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Seeing Growth Potential in Being Green
Finnish Companies Benefit From E.U.'s Eco-Friendly Rules

By Robert G. Kaiser
Washington Post Staff Writer
Wednesday, June 1, 2005

OULU, Finland -- Lassi Noponen, chief executive of Finland's Proventia Group, has his eye on General Electric Co., a firm thousands of times bigger than his own that recently announced plans to remake itself with "ecomagination," emphasizing ecologically friendly research and products to make money from being green.

It's not every day that a group of small companies like his can be flattered by one of the biggest multinational corporations, Noponen said in an interview here. But that is how he has interpreted GE's new initiative, announced May 9 by chief executive Jeffrey R. Immelt. Profiting from ecologically friendly products and services, Immelt's stated new goal, has been Proventia's objective since the company was launched nearly five years ago.

Noponen realizes that his modest group is no match for GE, but he thinks it can compete with anyone in its chosen areas of business. One is wind-powered electric turbines, produced with unique technology by a Proventia-owned company named WindWind.

WindWind recently announced the sale of a 24-megawatt "farm" of windmill turbines to Estonia, Finland's neighbor. The company will build eight giant machines with propellers 90 feet long, each generating three megawatts of power. The deal will be worth $30 million, Noponen said.

Finland, a creative little country of just 5.2 million people but enough skill and ambition to create Nokia Oyj, the biggest cell phone company in the world, is aggressively pursuing the next Nokia or, more realistically, a whole generation of new companies that can help what is already one of Europe's most successful economies remain competitive.

Finnish entrepreneurs are investing in eco-friendly businesses. Their most important salesmen may not be Finnish businesspeople (for whom, many here acknowledge, salesmanship is not a natural talent), but the European Union's regulation writers in Brussels who set the community's ecological standards.

Proventia, for example, hopes to make millions from the new E.U. regulation requiring the original manufacturer to recapture and recycle at least 75 percent of the contents of every piece of electronics and electrical equipment sold in Europe. The new standard comes into force in August, and adapting to it will cost companies (including some U.S. corporations) huge amounts of money, according to Noponen. He hopes Proventia companies will earn a lot of that money.

Proventia Automation, another member of the group, already produces machines that can cut up television sets and computer monitors, separating leaded from unleaded glass with a laser and recycling all the glass and other valuable, reusable components. Noponen hopes the E.U.'s new standard will produce numerous new customers for this technology.

More broadly, his firm can provide information technology and management advice to help manufacturers figure out how to meet the new rules most efficiently. Manufacturers of electronic equipment can actually make money by recycling their own creations when their useful lives are over, Noponen said.

Proventia's component companies had revenue of nearly $25 million last year. They project sales of $35 million this year and more than $60 million in 2007.

Another fast-growing Finnish firm banking on the impact of regulation is Green Rock Oy, manufacturer of a relatively simple and inexpensive sewage treatment device for a single-family house built beyond the reach of urban sewage systems. Larger models can be used by businesses or institutions.

Green Rock, too, is the beneficiary of a new E.U. regulation. This one requires that every new building put up in the E.U. that is not on a sewer system include its own wastewater treatment to bring pollution, particularly phosphates, to acceptable levels. Phosphate pollution is a major cause of the distress of the Chesapeake Bay and many of the world's waters.

The regulation, which came into effect this year, will be applied progressively until it is fully operational in 2020.

Juha Huhta, managing director of Green Rock, is also the inventor of its patented technology, a filter made from the fibers of two types of rock. Huhta's design involves a combination of additives to wastewater, dispensed by a simple insert put into a toilet, and a filtration system that, tests have shown, makes sewage into water clean enough to be used for irrigation, with a very low phosphorus content.

Green Rock's business, nearly doubling every year, will reach $10 million to $12 million in 2005 on sales of about 10,000 units, Huhta said. But he sees a truly golden future after 2020, when there's a good chance that every free-standing structure in Europe not on an urban sewer system will have to acquire its own wastewater treatment equipment. In its first years, the E.U. standard will affect only new construction, but even then the prospects are enormous, Huhta said.

Moreover, he has established a business relationship in China, which is also imposing new regulations to reduce phosphorus and other pollution from sewage. For a Finn, whose national population could fit several times just into the city of Shanghai, China is a dizzying business prospect. Green Rock's first Chinese customer is a chain of 150 hotels.

Neither Proventia nor Green Rock is publicly traded, though Proventia is pursuing the idea of an initial public offering, perhaps on London's stock exchange. Noponen and other Finnish businessmen with similar dreams acknowledge that getting major world markets interested in companies based in tiny Finland is extremely difficult. Huhta says that a sale of stock might be in Green Rock's future but that he has no such plans today.

Noponen and Huhta are examples of two different paths to entrepreneurial success in Finland. Noponen, 41, is obviously a member of the Finnish elite, a university graduate with an MBA from the London Business School.

He began his career as a lawyer in the oil business, then became an investment banker. In that role, he met one of Finland's most famous entrepreneurs, Veikko Lesonen, now 47, who exploited a service contract with Nokia in the 1980s to create JOT (Just On Time) Automation, a firm he sold for more than $200 million. They joined forces and launched Proventia largely with Lesonen's money.

Lesonen grew up and got rich far from Finland's elite. He never went to a university, and unlike virtually all Finns with more schooling, he speaks no foreign language well, though he now spends much of each year at his villa in Spain.

Huhta, 49, the inventor who created Green Rock, is more like Lesonen than the smooth Noponen. He went to a "polytechnic" college, as Finns call more-vocational colleges, and worked for a big construction company as a building engineer. During the economic depression in Finland in the early 1990s -- the result of the sudden loss of Finland's major export markets, the former Soviet empire -- the construction company was looking for new ways to make money, and Huhta came up with the water treatment idea.

In 1998, he bought his own idea from his employer and launched Green Rock. Today his three sons all work for him.

Huhta's risk-taking spirit is uncommon in Finland, though many Finns say they need a lot more of it. His own mother questioned his decision to leave the big construction company and strike out on his own. "Why did you take this big risk?" he quoted her as asking.

How about now that he is obviously doing very well -- is she proud of him? "I think so," he replied, recounting a story typical of Finnish reticence and shyness. "I have heard her telling the neighbors -- that's my son on TV."

In separate interviews, both executives made a point of embracing traditional Finnish values that put loyalty to the society ahead of personal ambition. Lesonen volunteered a strong defense of the Finnish welfare state, which is funded by some of the highest taxes in Europe.

When Huhta was asked if he hoped to get rich from Green Rock's success, he demurred. His goal, he said, is "to leave nature purer for my boys" and their children. If he gets rich in the process -- well, a Finn rarely talks about such things.

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