Welcome to Bulten's Capital Markets Day 2020. My name is Kamilla Oresvärd, and I am Senior Vice President, Corporate Communications. I am really happy to present an exciting agenda for you today. First, some practical things. Emergency exit, you can find here, and also the stairs where you came up. Also, keep your phones on silent mode. I would also like to inform you that all presentations will be published on our website, of course. The agenda that I'm going to present along with the Bulten team here today, we are going to start with sustainable growth presented by Anders Nyström, President and CEO. If you can stand up so we can see who you are. Going into strong financial platform presented by Helena Wennerström, Executive Vice President and CFO.
I am very happy to welcome Marco Suzuki, who comes here directly from U.S., he's here to present PSM International. After that, we will have a coffee break, going into the next session, we will start with our newest member in the Bulten management team, Fredrik Bäckström, who is Senior Vice President, Production, who will talk about our manufacturing footprint. After him, Marlene Dybeck, Senior Vice President, HR and Sustainability, will talk about sustainability as a driving force. We will go into something very exciting, something new, something that we are very proud of presenting here today. Philip Lejon, Vice President, Technology, will talk about BUFOe, a sustainable product line that is just recently launched. Magnus Carlunger, Senior Vice President, Marketing and Sales, will talk about the stronger sustainable offer, FSP 2.0.
We will go into a wrap-up by Anders Nyström, and then will be time for Q&As. If you have Q&As during the presentations, please feel free to ask them, preferably after the presentations, but we can do it continuously. Let's get started by welcoming Anders up on stage.
Thank you, Kamilla.
Hey, that's it.
Technology. Good afternoon, everyone, and warm welcome. I've been looking forward to this day for a long time, I can tell you. As always, when you work long and hard at developing something, in this case, a new or revised strategy for our company and the set of targets, of course, it's always a highlight to be able to take the veils off of that and show it, and that's what we're going to do today. Let me just say a couple of words about the headline we set for this session, sustainable growth. I suspect there's one or two of you in the audience who think to yourselves that that's a couple of corporate buzzwords. I hope that after this afternoon, you will be convinced that there is no company that takes this to heart and action more than Bulten.
Sustainable from every aspect, both economically and ecologically. I hope that that's going to be convincing to you after what you heard this afternoon. I'm really excited by where Bulten is going. I also think that after this afternoon, you'll share my excitement about that. Bulten has a proud history. We're three years away from a century and a half, which is quite remarkable. Most companies that were founded back in those days are gone. We're still around, and we're still developing, which means that as a company, we've been able to combine both the vast amount of experience and knowledge that we've accumulated over those years with a willingness to change, a willingness to develop, and to capture the opportunities that comes with market. We've been doing so very successfully over these 150 years. Change is definitely in our DNA.
The way we go about managing our customer base and our customer relationships is definitely one of the uniquenesses of Bulten. I want to dwell on that for a minute. As you can see, we have 3 categories of customers. It's heavy vehicle, commercial vehicle OEMs, it's light vehicle OEMs, and it's suppliers of the industry. Having a supplier code and being an approved supplier to this many OEMs and having those in our customer portfolio means a lot of opportunity. Where some of these were dominant players in our commodity field, for some others, we're not so dominant, but that means that we are having room to grow. The way we handle our customer relationships and the way we intimately contribute with value to these customers is quite unique in our industry.
We do that not only by providing a mere hardware, like it started back in 1873. A bolt was a bolt, and that's what you ship to your customers. We're doing much more than that now, which I'm going to come back to. I want to tell you just a short anecdote from my first meeting last year with one of our biggest customers. After 35 years in this industry, I can tell you that I have never before seen a fastener supplier making the list of the top 30 strategic suppliers of an OEM. It takes a lot for a fastener supplier to make that list. When this customer showed me, not only their list of their top strategic suppliers, but also the performance rating of those, we were the number one, and by a long way, actually, in that segmentation.
There is recognition in our customer base of the value that we provide to them, and that's something that we aim to continue to build on and to capitalize on and develop. I was talking about hardware versus software and what we actually provide in terms of value to our customers. These are our core products. If we had stayed with only merely providing those, probably wouldn't have been as successful as we are. We've expanded that in terms of products to also provide those types of components that we do not necessarily manufacture ourselves, but we outsource them, and we provide them through full service supply contracts to our customers. Maybe most importantly, with those customers that we have an FSP relationship, we also provide engineering, testing, design, procurement, logistics, and line feeding.
This is not merely engineering and developing fasteners, but also helping the customers to optimize their systems and subsystems to make the whole product more competitive and to standardize across their systems and do things that the OEMs traditionally don't do the way they are being organized. Feeding the products all the way up to the assembly point on the assembly line. Actually, there are a couple of more companies out there that do similar things. I think we can stick our head up and say we are the only ones that do this in earnest. We have value words, like most companies do. I just want to explain a little bit what this means to us. Being professional is something that we pride ourselves in being. Everyone wants to be professional.
I think we are very professional in the true sense of the word because we are looking to enrich the customer and help them succeed, and w e use our collective experience to do so. We're innovative, and that doesn't mean only being innovative in a product engineering sense of the word, but also inventing business models that are win-wins for us and the customer. We have a history of doing that and are continuing to do it. Our people are extremely dedicated. It's something that I could experience in stepping in from the outside and joining this company one year ago, that there is a certain Bulten culture and a Bulten spirit, with extremely dedicated employees, most of them with a lot of seniority. We're empowered.
It's a value word that's also simple to put on a PowerPoint slide, but this manifests itself in the way that we go about serving customers, and they are acknowledging that with Bulten, they are not up against fighting bureaucracy. They meet people every day in their operations that are empowered to make decisions when it's critical and do that with a fast turnaround time. It's also something that we pride ourselves in, and that's not just a word on a PowerPoint. The other uniqueness that I would like to point out that sets us apart from our competition is our presence, our geographical presence. The red-orange dots over here represents where we have manufacturing presence. We're in Sweden, Poland, Germany, U.S., Russia, and China, with our manufacturing sites, and we're expanding that also through the acquisition of PSM, which we'll come back to.
Fredrik will take you through the minutia of our manufacturing footprint. It's important to point out that there is nobody out there that's as complete as we are in serving customers with global platforms. This is also important to understand that our customers, they build the same products everywhere around the world. If it's not the exact same vehicle, it's based on the same platform. Of course, they want to source this once, not source it three times or four times when they develop the platform. That means three times or four times the validation cost. That's why we're benefiting from being globally spread. I should say also that we are taking steps, and it's an integral part of our strategy, to become more truly global. We want to increase our presence in regions where we haven't had scale before.
We have been in the U.S. and in China for a long time. We're really focusing on becoming a global company with scale in all those regions, and becoming a little bit less European-centric than we have in the past. 2019 was a special year for Bulten. It was a difficult year for very many in our industry. The year had lots of promises that met headwinds in the market. The car market had a lot of rocks thrown at it from different directions, primarily from our dear politicians, with confusing statements about diesel cars being allowed in cities or not, new emission legislation and taxation, not making it very easy for consumers to decide on what to buy or if to buy. We had Brexit, which also didn't make life very easy. In 2019, the total global car market fell between 4% and 5%.
That's what we were up against. We were able to maintain more or less flat top line, which probably means that we came a little bit of our check. We had to take some decisive action. We did during 2019. We took some very exciting action for the future, and we also took some painful but necessary action. The year started with a new CEO, I'm not sure if that thing fell into the painful or the exciting category, but I'll leave that up to others to judge. We did execute on our previously communicated plan to transfer our production in China from Beijing to Tianjin, significantly increasing our capabilities in China. We had a grand opening of that plant in November. One of the painful things we had to do, for sure, was to rightsize our cost structure in our German operation.
That was because of some of the headwinds in the product range that Bergkamen is producing. That was absolutely necessary. We did some really exciting things in terms of the acquisition of PSM, which we published just before Christmas. Probably when most of you just went to the last party for the season. That's when we finalized the contract, and we're extremely excited about that. We also completed the purchase of the land in Poland, which we had announced previously that we would. For the entire year, almost, at least a good portion of the year, we worked to take cash out of our warehouses, which was also partly a consequence of the market headwind that we met, that our production rates were higher going into 2019 than they needed to be.
That had an impact on our results for the year, but it was absolutely necessary. Now, the year in numbers, and you're probably very well familiar with these numbers. You've studied our reports, but SEK 3.1 billion of sales was a slight drop, less than the market though, compared to 2018. What I want to draw your attention to on this slide is the fourth quarter, because we've been telling you about our backlog of orders, taken contracts that are about to rev up and get launched and in the form of new vehicles hitting the road. During 2019, we experienced some delays in those product launches for our customers. In quarter four, we could see them come through.
Quarter four was a bit of a trend break for us, with sales 5% up compared to (quarter four 2018), which wasn't a bad quarter, by the way. Order intake up 13.6% versus 2018. This is how we ended a difficult and very eventful year, and that gave us a good jump-off point for 2020. Here we are, leaving 2019 behind us, with a fresh strategy, some exciting actions being taken, a partly new management team, some additions to it, we're facing 2020 and beyond, which is extremely exciting, I can tell you. I'm looking forward to that. Stronger 24, by the way, just to explain that. When we started our strategy revision in February of last year, we gave it this name because Stronger is a name that we've been using in Bulten for a long time. It's an allegory.
Our products are strong connections, and w e want to be a stronger company, significantly stronger five years from now than we are today. It was a natural word to use, Stronger in 2024. As part of the strategy work, we re-established the vision and the business concept and the mission for the organization. Everyone who's done this at some point or a couple of points in their careers, you probably know that to try to take what you want to do with the company, there are so many aspects of developing a company, and boil that down to one sentence and capture the essence of the company. That's difficult. We spent a lot of time on this, because we thought it was important, to really be as crisp so we could explain this to the world.
We came down with the sentence you see on this slide here and on the roll-up. We say, "We create and supply the most innovative and sustainable fastening solutions." That sort of signifies what it is Bulten's about. We continue, we're giving that a bit more meat saying that, "We continuously deliver market-leading fastener solutions that meet customer requirements on efficiency, quality, price, and sustainability. With clear objectives, global presence, responsible conduct, and the latest in technology innovation, we are the company that makes a difference and creates the greatest value for our customers." That actually hits home for us as an organization and describes where we're headed. Now, I won't take you through every word on this slide, but here's an additional piece of meat, that gives more granularity.
Really what it is we're saying here is that we, as I alluded to, we're taking our century and a half of knowledge and experience, and we build on that. I used the allegory before, Bulten as a fortress. We're not going to tear anything down, but we're going to build on it. We're going to add a wing and add a tower, and that's what we're doing. We're going to continue to provide complete solutions, not merely fasteners, not merely the hardware that you can hold in your hand, but use our knowledge in every aspect and help the customer succeed based on those complete solutions. Continue to be innovative on products and business models, and provide new functionality and new services that we haven't provided before.
You will see some of that when Magnus Carlunger will take you through how we're developing the FSP concept, and you'll understand what we mean by that. Sustainability and cost efficiency. Sustainability being one of the headlines, one of the two words in the headline of this afternoon, is at the core of probably everything we do. Both Philip Lejon and Fredrik's presentations will help you understand better what that means when we take that from word to action. What's really new then, and what are we building on and what are we adding? Bulten being a strong entity as it is, with a lot of uniqueness and a lot of aspects that have made us successful in the past. It's not necessarily entirely what it takes in order to be successful in the next five or 10 years.
You're seeing parts of our strategy already materializing. The first step is the addition of PSM, which I'm really excited about. Phenomenal company that brings a lot of value to Bulten, and in a true sense, I think we can, to use an old allegory, we're making one plus one three. I think it's very possible in this new context. Adding about half a billion SEK of sales to the group with very healthy margins of 10%. Not the least, a stronger position in Asia-Pacific and the U.S. As I mentioned before, we're a global company. We want to become a truly global company. PSM helps us very much to add scale, both in terms of manufacturing, but also, and maybe first and foremost, in customer portfolio, product portfolio, and a sales presence in those regions where we think we're underutilized in.
We have the business potential in the headroom to market. You saw the list of customers. We're dominant with some of those customers, not so dominant with others. We're not at all dominant in the Chinese market if you look at our market share, and i t doesn't take many percentage decimal points of market share in China with their 20 million units a year to significantly move the needle on our sales in China. We have a lot of headroom to grow there. Adjacent markets and products, what we mean by that is moving into more than just being in light vehicles and commercial vehicles, but also in other products. PSM has successfully done that. As you will see from Marco's presentation, a portion of their sales come from other industries.
That's going to help us capitalize on the product range that we traditionally had in Bulten and also showcase those to those markets. The request for sustainable solutions, again, Philip will talk more about this, but our customers are faced with gigantic penalty fees today for being CO2 emitters. They do that based on some criteria today, other criteria tomorrow, but our customers will be desperate for CO2 low-carbon products, and that's what we're going to capitalize on. Potential additional acquisitions, and I want to just point out, we're not going on a shopping spree. Some of you waited a long time for the PSM deal or something similar to that to happen. Now it did happen. It means that we've selected our target with a lot of care and a lot of analysis, and we're not on a shopping spree.
We are going to continue to look for good companies that will add to the fulfillment of our strategy, add the right technology, add the right geographical presence, or the right product completion of our portfolio. That may happen going forward as well. The strategy will be nothing without delivering results. We also want to communicate to you our revised financial targets. All of this is going to take us in 2024 from the SEK 3.1 billion today or in 2019 to SEK 5 billion in 2024. That's a 65%-70% growth, 10% CAGR, give or take. That's an ambitious goal, but we're confident we'll get there. EBIT, above 8%, and an ROCE of 15%. This is not going to come for free. It will be a lot of hard work. There are some drivers and some cornerstones of that delivery.
Again, we have a strong position and the uniqueness of the FSP concept, the geographical proximity to our customers, and the sustainable solutions that makes up a strong offer that we have today. We have momentum in our organic growth through the contracts that we have acquired. We have, you could say, momentum in our un-organic growth as well, with PSM being the first step. The margin expansion will come naturally from acquisition synergies, from our strengthened position in China and the U.S., the sheer scale of moving our top line upwards. We will also shift gears when it comes to our efficiency work. We have a lot of improvement opportunity, both in production and in distribution, probably more so in distribution, which is going to be very much a focus area in 2020 and 2021 for us to work on.
Technology is a great enabler, and the financial platform that allows us to act. It is not an inhibitor. We have a strong financial platform, which Helena will talk more about. That means that we also have a certain freedom to do what we need to do to get to these goals. With that, I want to leave the stage to Helena, our CFO.
Thank you. Yes, we have a strong position to support further growth. Today, I will touch base on the financial targets, on market development, and on our financial platform. First, some comments on our key ratios in relation to financial targets 2019. Volumes and strategic initiatives as well as stock adjustments affected the outcome of 2019. In this perspective, we are looking at the figures, excluding the items that affect the comparability, and that is the one in the middle. Our sales were down by approximately 1.2%, but with our pipeline of contracts, we are in a good position to continue to take market shares going forward. Our profitability with an adjusted operating margin of 4.8% was affected by the volatile market and to our stock efforts short term.
Adjusted Return on Capital Employed of 8.1% is lower than our target due to the lower profitability and higher investment level. The board, they suggest an unchanged dividend of 4 SEK a share, divided into two payments, one in April and one in October. All in all, 2019 was a middle year for Bulten, affected by a cautious market and initiated programs of measures. We now start off 2020 stronger, in a better position. It has been a very exciting year mapping out the future of the company. This resulted in our strategic agenda, Stronger 24, with new vision and new financial targets. The Stronger 24 has developed our vision beyond Europe and automotive industry, and it is also reflected in the financial targets as we aim to improve our efficiency and productivity. More about the financial targets within short.
With our sustainable approach, strong customer offer, and core values, we create great benefit for all our stakeholders. Some words about the market development and LMC production predictions. Looking in a longer perspective, the industry forecasting LMC Automotive estimates a gradual improvement of production of vehicles the years to come. LMC Automotive forecasts a global increase of 1.1% for light vehicles 2020 compared to 2019, and a decrease of 7.3% for heavy commercial vehicles 2020. Weighted for Bulten exposure, this means a decrease of 0.1%. The market in short-term view. In 2019, the light vehicle market amounted to about 90 million units, and the largest markets are China, followed by the U.S. and Western Europe. It was a turbulent year for the industry as a consequence of new regulations, the political climate, and the uncertainty around Brexit.
New tax regulations linked to CO2 emissions introduced in a number of European countries during 2020 also add some uncertainty. We maintained our market shares in 2019, and going forward, we will focus on growing globally. That was a little bit quick. No? Yeah, that was right. Okay. Some more comments about net sales and order intake then. Despite a continued cautious market development, Bulten's net sales and order intakes developed quite well during the fourth quarter. Net sales increased by 5% and order intakes by 13.6%, which indicate that deliveries of already contracted business are now gathering momentum. This is, of course, a very good sign. As I just mentioned, there are some uncertainty about the economic situation, the outcome of Brexit, and effects of coronavirus. We need to pay close attention to this.
The coming months will be a little bit difficult to predict. Looking on the right side here, we can see the number of production days. Bulten is actually not exposed for traditional seasonal variations, but the year reflects quite well our customer production days. We have actually three quarters that is quite even, but the third quarter is lower production days and also lower net sales and earnings. We predict a stronger Bulten organic growth versus the market. Of course, the market uncertainty, as I just mentioned, may have an impact on the volumes. However, we will underline that we have a good pipeline of won contracts. In this slide, you can see the different ramp-up contracts and what phase they are of the implementation.
During 2019, several contracts went into full pace and new contracts have entered into ramp-up phase, which have balanced the effect of the market volatility and the model shifts. Still, we have EUR 47 million of new contracts that has not yet gone into production. This will support Bulten's growth even further in the years to come. Now some comments on our new financial targets. The new growth target is to have a profitable growth to SEK 5 billion within 2024, corresponding to a compound annual growth rate of 10%. As I said, with our pipeline of contracts, we are in good position to take market shares going forward. With the expansion of our business through the contract of acquisition of PSM, that will also help, of course. We are on our way to become a truly global company with sustainable growth.
With a margin expansion, the new financial target is an operating margin of at least 8%. We actively run our organization to be profitable over time and create a sustainable business with good financial leverage. The margin expansion will happen through the production and distribution efficiency, economy of scale, technology, and of course, acquisition synergies. Finally, the strengthened global position will also add on. The target of return on capital employed remains at least at 15%, considering the IFRS 16 effect. The key ratio reflects the new target of the profitability and the target of efficiency in utilizing the capital. With our strong financial platform, we can create great benefit for all our stakeholders. Bulten's strong financial position provides flexibility and preparedness for the future, both when it comes to investment in increased capacity and for strategic acquisitions.
In the beginning of 2020, the agreement and acquire of PSM International Holdings Limited will be finalized. This acquisition will strengthen Bulten's position in the international fasteners market and provides a strong platform to continue growth globally. During the first half of 2020, we will also start to build our new facility in Poland, an important production and logistics plant to meet future volumes, and this will continue to strengthen Bulten's market position to come. We are aiming for green financing through a BREEAM certificate for the facility. BREEAM is a leading sustainability assessment method that really ensures and enhance that the wellbeing of people who live and work in them, and help to protect natural resources and make for more attractive property investments. We continuously also invest in increased capacity and efficiency, but more about that within short.
We have an equity ratio of 55.2% at the end of 2019, affected by the outcome of the market in 2019 and IFRS 16, still on a very solid level. Some financial guidelines. Just to be clear, it's not considered to be a financial target, just will guide you through it. The guidelines for average net working capital in relation to 12-month sales is about 20%-25% going forward, depending on the growth pace. In the end of 2019, we had a level of 25.5%, which is slightly above our guidelines. Activities are ongoing to reduce that level. In guidelines for the capital expenditures as percentage of 12-month sales, we are in a level of 7.1%, evidence that we actually invest in the future growth activities.
The guidelines are to be 2%-3% for maintenance of equipment, and additional up to 2% for capacity depending on the market development. The guidelines for depreciation is a 12-month sales is 4.25%, considering IFRS 16. Without, it's between 2% and 3%. In the end of 2019, we're in line with that guidelines. Finally, the guidelines regarding our tax rate is between 24% and 28%. In the end of 2019, the average tax rate was 41.7%, and it was mainly caused by the relocation and the negative result in China for that period, which has an overall impact on the calculation for the group. If we exclude that, we are in line with our guidelines of with 26.3%. Now, Bulten invest and develops its business at a low risk.
Normally, investment pays for maintenance of equipment is generally between 2% and 3% of the annual turnover. May, in short term, when adapting to higher volumes or higher degree of refinement, be additionally up to 2% of volume sales. For the coming months or years, it will be a bit higher as a result of already planned investments to increase capacity. Now we are talking about Poland, with a new facility as well as added-value investments in surface treatment. These investments will, however, improve Bulten production efficiency even further. Bulten was listed on Nasdaq Stockholm on 20th of May 2011. We have strong long-term owners. Our largest shareholder is Volito, and second largest, Öresund, and they are also representatives in our board and are also here today. As you can see, Bulten is among the top five shareholders through the share buyback program.
This will change going forward when we now use 1 million shares in the acquisition of PSM. EPT will become one of our largest shareholders, and the detection includes the 12-month platform period. Let us now recapture the development in Bulten before we are going forward and the next section, PSM. Bulten started to be a part of (indutrade Bulten), and it was introduced to the stock market again in 2011. In 2013, we had a turnover of SEK 3 trillion . 2014, we divested one half of the company, but in the same time, we actually grew with 34%. It costed us some percentage points in the operating margin due to the quick ramp-up of two new contracts that we implemented that year.
In 2015, we continued to grow with 12%. Now we actually managed to get back to the operating margin 6% through our optimization program. We predicted to have flat volume development during 2016, which we also had. During that year, we worked quite hard to consolidate and optimize our organization. It paid off quite well with an improved margin over 7%. Year 2017, we started to grow slowly. In 2018, we were back in the turnover level of SEK 3 billion and a new margin of 7%. As I have mentioned before, 2019 was a turbulent year for the industry as a consequence of new regulations, the political climate influencing the terms of trade in many countries, and the uncertainty surrounding Brexit. Volumes and strategic initiatives, as well as stock adjustments, affected the outcome of 2019.
I think it doesn't come as surprise that the automotive market, in many aspects, is undergoing structural change. This change is influenced by several long-term trends. Some of them, such as sustainability and electrification, are today involved in all our customers' values. These trends, in combination with digitalization and new legislations, makes the industry more complex, and suppliers like Bulten need to pay close attention to that development. Through the pattern of our contracts and acquisition of PSM, we will add to our geographical presence and become a more global company, to a 5 billion company within five years. We actively run our organization through profitable growth time. Thanks to this, we can create sustainable business. We have a strong financial platform to support further growth, and our sustainable approach will create great benefit for all our stakeholders. Thank you.
All right, here we go. Okay, I want to remind you of what it was we did, what we announced just before Christmas. We did announce that we were going to purchase PSM at a price tag of $24.5 million. Being in the profession you're in, I'm sure you've done the math on the multiple already, so I don't need to explain that to you. Why did we do this? Well, there were a number of driving forces behind that. We'd waited a long time to find the right target. PSM was attractive to us because it gave us exposure in markets where we have not been that strong before. I mentioned that to you previously, the U.S. and China, where PSM are very strong.
PSM are not so present in Europe from a sales perspective, which is our home market, and we're very European-centric, as you know. From a product standpoint, to make it very simple, you could say that on bolts with external threads, Bulten is an M6 and up, PSM, M6 and down, and nuts in internal threads. There's an extremely good fit and actually very little overlap between our product ranges. Also, on the customer side and the market segments we're in, we have a little bit of overlap on OEM customers, but it's quite small, which means that the increase of our exposure is great. Those are the primary driving forces behind PSM is also a very competent company. It's a strong brand with a great organization, and we're excited to work together with them.
With that, I have the pleasure to introduce Marco Suzuki, who is the president and CEO of PSM. Marco has a distinguished career in the automotive industry. He's been working for Toyota, for Sumitomo, for Impro, 25 years plus in senior positions, working both from the U.S., from Japan, China, and Europe. Right now, he's joining us from the U.S. Welcome, Marco.
Here you go.
Thank you. Good. I see the quiz. Thank you. Many people does not get the right for PSM name, so if you say shame on you. After this presentation, you still don't remember the PSM name, it's shame on me. Okay. This is a PSM highlight. This year, we are 89 years celebration. PSM was founded 89 years ago, 1931. Currently, globally, we have about 350 people, employees. The production in China, Taiwan, U.K. Our facility distribution, we have about over 22 countries. The most of people from China and Asia. China have about 60% and Taiwan 20%. Majority of our employees is from Asia. The finance performance, 2019 is a very challenging year for everyone. Compared to 2018, we have in past two years, we try to get the more business. Many business from China drop a lot. Some customer drop 80%, 20%, 50%.
2019, as a result, we have about 2%, 3% growth, t o cover new project, cover the drop a lot. For our EBITDA, we have about 18%, 19% growth through many initiative in past two years, including the restructuring, including we do adopt commonalization, consolidation, a lot of initiative from everywhere. We use our technology to have offshore, for example, finance. We have used a lot of China team to support others, other than we have everywhere a finance team, for example. The 2019 is this result. If you follow the segment in geography, you can see PSM a lot of automotive, and these two years try to develop more parts and more customer for industrial customer. Even within the automotive, we try to get more business for like electronics, battery related. I will introduce you later.
For geography, about 50%, half of the business from Asia, including China, Japan, South Asia. This is the name, Precision Screw Manufacturing, PSM. This is a history we have. We started from U.K. This from Willenhall, U.K. In the past several years, we have go to Taiwan, 1982. Everybody know fastener is very famous in Taiwan. It's a very strong supply chain. At 1982, it did not have much fasteners. We bring our machine from U.K. to Taiwan. Starting to boom in Taiwan fastener industry. In the 2002, we start China very early. Later on 2017, that's 10 years ago, EQT acquired PSM. In the 2016, we moved to a new facility, to Wuxi. I joined PSM on April 2018, almost two years. In past two years is a challenge years. Last year, we celebrate 88 anniversary.
The eight number in China is a lucky number, w e had double eight last year. We have a double punch last year. Number one is Brexit, w e are a U.K. company, first punch, Brexit. The second punch, we have a lot of business for China. We have Mr. Trump have a trade war between China and U.S.A. We do a lot of things to try to minimize the risk. We try to have something in U.K. we can produce in China, we can reduce the Brexit risk, luckily we have Taiwan. We do many things in China, we can move some things for Taiwan. From Taiwan to U.S.A., we don't have trade tax from that. In the past two years, we expand our cold form expansion in China. We opened plant 2 and plant 3, come to the 2020, we have Bulten together.
This is our global footprint. We have covered 22 countries. We have our distribution, especially for Asia. For example, we have an office in Singapore, a warehouse in Singapore, Thailand, Malaysia. We have an agent in many Southeast Asia. Other than in USA, we have several offices. For example, we have office in the West Coast, in California to serve Apple and Tesla, for example, Wisconsin with Chicago, and the manufacturing we just introduced. Who is our customer and where our parts go? 70% of the business go to automotive. For example, we are some OEMs. Most of our customer for automotive is Tier 1. For example, we have Schaeffler, Mahle, and CATL. Many people maybe know CATL is a battery manufacturer, is the largest other than Tesla.
Recently, last year, CATL invest to EUR 1.8 billion in Germany, because they are going to grow the business with these BMW and others. We are the key supplier for CATL last year. It's a new business last year. Used to be CATL let their Tier 1 supplier to choose the parts. They find out the 30% of problem for quality delivery is from inserts for plastic. CATL take back all the purchasing power. They select only two supplier in the world to supply their inserts for plastic, and we are one of them. We are very excited because they expanding to Germany, and later on we have German with Bulten. We have grown more opportunity with those facilities. The other one which I'd point out is the thermal management module is for Schaeffler.
We are the only Tier 1 supplier can localize in China, successfully do that, with the cold form plus machining, plus the center grinding. Multiple applications. Other than automotive, we also have industrial, especially these two years. We try to go get more diversify ourself. For example, we get a 5G for Huawei business. It's a antenna. They're growing very fast in China, and w e also have a watch. If you have latest, most popular watch in your hand, it's a Fruitz. It's a Fruitz watch. We have 15 very small screws in this watch. Maybe people cannot imagine how small it is, I will If we take a look, it's small. We have 15 in that watch. Other than that, we have GE, Sony, and others. For example, Mindray is the largest medical equipment in China.
We help them to consolidate parts from 100 more part number to 25 part numbers. We become the only one supplier for them, for their inserts. You can see, PSM try to go to several industries growing and more advanced, and the combination with multiple application together, including cold form, machining, grinding. As much we can add in one component, we have a more higher barrier to prevent our competitor to come into our business. New journey for 2020. What happened? I think industry introduce a synergy. I would like to dig a little bit more to tell you from perspective of PSM. From product perspective, PSM has been doing this for 18, 19 years for the nuts, and our main customer is Tier 1. Bulten, very famous on the bolt.
We have one product, is combination, we call compression limiter assembly, bolt and the nuts, and together we assemble that. That exactly is a combination between PSM and Bulten. We can get more good price from Bulten, and we have good assembly capability, give more competitiveness to our market. From the customer base, you see this page before. Most customer major for business Bulten is OEMs. They go to Volvo, Jaguar, and for PSM, we most go to the Tier 1 suppliers. From the perspective of Full Service Provider, we are vertically integrated each other, including products and customer. If you found a global footprint, we leverage each other. Bulten very strong in Europe, and we are very strong in Asia on customer. These two combination, and coincidentally, in Ohio, we have Bulten there, and we are there.
We have more synergy each other combined in North America. When we talk about the most thing about the Bulten synergy, we can play the different game in China. PSM have in near Shanghai area. Don't worry, it's not corona, okay? I have two home, o ne is in China, Wuxi, one is in Chicago. Okay. I left China in January 20th, and past two weeks in Chicago, so I'm safe, so no worry about corona. We are in very close to Shanghai, and later on we have a partner in South China making that small parts also. Now Bulten have a plant in North China. For customer or for China, we can cover entirely, for manufacturing, for our sales team will cover China. That is, we think, is a great synergy between these two companies.
This is my final one. I just heard we have Taiwan, also like Anders mentioned about they purchase a lot from Taiwan. This morning, I very surprised from the call, our senior VP, he told me great news because the purchase team, I say, "Can you introduce the Taiwan supplier to us, to our China, Taiwan team?" They have conversation, they call, have a conference with the Taiwan supplier. This morning, Carl told me the Taiwan supplier tell them, "We're going to cost down for you a major part, 8%." Only, I think, Carl can more call every day to that supplier so we can get a synergy together. 234 years combination, great synergy. We are very excited to looking for 2020. Thank you.
Hope you all feel refreshed after the coffee break. My name is Fredrik Bäckström. I'm the SVP of Production of Bulten since December 2019, obviously not yet an expert in fasteners. I most recently come from Arcam, a manufacturer of 3D printer for metal, delisted 2018 when acquired by General Electric. Quite new to the business, but very excited to be here on this journey. Bulten has a very strong manufacturing footprint. By producing near our customers, we can provide them with instant service and shorter lead time. By our manufacturing strategy, we're combining the best of two worlds, high volume production of our own internal specialized product, and a wide range of fasteners needed to serve our customer's complete range of products.
Through our central European units in Hallstahammar, Bergkamen, and Bielsko-Biała, Poland, we manufacture our core, the individually core range of products that are specialized, in a manufacturing perspective, to make the plant as efficient as possible. With our units in Hudson and Tianjin and Nizhny Novgorod, we are producing a complete range of automotive fasteners for that specific market. With the additional footprint of the manufacturing facilities of PSM, we will be able to strengthen our regional and local presence to become even more flexible when it comes to suit our customer needs. The total production capacity in Europe, as it is defined, is by how many tonnage we can produce through our heat treatment, and the combined volume now in Europe is roughly 50,000 tons annually, with some capacity to grow still, which is interesting for the Stronger 24.
Also remember that I said it is actually in the heat treatment that is the capacity constraint. When Philip is talking about what we are doing on the product side, that will shed some new light on what we are doing. With PSM in our group, there will be significant synergies between the two companies. With the cold forming, where we at Bulten are specialized in external threads, and PSM are specialized in internal threads, as in specialized nuts. We can combine our manufacturing capabilities in sourcing production that is currently sourced from outside vendors, but also making sure that we are specializing each factory to what it's best suited to do. Probably moving some from Bulten factories to PSM factories, and from PSM factories to Bulten factories. In machining, PSM has a very strong position, complete factories for this.
This gives an excellent opportunity to utilize those resources for Bulten products. Heat treatment is an area, and even surface treatment, is an area where Bulten has a very strong position and PSM has none. We're currently, at the PSM side, sourcing a lot of those activities outside the company. By bringing them in, we will get better revenues and increase margins. Site footprint, Marco already mentioned this. There are a few low-hanging fruit there, especially when it comes to our U.S. operation. We do have a close proximity in the U.K., and also in Taiwan, there is this big opportunity. Not previously released, Bulten had plans in order to start up some kind of sourcing office in Taiwan. The need for that may no longer is needed when we have a very strong sourcing team under the umbrella of PSM.
Marco revealed some really good news there previously. Also, when it comes to share raw material suppliers, Bulten has a sourcing range which is much wider than PSM by much higher tonnage. PSM will be able to piggyback significantly on our big volumes that we are sourcing in the rod segment, for instance. These synergies will come. For those of you who are not familiar, what is the actual production process of a bolt? In its simplest form, making a bolt is you form it, you heat it, you coat it, and then you ship it. That's very easy, and that is basically the core of what If you remember those circles that you have the core of it. However, there are a lot of additional value add that can be made in the production process afterwards.
This simple routing here is not the case for the majority of our products. If we talk about our production strategy when it comes what products we are making where, we can start out by looking at the Polish plant that we just saw on the movie. The Polish plant is specialized in smaller dimensions and with a lot of value added to it. Typical size range from below M10, and the more the labor content and the more specialized, the higher they can go. Our German facility, they are, let's say, in a sweet spot where we are very standardized, extremely high volumes, very low labor content, and it's by far our most efficient when it comes to produced number of screws per employee hour. Very specialized in a very narrow segment. Our Swedish operation is going towards much larger dimensions.
Their most extreme one is actually 30 mm by 300 mm. That's a severe bolt. It can lift 54 tons, one single bolt, quite heavy duty, but also in the special range, they can meet this. Stainless steel and high-temperature application is specialized by our Swedish operation. Our markets in China, Russia, and the U.S., they provide the fasteners needed for the customers we currently are serving there at this point. That means that they cover the full range. When the operation is growing, and we will become much stronger on the market, we will probably see a specialization even there, from a perspective that specialization gives higher margins when possible. As you can see, there is a gap here of micro fasteners, micro fasteners, typically something you would find in a smartwatch.
There's also a gap on the internal threads, nuts, special types of nuts, and this is where the PSM comes in now. With the addition of them to our production portfolio, we will be able to handle fasteners from the size 0.8 mm up to 30 mm in dimension. Marco, how short are your shortest fasteners? If just maybe 1 or 2 mm, right? Up to 300 mm.
You saw the small one.
Yeah. They're so small, if you sneeze, they will go out all over the place. That's how small they are. Flexible by standardization. Bulten has a concept when it comes to how we standardize our machines, our toolings, and our operation systems that allows us to have a great inter-operational flexibility between different units. We also have a shorter ramp-up when we're starting a facility like the one in Tianjin. We can add resources from our existing facility and provide that over to them to help them ramp up. It also gives the emergencies handling when, for instance, in 2018, Hallstahammar ran out of capacity due to unanticipated demand. We could flexibly shift that operation over to our German and our Polish operation. Since we are using standardized machines, we will also reduce CapEx quite significantly, combining our sourcing volumes to a few of the suppliers.
Of course, we can leverage our bargaining power when we go out and buy more machines and buy more equipment. Preparing for profitable growth. Bulten Stronger 24 calls for a significant growth in volume. That volume will come from existing capacity in our current facility. We have still some growth potential in our central European factories. It will also come from new operations, and you have already seen the information about our Tianjin factory and the purchase of a plot in Poland. A quick snapshot about our Tianjin facility that we inaugurated last year. We did a successful move without interruption for our customers. That, by itself, is a great achievement. It is expensive not to meet the customers' demand. The size is roughly 9,000 square meters, 100 employees, and it's a fully equipped factory right now.
We've taken the CapEx for that. It's fully equipped, ready to grow, ready to ramp. It's going to be exciting to see the volume increase there. From a sustainability side, it can be interesting to know that the surface treatment is in a special environmental zone, which means that we have the local community government taking care of all the residuals from the plant, making sure that there is zero waste from our operation here, which is very, very important when it comes to especially the surface treatment. Our new plant in Poland, it's in a place called, if you can say it, Radziechowy-Wieprz. In short, we call it Rad, and I think you all understand why. Its plot size, that is roughly 100,000 sq m. In the initial phase, we plan for a facility size of about 25,000 sq m.
You can compare that to the size of the Tianjin factory. Initially, we will in-source a very expensive operation, the surface treatment. It's done at a subcontractor in the region. Currently, we are struggling with that supplier when it comes to all aspect of operation, pricing going up, capacity not sufficient, lead times high, and also quality issues. By bringing that inside, we will have a significant better position when it comes to our own operation. We also have the possibility, as we said, with the facility to incorporate more operations. Heat treatment, for instance, is one of those, should it be needed. We will move our logistics center from Wilkowice and put it in the same building.
From a logistic and transportation cost and sustainability cost, that's a huge advantage because we eliminate a lot of transportation, so we will reduce lead times significantly when it comes to that, and cost. What else? Helena already mentioned the green financing we will have through the BREEAM. A lot of efforts go into making this a very sustainable building, both when it comes to the design of the building itself, but also the surroundings of it. An interesting point when it comes to sustainability about this, in China, the local governments think that the waste is so hazardous, they don't trust anybody with it. Here, it's the opposite. We will have zero contaminated water from this facility. Exactly zero. How do we do that? Yes, we will recycle it through evaporation and then condensation, which means we will clean the water.
We get completely 100% clean water back. The slurry that remains will be dried, and left of many cubic meters of contaminated water will be a tiny cake of material that we actually can sell on the market. A very comprehensive cleaning procedure in that facility. Margin expansion, also part of the Stronger 24. Very important, of course, to have money in the pocket when you want to go increasing your volumes. How we will do that? The quest for increased margin, that's a never-ending story, you just continuously need to do that. Some of the activities we will undertake is production consolidation. It will come partly from the acquisition from PSM, where we will move production from one site to another, and in-sourcing of externally sourced production.
It will also come from the fact that when you are entering in a Full Service Provider agreement, time to market is of the essence. Magnus will talk about our Full Service Provider concept later on. Sometimes when you take over a supply chain, it's not as efficient as it should be. From the source components, it can be that the OEM has provided you should only purchase from them. Possibility to resource and re-in-source that type of component will give some margins. Already mentioned the way we are in-sourcing high margin operation from the outside, heat treatment and surface treatment are examples of that. Distribution network efficiency. Anders talked briefly about that. We do have some parts that are well traveled, we can say. They've been around the world a little bit. There is significant savings to be made there.
We're currently running a project around this, probably reducing our warehouse footprint, reducing transportation costs also around the world. Localization of production. Producing in a foreign country, shipping it with trade cost, that is a waste. Bulten is one of the few that has the opportunity to actually produce near all the customers. That gives lower cost, and we do have projects around that as well. On a personal note, being new, I can say that standing here right now that when it comes to lean production, we are good, but we are not super great. There is actually measures to be made there. I think that the fact that the plants have been allowed to be run rather independently means that the units that are excellent in one area does not use the center of excellence of another.
By combining the best practice from all units, we will achieve additional operational efficiency. Bulten Production System, it's great, but it needs to be implemented to a fuller extent. Coming from the 3D printing industry where the production units are, I would say they are 100% digitalized. There is very little manual information. I think there is an untapped opportunity when it comes to Industry 4.0 as well. We can be better at digitalizing our factories and using more modern technologies when it comes to digital improvement. Last but not least, sustainability efforts. They will lead to reduced cost. It's not pro bono work we are doing when it comes to sustainability. It's actually core. We will save money on this. That leads us to sustainable operations. I already talked a little bit about what we're doing in the Polish plant.
This is actually in our old Polish facility where we have installed solar panels to the capacity of roughly 100,000 kilowatt hours in yearly production. A significant contribution to our electrical consumption in that factory. By already in the design phase of the new building incorporating this, we can achieve a very efficient solar panel installation without having to retrofitting. It's much cheaper when you do it from the beginning. In total, what we are seeing on those parts of the building here, that corresponds to roughly 450,000 kilowatt hours per year. That will cover roughly 16% of the total consumption there. This is a rather cool feature. It's actually a customer parking. If you have electrical vehicle, you will get the electricity from the roof shading it here.
Maybe not the greatest contribution, but still it shows the customers that we are caring. Part of the plot here, a big portion of the land is reserved for what is called a solar farm that will actually be completely dedicated to the production of electricity. In combination with all these, it will be, well, not 100%, but a large portion of the total electricity consumed at that plant. Once again, it's not pro bono. It's actually something that is giving us higher margin, saving costs. As I'm quite new, I can take absolutely no credit for this, but I'm so immensely proud to show these figures anyway. These are the CO2 footprint reduction from our oldest factory in an operation founded in 1873. You don't have to start from scratch. You can actually do significant amount of work.
Yeah, systematically working to reduce our CO2 footprint gives excellent result. When we come to Marlene and Philip, keep this graph in mind. These two numbers. It's a teaser for what will come. In Sweden, it's easier to reduce your CO2 footprint because there is clean energy available. You can buy clean electricity. Even in our German facility, we've been able to reduce it with one-third in over a couple of years, and the graph continues down like this. It's actually something we will continue to work with. Well, that ends the sustainable growth session on the production. Any questions about our manufacturing and our manufacturing footprint? Crystal clear, like the sewage water from the Polish surface treatment plant. Okay, Marlene.
Thank you, Fredrik. Let's talk about sustainability as a driving force, and I'm quite sure that you understand that I'm a very happy person today as I'm heading up the HR and sustainability function in the company. By talking about sustainability as a driving force, I think we should ask ourselves one important question, and that is, who is deciding our future, besides ourselves? Any suggestions? Come on. Who is important? Who decides the future of Bulten? Any suggestion? Customers. Thank you. You? What I'm talking about is actually what we have been working very consciously with the last years, is our stakeholder mapping and model. By saying that, as a company, it's important to really understand who are your stakeholders, because they are actually deciding your future.
This is the stakeholder mapping that we have done in Bulten, and we have been working with this for a couple of years. We have, of course, identified the customers, but also some other high-level groups of stakeholders. That is not enough to only focus on the stakeholders, of course, because you need to put everything into a context. This model is showing two aspects, two example aspects that is really key for us to understand, and that is, what is going on globally, what are the global trends or the global movements? The next question is, what will drop over to become legislation? We know, I know, you know, that what really drives change is normally what comes into legislation. That is really key for us, and this is what we have been working for really hard for some years.
By saying that, I can give you one example of a global trend. Do you remember, like 2017, what the three biggest global trends were? One you can probably guess. Well, it was digitalization, shared economy, and sustainability. The Paris Agreement was just a few years old. One of the first legislations that came into force that really had a big impact on businesses and their sustainability work was actually the reporting initiative. 2017, almost all European companies had to start to report out formally on their sustainability efforts and work and start to measure and present that officially, transparent. That was hard work at that time, I can promise you that these days it's even harder. What do you think is the most powerful aspect that impacts the global trends today?
According to World Economic Forum, which are identifying global trends annually, last year, they identified that the environmental aspect, the negative environmental aspects, is actually the key contributor to the global trends. Well, at least a majority of the global trends are really impacted by the environment, and especially the CO2 footprint. We know this. It's no news. We all know this. That is really showing the fast speed in this around us. What is currently the key driver, and what is around the corner? What is coming around the corner for our stakeholders? Well, I think we should try and focus on one group today and the customers. Why don't we listen to see what they have to tell us? What is really the key drivers for our customers these days?
I would say that avoiding penalties is probably the most important thing these days, and you know about that as well. We have heard about this earlier today, that all OEMs that are operating in the European market, they are facing big penalties because of the new legislation that says that you can only emit a 95 gram of CO2 per driven kilometer. None of the OEMs are meeting that demand today, and not even next year, because the penalties will be even higher next year. So by saying that, you could say that the tailpipe emissions that we are talking about right now has really driven the electrification. What is coming up now? The next thing, if you look into the trends and legislation, it is actually something which is called the life cycle CO2 footprint of the products, of the cars.
This means totally new demands on our customers and on us, of course, because we are part of their life cycle. This is one picture. This is one example of how a customer of ours is describing the CO2 life cycle emission. It starts with the production, which starts supply chain, w e are part of supply chain. The next thing is the production. It's the OEM's own production. You have the next phase, the user phase. That is about fuel and energy supply and energy consumption of the car, and then y ou have the end of life, which is about recycling. All the full life cycle emission will be taken into consideration, and that will for sure be the next legislation coming up, and we know that. What are the customers doing now?
They are actually putting in place systems to measure the CO2 impact, which comes from their supply chain, which come from us and w e are prepared for this. Why are they doing that? Because they have committed, you saw the movie. They have committed to meet the Paris Agreement, to reduce with 30% per car by 2025. It's only five years ahead. For sure, I would say that the quote from Volkswagen, which we have here in the bottom of the picture, is really telling the truth, but it's also an opportunity. They say, "In the future, there is to be a sustainability rating, which will be taken into consideration in the assessment of suppliers. Sustainability is to become a selection criterion that will be just as important as cost, quality, technological competence, and innovative strength." All our other customers are also saying the same thing today.
Stronger 24. Bulten aim to be number one in our business when it comes to sustainable development, and we have a roadmap for that. This roadmap is taking care of the stakeholder mapping, the value chain of ours. We know, of course, where we have the biggest impact and where we can make a difference. It's also taking into consideration the global context, but now it's also integrated in our business strategy. These are the five areas that we are focusing on. We focus on the corporate governance and business ethics. We focus on responsible and sustainable supply chain because no one can solve this by themselves. We need to work together. We also need to work together with our supply chain. Sustainable own operations, for sure, we have a vision and plans, and Fredrik, you just told us about some of the plans we have.
Sustainable product offer that both Philip and Magnus will talk more about very soon. This is carried up by our organization, which is characterized by diversity and inclusion. How do we know if we are on track or if we perhaps even are in the forefront? I don't know if you have heard about any third-party assessments, but actually, we, as a supplier, we are asked on a regular basis from all our customers to participate in different assessments. As you can understand, no one is in a position to say no. Of course, we do this happily. We are very proud about that EcoVadis, which is one of the biggest global players when it comes to CSR assessment, they assess about 60,000 companies.
There are more than 450 global big companies that are using EcoVadis to assess all the supply chain, but also to find new suppliers. We went through this assessment and third-party analysis last year, and we actually came out with a gold medal. What does that mean? That means that we belong to the 5% of the global companies, top 5% of companies globally when it comes to CSR and sustainability. As you can see, we actually are positioned in the top 1% of companies within our own business. I think we have some evidence that we are for sure on the right track, and that we are even in the forefront. By saying that, we are ahead of the game. What is it about then in the end?
How can we deliver the vision that we have, that we want to create and supply the most innovative and sustainable fastening solutions? It is actually about developing new products and services, and you will for sure hear more about this. It is about manufacturing approaches. Fredrik talked about that, Philip will also talk a bit about that as well. It is about our relations with customers and stakeholders, really to understand the context and the stakeholders and act upon that. Why is Bulten well-positioned when it comes to take on this lead? It is based because we are an old company, and we are here for a reason. Our values is really key to us, but also the creativity, the technology, and the innovation power.
For sure, you will hear more about this and also ask a lot of questions that we hope that you have. The skills and expertise. This is really what is framing why we strongly believe that we will be number one when it comes to sustainable development in our business. Before I hand over to Philip, I thought that I would share with you the voice of the customer. We had some teasers in our social medias, right before we published our press release for today meeting and the BUFOe. One of our biggest customers, I will not mention who, but the person who is the head of global sustainability immediately posted a chat with me, and he said it like this: "Marlene, reference to your LinkedIn post.
How is it possible to reduce the CO2 footprint for bolts?" I answered him, "Hello. Just wait a few more days, and then you will get to know more." He answered, "All right. We are working now, exactly with these questions. Please send me more info." I think that is a really good example, and I think timing is everything. Philip, please, come and tell us more.
Oops. Thank you.
Thank you.
Thank you very much. I think that we have a very good understanding of the context and why it's so important that we are developing new solutions that really make a difference when it comes to carbon emission. First of all, when we understood that reducing carbon emission is actually business critical for us, we asked ourselves this question: what is the carbon footprint of a bolt? Does it really matter? Can we make a difference? We set out to try and understand what the average EU bolt production, actually, what is the carbon footprint? What's the energy consumption, and what is it in each and every step? This is the result. We can clearly see that, talking about energy consumption alone, it actually, heat treatment stands for more than half. In CO2, it's more than 30%.
Naturally, heat treatment is on top of our list for improving this. Now I'm really happy to be able to introduce BUFOe, which does exactly that. Before I tell you a little bit more about how it works, I wanted to give you a history lesson about BUFO, the brand BUFO. It's short for, BU is Bulten, obviously, but FO is actually Forsell. Professor Karl Forssell, back in 1918, invented a product which was the first of many innovations, which actually established BUFO and Bulten as the technology leader in high quality and high strength bolts. We are doing the same thing again, in another context here. We are now launching the first high-strength bolt, which is also eco-friendly, which makes it very natural to add just an e to this branding. How does it actually work?
I know that most of you are not engineers, so I will try to make it very simple and understandable. Our customers, they require a certain strength from all our bolts. We have these tools to make that happen. We have the material properties, our cold forging process, and we have the heat treatment. The normal process looks like this. We receive a material with a certain strength, w e cold forge it, and by work deformation, work hardening, it gets a little bit stronger, w e put it in the oven, and we heat it up twice. This is why we have so high energy consumption here, because we have to heat it up to make it strong, and then heat it up again to de-brittle it. Otherwise, it's too hard, and it will break.
With BUFOe, we use a slightly different material, but t he key is this, the cold forging. This material has hardening mechanisms which are triggered by deformation. With our know-how and our testing, calculation, and development, we have figured out how we can consistently get the required strength just by forming the parts, which we already do, making this very energy-consuming, carbon-emitting process redundant. We achieve this: 30% less CO2e. CO2e is actually carbon emission equivalent. 50% less energy per bolt. There are other benefits. Fredrik said something about how we measure the capacity of our operations in what the heat treatment can process. Obviously, we can increase capacity if we take away the bottleneck, which is heat treatment. We don't need to invest in increasing capacity by adding even more carbon-emitting ovens.
We can reduce the lead time because we're taking away one of the steps in the process. As a matter of fact, the biggest source for quality issues is heat treatment. By removing that, we have a possibility to actually improve quality even further. We are releasing this now, this week, to you and our customers simultaneously, and you've already heard the reason and the timing for this. All the customers now ask us for solutions just like this. To give you a very specific example, I know that you have already had lots of examples from Marlene and others. Volvo Cars specifically, they've said to us that we want you to challenge the traditional ways of doing things, because we know that it's impossible to reach these goals by doing the same thing as we all have done in the past.
BUFOe is really challenging the traditional way of making bolts, which is by heat treating them. Another example from Daimler is that they are working on finding a way to make steel from iron ore into steel billets without using blast furnaces. Blast furnaces are one of the most carbon-emitting processes that we have. We're not solving that problem with BUFOe, but at least Daimler, if they choose BUFOe, they don't need to heat up the steel once again to make it strong. We do that by our cold forging instead. Is 30% enough? It's enough to meet the goal for the Paris Agreement, but we think that we can do more. If we look into every step of the process that we either own or control and optimize those, we believe that we can cut the emissions in half, so reducing 50%.
This is without adding renewable energy. If we bring in that as a factor, we can do even better. Solar farms, well, renewable energy from the sources that we have in Sweden. We have the possibility to really make a difference here. The obstacle that we have to overcome to achieve this is the traditions, the specifications that the industry have today. We need to find a way to let the customers let us help them. We think that our Full Service Provider model is a part of that solution. Because when they give us the confidence to control the complete value chain of fasteners, then we can start doing all these incremental improvements step by step.
We can deliver not only the least carbon footprint for our products, but also, as Fredrik and others said before, probably the best price as well. I will hand over to Magnus. He will tell you more about how Full Service Provider works, how eco-efficient solutions and quality and Bulten runs through it in a natural way. Thank you.
Thank you. My name is Magnus Carlunger. Been working with sales for 25 within Bulten. I just realized that I'm the oldest Bulten person in this room today. Sorry, t here I am. Our FSP concept is not a new invention for now. Actually, the success story was introduced 20 years ago, but it has been developed through the years to the state where we are today. We work in an industry who is heavily loaded with abbreviations. Now it's a quiz for you. What do we mean with FSP? Anyone? Thank you. Perfect, y es. Welcome to the Bulten Full Service Provider eternity. I will give you a picture of our updated FSP concept, where we have strengthened the customer offer by taking increased responsibility of the supply chain, and this is a sustainable supply chain.
Fasteners is a complex commodity that requires its focus, and we are convinced by optimizing the structure to the optimal solution of one point of contact, all stakeholders will benefit out of a win-win perspective. However, Bulten, we are always interested in winning, gaining new businesses from a single part order to a complete full FSP contract. Because we have to bear in mind that a single part order can develop into an FSP solution. An FSP solution, as such, is the crown jewel of Bulten's offer to the customers, and that is for sure an award of trust in a relation between a customer and Bulten. We can ask ourselves, what is the reason behind starting to sell in the FSP concept? It is true that fasteners is a challenge for the automotive industry.
It's really a complex commodity with a lot of part numbers, it's difficult to control the total cost of purchase. In an assembly plant, we can talk about 8,000-10,000 different components that has to be assembled together. Out of these 8,000-15,000 components, 20%-25% of them is fasteners. If you look into the purchase value of the components, fasteners represents roughly 1%. It's a huge number of parts to a part by part, very low cost and complex. This is the basics for Bulten entering to the arguments of FSP. On top of the complexity, we are all meeting new demands and much related to the environment. This is something where we as Bulten want to contribute and take a responsibility of the complete supply chain.
With resources from Bulten, we can support them with customized, optimized solutions, one point of contact, and last but not least, a global footprint supporting the customers locally. As of today, we have a new product line, which we really hopes will trigger the engineers to work close with Bulten, and that is the BUFOe. I'm excited to go out and meet the engineers today and hear, are they willing to start to question on the traditional standards that are controlling the fastener specifications today? Time, money, and resources are wasted daily when design and organizational processes grow out of control. What do we mean with this? This is an environment that we meet when we meet the customers on a daily basis. First of all, time and resource is required a lot of in terms of developing cars.
Today, we are forced by shorter lead times to get out with new products on the market. We have unmanaged process chains, meaning that fasteners as such, imagine a car company, they have design areas, and everywhere, the single point of contact is fasteners. Without a control of the fasteners, they will grow to a massive number of part numbers. Last but not least, there is a variety of suppliers providing fasteners and challenge the efficiency. There are too many steps from order to delivery, and you can always ask the customers: How do you utilize your resources wisely? The Bulten customer offer is an experienced partner, 147 years of fastener engineering, capable to understand all specific customer requirements. A cover-all solution. Bulten is a partner where we can source, produce 100% of the demand for assembling a car.
In the jungle of suppliers, the one point of contact will simplify the relation with your fastener supplier. What is the base for Bulten when we're entering the Full Service Provider system? We are going in the beginning, with a clear objective to make it more efficient. As someone mentioned before here, entering an FSP concept can be very complex and cost-driving. Bulten wants to take responsibility and start to work. Through our work, we can step by step improve the margins for Bulten, and that is many times through commonalization. Commonalization means that we are reducing the number of parts and increasing the volumes produced per part. That is crucial. Simplified assembly. A screw can be designed in many ways, and without support from a competent partner, this is costly. We are focusing on cost when the part is assembled in the car.
It's the same as in-place cost. This is tradition for Bulten for many years. Sustainable solutions, challenge the traditions, new materials, new solutions, and as of today, BUFOe. Full Service Provider, we say it is modules. Why do we say it's modules? FSP is not a one solution fits all. We will find out together with the different customers, their request, how they want to see the relation between their work and Bulten as their supplier. It can be from a single part supply to a complete chain from research and development to the aftermarket. We have for sure the competence to implement whatever solution suited to make a change for the customer. The change is something that we see is the difference, and we do it in different modules. Engineering, for example, we can support with faster engineering services.
We can be on site from Mondays to Fridays at customer, supporting them in fastener questions, or we can be offsite supporting them with their demands. The crucial thing is that right part from the beginning will give you a speedy development phase and a cost-efficient solution. Speed is important, why we are focusing in rapid prototyping. If we can come up with an idea today and supply prototypes tomorrow, we have a great advantage towards our competition. Important is that we can also secure the test and validation of each and every individual fasteners. Manufacturing. We have innovative, technological, advanced products. Some of them you can find here. I had an interesting discussion during the break about new steel material and how we have new solutions for adopting fastening solutions for high-strength materials. They are here. You can go and watch them later on.
We are producing something that is mentioned, TAPTITE. TAPTITE 2000, FASTITE, FASTITE 2000, which are special designed fasteners for different types of assemblies. We have a strong manufacturing footprint with production in China, in Poland, in Russia, China, U.S., which are enabling every customer to get the local support. In each site, we have the same competent support our customers with the same questions. Procurement capabilities. This is one of the substantial part of our FSP system, where we are supporting the customers with 100% requirements for an automotive assembly. It's also a good guidance for Bulten to check the market pricing on the global market level. Logistics. By using FSP system, we are able to have control of the end-to-end distribution. How do we load our shipments? We are trying to eliminate shipping air, maximize the loading of our containers coming to Europe.
We also have a distribution network of suppliers where we can ship goods in an optimal way throughout our facilities. Packaging is another topic where different suppliers are using different types of packaging. Bulten are customizing the packaging upon requirements to the customers, simplifying the way how a delivery looks like day out, day in. I will give you some examples where Bulten have made difference to the customers. This is a customer using a very expensive locking nut system on various assembly points in the car. Our engineers went in and analyzed the requirement, the need of this special locking feature. They made tests and validated that it worked without this locking feature. By the end of the day, when we introduced a new solution, we could save the customer EUR 800,000 a year. That is substantial savings, and this is for fasteners.
Another part is a screw designed for a steering column, a tricky assembly where the fasteners was hard to assembly. Same here, our engineers looked into it and optimized the design, took away some features that were unnecessary, and the savings for one single part numbers was EUR 100,000 a year. There is a reason to engage with an FSP supplier. You can find savings. What we do focus in now in FSP 2.0 is the eco arguments, eco engineering. What do we mean by eco engineering? Yes, we are talking about optimized design, lightweight materials, elimination of waste, correct material from the beginning, reusability. There are fasteners that you can reuse that today on a service are disassembling and scrapped. You can use parts that you can reuse again without scrap. That is waste to take scrap.
Last but not least, BUFOe , a potential for the future. Eco manufacturing. Cold forming. Cold forming as a technology as such is an eco product with very limited loss of material. We do today secondary machining, but if designed optimally, you can avoid to do secondary machining. Heat treatment, as Philip said, we do not need the heat treatment in the future. In-house manufacturing, create the value internally, what Fredrik said. Take control of the total process chain from raw material to a finished product. Reduction of non-renewable energy, initiatives that we are doing in every investment we do in the future. Can we do something that is supportive for this environment? We will do it. Increase the usage of raw material from electric arc furnace with a high degree of recycled material. Procurement.
We have a wide global supply base, they are committed to work with carbon emission reduction. They are committed to support a zero-defect policy because defects is waste. Right thing from the beginning will improve the CO2 emission. Also internally, we were talking about the Bulten Production System and the lean manufacturing. With a higher focus on lean manufacturing, we will avoid doing mistakes. Mistakes is waste. Logistics. This is a very interesting topic where we are looking into how can we improve the way that we transport goods. Green ships, trains. How can we identify a supply base located where we can utilize train, air rail, and green ships? Again, this is a really strong topic that we have to work with our customers, where they have a variety of enclosures, from plastic boxes to plastic bags, carbon bags.
If we could standardize that to a more unified system, we have a lot of benefits to do, not only for Bulten, but also for the customers. Bulten, yes, we deliver a value chain that makes a difference. We have the competence, we have the eco-sufficient solutions, we have the EcoVadis, and EcoVadis is something that we within Bulten are really proud of. Talking to the customers, and we are mentioning EcoVadis, they really raise their eyes, oh, because they are talking about in their sourcing strategy, EcoVadis is one point that pushing you in the forefront when choosing a supplier. That is what is said today. It will be very interesting when it comes up to a quote, if we have to quote a little bit higher price, if EcoVadis overruns the price. Quality, for sure. Bulten is a renowned supplier within quality.
The improvements made through the years is a very good evidence of the right actions made within Bulten. Last but not least, that really makes a difference is the culture. Bulten are seen as professional, Bulten are seen as innovative, Bulten are dedicated, and Bulten are empowered. No matter who you meet within our organization, we will always do whatever we can to find a solution. The vision, we create and supply the most innovative and sustainable fastening solution. This is the new Bulten. Thank you for listening.
It's time to wrap up. I'm just going to show you this last slide, which you recognize from the introductory session earlier today. In achieving our goals, we said we have a strong position, we have growth momentum, we have actions in place to drive margin expansion, and we have a strong financial platform. I hope that from the presentations you've seen this afternoon, that you recognize what it is we're doing, the substance that we have behind all of these drivers and all of these building blocks of reaching our goals. I'm not going to repeat them, but there are a couple that really stand out. The introduction of the BUFOe, the PSM acquisition that gives us a unique set of synergy opportunities, both when it comes to revenue and when it comes to cost efficiency.
All in all, I hope that you've seen why I'm so passionate about the journey we're on with Bulten, and that you want to come along with us. Okay. That concludes the presentations, and there's an opportunity to ask questions. I would like the presenters to come on stage, please. We'll try and manage the microphone here. We have a hand mic, so we can use the hand mic for questions, as well as pass that around for answers.
Hey. A couple of questions on various subjects. First, the financial targets of reaching SEK 5 billion on sales in 2024. Do you need any additional acquisitions except from the PSM side?
You have to see. As I said, we have a good momentum when it comes to organic growth. We have a good momentum when it comes to non-organic growth. It's in the nature of it that when you identify a target, you can't determine the size of that target ahead of time, but it will definitely contribute, and once we get there, you will see whether that makes us overachieve or.
Okay. Also, with the Full Service Provider concept, have that been used also on the PSM side, or is that an opportunity?
Not in the same way. I think Marco mentioned a few examples where PSMs really helped customers to achieve their goals and to save costs and improve performance. In a way, I don't think that you're unfamiliar with it, but all of the building blocks of the FSP, we think we're actually the only ones applying right now.
That could be an opportunity for the future, maybe.
I would like to give comment. Yes, it is an opportunity. The reason why I say this is that looking into Europe, you have Europe seen as a small part of the globe, but even in Europe you have regions where different supplier have been stronger and protected by the customer base. Already now, I don't think even Marco knows this, that since last week, we get close in the name of Bulten PSM in regions where Bulten has been weak. There is for sure an opportunity to grow together with PSM, where the portfolio of PSM is much broader today than it was a year ago.
Also, if we look at the history of Bulten, you used to belong to a larger group with the Bufab as well, which is more of a trading company right now, but they will come to some trading on industries outside of the automotive, and you used to be concentrated on automotive alone. With the PSM acquisition, it opens up more. Are you seeing yourself going for the full service provider concept also for other customers outside of automotive, maybe? To be more a direct competitor to Bufab, for example?
I'm not sure that we can claim that.
Oh, sorry.
Direct competitors to Bufab because our product offering is completely different. Yes, we will touch their customers, but we do it in our way.
To the extent, for instance, a white good, consumer electronic company would like to go into more of an FSP relationship, we're going to be open to that.
Okay. Finally, a few ones on the BUFO product then. The material you use, is that very much more expensive than the traditional material?
Fortunately, no. It's not that much more expensive. By eliminating the heat treatment, the small increase in cost of the material is negligible.
Okay.
You heard me.
Will you still go for charging higher prices for that one then?
That question I have to pass over to the sales department, of course.
We defer that to the price negotiation.
Okay. Also, I learned from way back, I'm a mechanical engineer, that the trick in getting a hard outside and a soft inside in a bolt, you get by heat treatment. Some Chinese low-cost producers have difficulties getting the right qualities, and heat treatment has been the trick in getting that done. Now when you can do the thing without heat treatment, are you afraid of being more copied and afraid of more low-cost production? Do you have some patents or something protecting the process?
Let me take that. What we're doing is moving the know-how from the heat treatment process into the forming process instead, because this requires quite a lot of know-how. We've been forming metal for 150 years, and that means that we've figured out a thing or two about how cold forming works and what that does to the grain structure of the metal. That's where the secret sauce is.
In this transition, do you need new machinery, or can you use?
No.
Okay. I think that's all for me. Thank you.
Any other questions? Yes, Markus.
Yeah, I could sort of join Kenneth there. Looking at what does it need from the customer to use the new fasteners BUFO technique besides testing it, is it sort of a given that they see the opportunity in reducing the CO2 footprint, or is it more like, well, we need to test this for a few years? When could we see a potential ramp-up of?
We've done the testing and validation to prove that the product is equal in terms of performance to what the customers are buying today. What they need to get used to the thought of not trading or not buying to a standard, but buying to an engineering specification.
Given that the fastener content of the car was maybe 1%, is the CO2 footprint a larger part of the car, or could you give some sort of?
Please ask that question again.
No, I mean, the fastener content of a car. You mentioned it's 1% or something like that, could it be the CO2 footprint is that the fastener create, is it a larger part of the CO2 footprint for the whole chain?
Well, I'm not sure I fully understood the question. Let me answer like this. There are several thousand fasteners in each car. One doesn't make a huge difference. Considering that we, in one of our plants, produce 5 million parts per day, the combined reduction of CO2 will have a huge impact, naturally. When it comes to the You remember the picture that Marlene showed you of the life cycle? You have the supply chain is about six tons of CO2 emissions. We believe that for each car, we are about 1% of that. It's not big. In that context, it is not that big. Also, again, looking at the example from the video, by just reducing half a percent, it's the equivalent of a forest twice the size of Shanghai when it comes to sequester carbon emission by plant increase. It's big.
Let me just add to that. Having spent all my career in the automotive industry, been through the weight chase, that's been going on for decades. I think this is very similar. The CO2 chase is going to be very similar to the weight chase, where there is no way if you're taking 200 kilograms out of a passenger car, there's no way you can do that from one or two systems. You have to optimize every single component, and you cannot afford not to do it on every single component. You have to take 30% out of life cycle CO2, you need to go at it exactly the same way. The suppliers that cannot provide that reduction, they're going to run off the road.
We're determined to be at the head of that and to be the only supplier that they can afford to choose.
You are the only one supplying this kind of technique at the moment?
Far, yes.
Yeah. About the financial target there, I just wondered, you talk about these synergies in sort of the PSM acquisition, and I guess are those synergies involved in the target to a full extent, or do they come later than 2024?
I'm sure we will find synergies on the other side of 2024 as well. The synergies are a great enabler for us to reach our targets.
The targets then, 2024, it's a couple of years ahead. Do you expect to reach that? Are they back-end loaded? Is it sort of things that happen 2023, 2024, or how should we see it? Is it a straight line?
I won't be able to give guidance. I think you have to be patient there.
Thank you.
More questions? No.
Can I add some comment to the question from PSM perspective? The Full Service Provider concept, I really like it. I didn't think about it that way for PSM before, because most of our parts, we go very closely with our customer. We do the design and tailor-make for that. Some part we have general part numbers. After we think about the combination of Bulten and PSM, there could be a synergy for PSM, too. For example, Bulten is a Full Service Provider, and they buy a lot of things from outside, and now they can switch to PSM. That's number 1. Number 2 is from PSM perspective. We already have a supplier code for many customers, including the OEM Tier 1, and even we have for Tesla or those kind related. We talked about that during our break. We are the largest fastener supplier for Tesla.
I didn't show in the presentation. We will bring Bulten to our supply chain. Used to be we can supply part of that for the nut, but now we can expand our portfolio, including Bulten's parts. PSM become our customers' Full Service Provider.
Okay. No more questions, then I think we're.
Just coming back.
No more comments.
Just coming back to the BUFOe technique there. Do you expect this, or could it be that the heat treatment capacity you have in-house will be redundant, or is it sort of complementary? Could these fasteners be used in your whole offering, this technique, or is it more sort of a niche part?
I think it's overestimating that all customers will switch to BUFOe immediately. One scenario could be that we are increasing the capacity in the other assets while not increasing in them, and thus meeting the capacity demand for the SEK 5.1 billion target that we're talking about in 2024.
Okay.
You want to see BUFOe as a growth opportunity rather than a replacement. I'm sure that the demand for heat-treated bolts will be there for a long, long time.
There are differences. A lot of them can be replaced, a lot of the heat-treated parts that the customers use today. Some can't be. Also, there is a lot more to learn because this technology, the BUFOe technology, has actually benefits other than just reducing CO2 or increasing capacity, for sure. There are properties that increases fatigue resistance. There are also hydrogen brittleness issues that could be solved with this. This has to be researched and developed further. Peter, time.
Not only the heat treatment, through my experience in China, for example, Asia, especially for China, because the environmental regulation getting more stricter and stricter. For example, for many cities in China, there's no more license for plating, and it's more stricter and stricter for the heat treatment. Heat treatment price getting higher and higher, and the license will be smaller and smaller. It's not easy to get a license for heat treatment. Heat treatment, the lead time getting longer. Even the price is same without heat treatment, but the raw material getting higher or something, the payoff will be even. For the lead time, getting more shorter. The other one is in the risk, because you are getting harder to find a heat supplier or getting those kind of things. That would be a great benefit to your cost, for your lead time.
That means your competitiveness in the market.
Okay, I guess that concludes it. Thank you very much, ladies and gentlemen, for spending the time with us this afternoon. It's been a pleasure. I wish you a good continued late afternoon and evening. I'm sure I will see most of you soon. Okay.