andritz Oy Kaj Lindh Boliden Kokkola Oy Karri Osara Cargotec Oyj Jorma Nurmi Fed. of Finnish Technology Industries Ilkka Niemelä FIMA ry Antti Siren Finn-Power Oy Juha Mäkitalo Hanken school of economics Maria Holmlund-Rytkönen Hermia Oy Toni Sulameri KONE Oyj Harri Hakala Konecranes Oyj Matti Kemppainen Kumera Oy Jyri Talja Lappeenranta university of technology Jukka Hallikas Laurea univ. of applied sciences Jukka Ojasalo Metropolia univ. of applied sciences Pekka Hautala Metso Oyj Jari Liimatainen Outokumpu Oyj Niilo Suutala Outotec Oyj Ilkka Kojo Rautaruukki Oyj Arto Ranta-Eskola Raute Oyj Marko Perttilä Sitra Pekka Salmi STX Finland Oy Jouko Vuoskoski Tampere university of technology Matti Vilenius Tekes Lauri Ala-Opas Tieto Finland Oy Risto Raunio University of Jyväskylä Timo Tiihonen University of Oulu Juhani Niskanen University of Vaasa Petri Helo VTT Rauno Heinonen

8 ANNUAL REPORT (26) The five steering groups have five primary roles in FIMECC: to prepare new research programs, which are the basic operational research instrument of FIMECC to write the text for SRA regarding their field of expertise (theme) to write research program plans with CTO to evaluate new program plans for board of directors and on-going programs for CTO s program portfolio management the chairmen of steering groups form CEO s management team FIMECC had the first renewal of steering group members in September 1 st Until that, persons nominated in the first round in 2008 worked for us. Following persons from following stakeholders were members of steering groups from September 1 st on: Service business Chair: Miia Martinsuo, Tampere University of Technology Company members: Björn Stenwall Casimir Svensson Lea Lehtinen Timo Kangas Heikki Kettunen Academic members: Maria Holmlund-Rytkönen Virpi Tuunainen Cargotec Oyj Andritz Oyj Kone Oyj Raute Oyj Metso Oyj Hanken School of Economics Aalto University User experience Chair: Hannu Kuoppala, KONE Oyj Company members: Seija Junno Hannu Hytönen Jouni Hölsä Petteri Venetjoki Rautaruukki Oyj Tieto Oyj Finn-Power Oy Metso Oyj Academic members: Eero Miettinen Aalto University Seppo Leminen Laurea AMK Maaria Nuutinen VTT Global networks Chair: Kari Airaksinen, Airaksinen Consulting Oy Company members: Petri Hassinen KONE Oyj Tero-Jussi Teppo Finn-Power Oy Risto Raunio Tieto Oyj

9 ANNUAL REPORT (26) Academic members: Petri Helo University of Vaasa Arto Rajala Aalto University Kim Wikström Åbo Akademi Intelligent solutions Chair: Hannu Lindfors, Konecranes Oyj Company members: Pekka Yli-Paunu Antti Siren Jouni Pyötsiä Kari Saloheimo Cargotec Oyj FIMA ry / Hermia Metso Oyj Outotec Oyj Academic members: Matti Vilenius Tampere University of Technology Olli Ventä VTT Kaisa Sere Åbo Akademi Breakthrough materials Chair: Arto Ranta-Eskola, Rautaruukki Oyj Company members: Petteri Valjus Jari Liimatainen Juho Talonen Carl-Gustav Berg Kone Oyj Metso Materials Technology Oy Outokumpu Oyj Andritz Oy Academic members: Pentti Karjalainen University of Oulu Simo-Pekka Hannula Helsinki University of Technology Kenneth Holmberg VTT MANAGEMENT Chief Executive Officer Dr. Harri Kulmala (b. 1975) External positions in 2010: Member of high level group, EU ManuFuture technology platform National coordinator, European Concept - EU ManuFuture subplatform Member of advisory board, Tampere University of Technology, Institute of Production Engineering Member of Lohja-Uusimaa advisory board, Laurea University of Applied Sciences Member of The Federation of Finnish Technology Industries, technology and business council

10 ANNUAL REPORT (26) Chief Technology Officer Dr. Seppo Tikkanen (b. 1969) External positions in 2010: Member of advisory board, Edutech, Centre for Continuing Education at Tampere University of Technology OTHER PERSONNEL Mrs. Essi Heinänen (L.LM), legal counsel (joint with other SHOK companies) Ms. Marika Moilanen (BBA), executive assistant Outsourced program management in 2010: I&N Mr. Matti Nallikari STX Finland Oy LIGHT Dr. Tapani Halme LUT ELEMET Dr. Vesa Karvonen LUT (until June 30th) Dr. Jarmo Söderman ÅA (from July 1st) EFFIMA Mr. Ismo Vessonen VTT DEMAPP Dr.Markku Heino & Dr.Laura Kauhanen Spinverse Oy GP4 Dr. Katri Valkokari VTT

11 ANNUAL REPORT (26) RESEARCH ACTIVITIES - OVERVIEW The research volume of FIMECC as a percentage of the industry s total research volume is estimated to be about 10 per cent in The targeted annual monetary research volume of FIMECC is ca 60M, which means about persons working annually in the research programs of FIMECC. This amount is invested on five research themes (see Figure 1 below): 1. Service business How to build understanding on service business logics, customer demand forecasting, inter-organizational new service development, benefit sharing, and open service innovation systems? 2. User experience How to create established structures for understanding diversifying user profiles and design leadership platforms? 3. Global networks How to create and manage agile, flexible and resilient demand and supply networks in continuously changing business environment? 4. Intelligent solutions How to increase the value added of customer solutions by the means of product and process-integrated intelligence? 5. Breakthrough materials How to improve the performance of customer solutions by the means of new material development and use? Outcomes Service Business OPEN SYSTEMS & PROCESSES High performance service concepts User Experience USABILITY & INDUSTRIAL DESIGN Outstanding user experience Global Networks SUPPLY & DEMAND CHAIN MANAGEMENT Intelligent Solutions PRODUCTS & PROCESSES Breakthrough Materials MATERIALS & PROCESSING Efficient and flexible network structures Leading solutions to pioneering customers New materials that create new markets Figure 1. Strategic research themes of FIMECC.

12 ANNUAL REPORT (26) In 2010, research activities were strengthened and enlarged (see program map in Figure 2). Breakthrough Materials, Intelligent Solutions and Global Networks themes had together six research programs running from year 2009 (see ongoing research programs section). User Experience and Service Business themes both launched their first programs in These themes have been recognized as significant renewal agents for our industry, which means that revolutionary era in FIMECC is closer than before. Hence, a really important milestone in FIMECC history was reached when all five strategic research themes got at least one research program launched. Figure 2. Program map of FIMECC. The program preparations were strongly led by industry. All preparation processes can be described by do-what-is-known-good and test-and-try-other-way. Even though the operational model and decision making in FIMECC was totally new for all and the operational model had to be designed simultaneously with research program contents, the people involved managed the challenge. However, in order to minimize the program preparation time, the future operational practices will be mainly adopted from Future Automation Systems (BAT) program preparation. This is a program ready to be launched in Two programs were under construction in order to launch these after Active and functional new materials (ACTIFUN) was initially prepared but as a program postponed to be started in Manufacturing technology area proceeded through small pre-studies in order to identify right content for a new program. The total research volume budgeted for the programs second operational year (months from programs start) was ca. 42M, but the economic downturn and time gap between planned and actual program kick-offs decreased the actual research volume. In 2010, the actual FIMECC program volume was ca. 40M. Tekes funding in FIMECC programs was 50 per cent on average. Direct external

13 ANNUAL REPORT (26) funding from Academy of Finland, Sitra, and EU remains challenge for further years. FIMECC invested in program management tool and operative system development meaning that dynamic portfolio analysis and management in R&D investment can be carried out. ON-GOING RESEARCH PROGRAMS This chapter introduces shortly the research volumes of FIMECC and the focus & objectives of each eight research programs. Since some the programs were launched in 2009, some results are introduced. All on-going research programs can be joined later, if the existing consortium accepts the new applicant and the new applicant accepts the existing consortium agreement. Following figures represent companies (Figure 3) and research institutes (Figure 4) FIMECC participation in all programs as planned at the end of The closeplanned program budget division of FIMECC research programs is presented in Figure 5. STX Europe 24,3 17,7 Rautaruukki Oyj Metso Oyj Cargotec Finland Oy 2,9 3,3 3,3 3,6 6,7 11,5 12,7 15,1 16,5 Outokumpu Oyj Outotec Oyj KONE Oyj Konecranes Oyj Wärtsilä Finland Oy Napa Oy Other Figure 3. Companies 5-year input participation in FIMECC research (M ).

14 ANNUAL REPORT (26) Aalto University VTT TUT University of Oulu LUT Other Figure 4. Research institutes 5-year input participation in FIMECC research (M ) FutIS UXUS I&N GP4 EFFIMA ELEMET DEMAPP LIGHT Figure 5. Budget division of FIMECC research programs (as planned, M ). Innovations and Network I&N (Global Networks theme) Innovations and Network program is directed to create novel solutions to decentralized innovation activities in project-based business. The basic problem in project business is to find platform solutions to projects that are traditionally felt unique. Project networks also consist of many companies representing different management cultures. Innovations and Network program aims to build

15 ANNUAL REPORT (26) competence to create customized products with the efficiency of serial production, and to manage decentralized R&D&I activities in dispersed networks. The primary pilot business in the program is maritime industry. Light and efficient solutions LIGHT (Breakthrough Materials theme) The importance of raw material and energy efficiency is constantly increasing. Light and efficient solutions provide great potential for saving raw materials and energy and decreasing CO 2 emissions over the lifetime of cars and trucks, heavy duty vehicles and other moving equipment and machinery. Increased performance is an additional benefit, for example, in lifting and transport equipment. Novel high-performance ultra high strength steels and stainless steels in combination with innovative design and manufacturing technologies provide the means to reach substantial weight savings. Leading international research in four integrated research areas will be pursued: 1) production and properties of breakthrough materials 2) novel manufacturing technologies for light solutions 3) innovative designs for high strength and lightweight structures, and 4) environmental footprint for new lightweight solutions. The strategic platform research (SPR) concentrates on increased understanding in materials performance and product design and manufacturing processes. The industrial applied research part (IAR) concentrates on applying the results of SPR into product development processes. Energy and life-cycle efficient metal processes ELEMET (Intelligent Solutions theme) Metal production is faced with growing demands of energy and material efficiency, along with economical competitiveness. The research program aims at creating new, intelligent ways of producing metals to reduce energy consumption improve utilization of raw materials and reduce wastes and emissions. It focuses on processes that are relevant to the Finnish metals industry, in both steel and base metal production. Key research areas are metallurgy and thermodynamics that are applied to production processes through modeling and simulation. The aim is to build a critical mass of knowledge, with model platforms and databases that can be used in further, more application-oriented development work. The program joins together all significant players in the Finnish metals production and metallurgical research, along with selected international partners. The program plan consists of the following work packages and project initiatives: Radically improved material and energy efficiency in ferrous industry New opportunities in base metals industry Towards zero-waste plant Life cycle management and environmental footprint Innovative simulation tools for metallurgical processes Development of production technology for future ultra-clean steel

16 ANNUAL REPORT (26) Energy and life-cycle efficient machines EFFIMA (Intelligent Solutions theme) The core scope definition of the program is based on targets from the FIMECC Intelligent Solutions mission statement. Program target is to develop new technology and solutions that enable new machines, devices and systems with dramatically lower life cycle costs and especially lower energy consumption - than what is the international state-of-the-art of today. The program has three (3) work packages, aiming at the following future visions with specified R&D actions: Low energy consumption and environmental emissions, technologies for life cycle cost management, and efficiency by means of human compatible multi-machine systems. Demanding applications DEMAPP (Breakthrough Materials theme) Demanding application program is a research program under FIMECC s Breakthrough Material theme. Its goal is to develop solutions for applications which have demanding environmental or operational conditions such as wear conditions, corrosive conditions, service in extreme conditions, friction and energy and combinations and mixture of the above-mentioned conditions. The program has five focus areas, wear resistant materials and solutions; corrosion resistant materials and solutions; extreme service conditions; friction and energy and production technology for demanding applications. As results of the program the knowledge of material behavior in demanding conditions will be increased. Secondly, knowledge of material selection according to service conditions is improved and new materials will be developed and tested. Results can be exploited by many Finnish companies in their products. Global processes for high variety production GP4Variants (Global Networks theme, not managed as a full SHOK research program) Global corporations outsource the product development function along with production. At the same time, they seek for fewer suppliers from whom they can buy more complete and complex subsystems. Alternatively, global corporations initiate collaborative product development projects with suppliers and engineering companies. Networked manufacturing companies adopt and utilize methods for modular product families and platforms. The challenge is the complexity involved with the above described industrial context. Complexity is a challenge to the lifecycle management of product platforms and module systems. The program aims to develop means to boost competitiveness of Finnish global networked companies through the implementation of global product lifecycle management. The objectives are improved global network management and procedures for business processes. Research topics are how to adapt existing theories of business, networking organizations, product processes and virtual engineering into new environments, to test and to iterate them in industrial case studies, and to synthesize gathered experience and summarize them as best practices of global processes networking organizations.

17 ANNUAL REPORT (26) The program is linked to FIMECC Global Networks SRA vision of being world-class in cost efficient manufacturing of high product variety. User Experience and usability in complex systems UXUS (User Experience theme) User Experience & Usability in complex Systems (UXUS) supports future knowledge creation and new innovative practices in developing the user and customer experience excellence. The program consists of four work packages (WPs). WP1 includes conceptualization of the research framework of user and customer experience as a business factor. It also identifies factors that affect user and customer experience through interaction. WP2 includes development of customer and user driven innovation methods and practices that facilitate living dialogue with producers and customers/users throughout the entire product/service life cycle. Furthermore, in WP2 the human-centered design approach will be broadened from product-driven focus to holistic customer solutions with products, services and systems. WP3 aims to develop radically new user interaction concepts and tools that improve user experience and productiveness. The overall target of the program is to increase the capability and competitiveness of Finnish metals and engineering industry by developing and implementing new design and collaboration methods that produce personalized user/customer experiences. The impacts of the program are evaluated in WP4. Future Industrial Services FutIS (Service Business theme) FutIS Future Industrial services research program promotes the adoption and expansion of service business in technology-based industrial firms. The unique network of FutIS includes 20 companies and nine research groups and their international partners. The research program investigates the future of industrial services in metal and engineering industry in three major topics: service business mindset, integrated service development, and efficient service operations. FutIS program develops new competence and better profitability for participating industrial firms service business, and with its significant scope promotes the transformation of the entire industry. The long-term orientation in the program means that ideas and opportunities are explored for novel businesses by examining the futures of customers operations and environments; methods, processes and practices are developed to enable service business transformation over the forthcoming 5-15 years; and bottlenecks and inefficiencies in processes are sought and solved to generate readiness for service business adoption and expansion. The readiness for future industrial services is sought by integrating knowledge of service business logics with the unique requirements of the technology-based context. The theoretical approach for research is integrative in that FutIS covers the viewpoints of service strategy, marketing, operations and innovations simultaneously, promotes their interplay, and thereby generates new knowledge to the international research community. The unique network of FutIS will work

18 ANNUAL REPORT (26) together in an effort to turn service business into a significant success factor in Finnish engineering industry and their broader business network. RESULTS SELECTED NEW EXAMPLES OF FIMECC OUTCOMES Hatch cover innovation (Innovations & Network) Cargotec's MacRack solution for side-rolling hatch covers won the International Bulk Journal's (IBJ) environment protection award IBJ Awards judges were impressed by the MacRack system, which is based on environmentally-friendly electric-drive technology that offers ship-owners energy savings, and eliminates hydraulic oil leaks along with the need to fit hydraulic pipe work on board. MacRack technology basis is developed in I&N program. Novel high strength stainless steels (LIGHT) High strength steels can be utilized for mobile vehicles (trains, buses, trailers, etc.) to reduce their weight, fuel consumption and gas emissions. Austenitic stainless steels used in these weight critical structures can be strengthened by temper rolling. However, anisotropy exists in their mechanical properties. A novel processing method consisting of cold rolling has been applied to commercial low-ni Cr-Mn steels. Resulting reversion-treated ultrafine-grained austenitic stainless steels have highly enhanced strength and high ductility, the combinations exceeding those of temper-rolled steels. Furthermore, no anisotropy exists in tensile strength properties. Figure above shows the tensile strength and elongation properties of the new high strength steels investigated in LIGHT program compared to the target range set by European Commission in ESTEP.

19 ANNUAL REPORT (26) Computational efficient steel converter model (ELEMET) Result Consortium: Mika Järvinen (Aalto University) Sauli Pisilä, Aki Kärnä, and Timo Fabritius (University of Oulu) Topi Ikäheimonen and Pentti Kupari (Outokumpu Stainless Oy) In the current turbulent and highly competitive steel markets a rapid process and product development cycle has to be maintained for profitable production through market cycles. The demand for advanced steels has increased the complexity of secondary metallurgy. To ensure fast implementation of new steel grades to profitable production by modified reactors and operational practices a holistic, reliable and a user-friendly model of secondary processes with fundamental and generalized sub-models was developed. The idea was to model a steel converter (AOD as the first case) as a combination of a detailed plug flow reactor model for the reactive plume zone and a continuously stirred tank reactor for the steel melt, see Figure 6. Figure 6: Principles of the reactor model Figure 7 shows the customized user-interface. This new approach has many advantages compared with the previous models. It is computationally very effective compared to CFD codes due to smaller amount of variables. Results can be obtained faster than real time. The model is physically sufficiently detailed so that the number of free adjustable model parameters is minimized. The model has been already successfully applied to a wide range of stainless steel grades and converter parameters. Validation results for different converters are in good agreement with real process data.

20 ANNUAL REPORT (26) Figure 7: Customized user-interface

21 ANNUAL REPORT (26) Digital microhydraulics solenoid-actuated micro valve concepts (EFFIMA) In good time, transistor enabled small computers and integrated circuits and the remainder is historical success story. Exactly in the same way, digital micro valve enables new digital hydraulic solutions. The key innovation is to have hundreds of small mass-produced digital on/off valves instead of traditional valve. The same principle has been used in flat displays and digital cameras. In hydraulics, this means big improvement in the performance, reliability and energy efficiency of hydraulic systems. The key component is miniaturized digital on/off valve with fast response and big flow-through vs. size. This is the main research topic of the project and the final target is first-in-the-world 1 kb digital valve package. The main research results of the first research year are that solenoid actuator is the best alternative and the successful implementation of the first prototype valve. The first prototype has diameter of 10 mm and response time of 2 ms. The further optimization will still increase the relative flow rate by 80 percent. This allows the implementation of digital micro valve package into the same space as traditional valves. Pilot operated solution for higher flow rates is also studied. To summarize: 1) Research on miniaturized digital on/off valve (analogy: transistor) 2) 1 kb valve package with 1024 miniaturized valves (analogy: integrated circuit) 3) Ultimate performance and fault tolerance (analogy: microcomputer) Figures above: Ø10 mm prototype - Simple design; Volume 2.4 cm3; Response time 2 ms; Flow rate 0.3 dp = 1 MPa.

22 ANNUAL REPORT (26) New wear test facilities and testing techniques build at Tampere University of Technology (DEMAPP) Result Consortium: Veli-Tapani Kuokkala, Juuso Terva, Vilma Ratia and Niko Ojala (Tampere University of Technology, Department of Materials Science) Kenneth Holmberg, Aino Helle and Anssi Laukkanen (VTT Technical Research Centre of Finland) Päivi Kivikytö-Reponen, Marke Kallio and Jari Liimatainen (Metso Minerals Oy, Metso Materials Technology) Jukka Kömi, Anu Kemppainen and Olli Oja (Rautaruukki Oyj) The main objectives of the project are to enhance the fundamental understanding of heavy abrasive and impact wear of new engineering materials, to elucidate the role of various wear mechanisms and wearcorrosion/fatigue interactions in selected wear environments, to provide new models and methodology for the simulation of wear phenomena under various conditions, and to provide state-of-the-art solutions and technologies for on-line detection of wear. In order to accomplish these demanding tasks, the materials delivered by the participating companies are subjected to thorough characterization of the microstructure and the most important wear related mechanical, physical and chemical properties. The most promising materials are being studied in laboratory scale wear tests simulating certain wear conditions or environments (e.g., abrasive, impact, corrosion and fatigue wear). The development of new wear test facilities and testing techniques that correspond better to the real wear conditions play a very central role in this subproject. These methods need to be well-defined and well-controlled yet simple enough to enable correct conclusions to be drawn about the wear resistance of the test materials and, in particular, about the phenomena and mechanisms behind the observed behavior and performance of the test materials. An excellent example of the new methods already developed in this project is the single-pass/multiple-pass scratch test with real abrasives instead of the commonly used diamond and hard metal indenters. Although the conditions during the tests change due to the continuous fracturing of the abrasive and the subsequent formation of new scratching tips and edges, with novel analysis methods these tests provide invaluable new information about the details of the actual wear events. In addition to the micro structural characterization and wear testing of the selected materials, modeling and simulation play a very important role in the development of new wear resistant materials and solutions. Modeling and simulation are aimed to serve both practical prediction of the material behavior and to facilitate materials development and materials selection, but in particular to enhance the deeper scientific understanding of the wear processes and mechanisms. All this is conducted in collaboration with Tallinn University of Technology, National Research Council of Canada, and University of Sheffield.

23 ANNUAL REPORT (26) New corrosion protective coating for biomass boilers (DEMAPP) Result Consortium: Stefan Holmström, Tommi Varis, Rami Pohja, Pertti Auerkari, Satu Tuurna, Tomi Suhonen For cleaner world, boilers go dirty. To reduce unwanted emissions, fossil fuels are increasingly replaced by renewable fuels that unfortunately include high concentrations of impurities like chlorine. Chlorine promotes severe boiler corrosion by a catalytic process called active oxidation. VTT and Aalto University have developed prototype protective coatings against chlorine corrosion of biomass boilers. The test results in laboratory scale appear highly promising, showing better resistance to hot chlorine atmospheres and salts than with conventional measures of protection. Multiple approaches to tackle the corrosion challenge have been used. Aalto University is developing overlay welding with prototype FeCrAl consumables that do not crack in spite of high aluminum content (targeted at 6-10%). VTT is developing both supersaturated and multilayer thermal spray coatings. Very promising results have been shown by prototype multilayer Cl-trapping coatings with chemical Ni overlay (Figure below). The multilayer coating solution is in itself a great step against corrosion protection, and it has opened up new ideas for improvement routes such as the construction of a protective lamellar structure throughout the coating. a) b) Figures above: Coatings subjected to KCl environment at 600 o C: a) conventional coating suffering severe corrosion b) protective Matexon multilayer coating with similar baseline composition

24 ANNUAL REPORT (26) OTHER ACTIVITIES Management visit to Brussels (FMTC, Effra, Tekes, Teknikföretagen/SWE) UBICOM Technology program seminar, Tampere Strategic partnership negotiation and planning at Politecnico di Milano SISU2010 Technology program, final seminar, discussion panel, Tampere Management visit to Linz (ACCM) th EU ManuFuture HLG meeting and EU PPP-event in Valencia FinnTec10 exhibition, stand & keynote Metal producers seminar, discussion panel, Kirkkonummi SHOK Summit, Helsinki, 500 persons I&N, mini-seminar, Turku, 20 persons EFFIMA, 1 st annual seminar, Tampere, 70 persons nd European Concept meeting for Services in Aachen FIMECC presentation in Piacenza Hosting Brazilian delegation from Petrobras EU ManuFuture PPP-activation meeting in Brussels ELEMET 1 st annual seminar, Espoo, 70 persons DEMAPP 1 st annual seminar, Espoo, 80 persons st EFFIMA Impact Day, Helsinki, 30 persons LIGHT 1 st annual seminar, Tampere, 40 persons Excursion to Germany and Italy, 11 persons Signature of the 1 st strategic research cooperation agreement, Milano th EU ManuFuture HLG meeting in Stuttgart rd Annual Seminar, Tampere, 130 persons

25 ANNUAL REPORT (26) STAKEHOLDER RELATIONSHIPS Support and assistance from following non-shareholder organizations supported in FIMECC strategy and operations: Academy of Finland CLEEN Ltd. Confederation of Finnish Industries EK Finnish ministry of employment and economy Forest Cluster Ltd. Institute for the future, Stanford, U.S. Politecnico di Milano RWTH Aachen RYM Ltd. SalWe Ltd. Tekes The Federation of Finnish Technology Industries Tivit Ltd. Following suppliers were used for services: Aitiopaikka/Sihteeristö Oy Office services Attorneys LMR Ltd. Law & juridical advice Inno-W Oy Web pages & research portal Kuudes kerros Oy Corporate image & branding Neuvos Group IT infrastructure Talenom Oy Accounting COMMUNICATIONS The primary communications between FIMECC and public media were through website Ca. 20 articles in Finnish daily newspapers and weekly magazines were published. FIMECC relied primarily on The Federation of Finnish Technology Industries in external communication. Many FIMECC personnel interviews, articles and technology policy comments were published. FIMECC Bulletin FWD was launched with two issues. FIMECC In-Brief information package was launched in July. Three videos regarding FIMECC activities were produced. SHOK Summit as a cross-shok cooperative concept and gathering was designed and piloted.

26 ANNUAL REPORT (26) KEY FINANCIAL INFORMATION The 3 rd financial year of FIMECC ended December 31 st. Due to the special role of FIMECC as a non-profit company and the start-up phase of the company in its life cycle, the key financial information is presented in short form and without traditional business performance measures. Income statement Income Net sales ,90 FIMECC commission (2% program fees) ,16 Tekes start-up funding ,11 Total income ,17 Expenses Materials and services ,79 Staff costs ,70 Program management cost ,07 Other expenses from operations ,44 Total expenses ,81 Operating profit ,90 Interest income ,19 Profit (loss) for the year Tax Net profit (loss) , , ,83 Balance sheet Assets Long-term investments 4 758,00 Short-term receivables ,73 Cash and bank balances ,52 Total assets ,25 Liabilities and shareholders equity Restricted equity ,00 Non-restricted equity ,00 Net losses for previous years ,15 Net profit for the year ,83 Liabilities ,57 Total liabilities and shareholders equity ,25