Employees as co-owners of Veidekke
At Veidekke we have a commercial focus on the work on corporate social responsibility, while also realizing that it takes time to integrate the mindset in all aspects of our operations. An area of commercially driven corporate social responsibility where we are at the forefront is work on employee co-ownership. Every year the employees are offered shares at a 20 percent discount, in addition to reasonable loan schemes to finance the purchase.
At Veidekke we believe that integrating corporate social responsibility as part of our core operations will provide us with significant competitive advantages over time. There are two reasons for this: First, one contributes to maintaining a healthy financial market – a precondition for added value and economic growth over time. Second, the company may reap more direct operative benefits, such as recruiting the best associates, better innovation processes, easier access to capital and a better reputation.
Salary and benefits
Veidekke is a large employer with approx. 6,000 employees in Scandinavia. We spend NOK 2.9 billion on salary annually. This comprises 2.3 billion in Norway, 370 million in Sweden and 281 million in Denmark. Most of Veidekke's companies have pension schemes for employees, in addition to statutory requirements. Most of the pensions are financed through funds in life insurance companies, but some is paid over operations. Total pension costs in the company were approx. NOK 265 million in 2009. As a part of staff benefits in the company we also offer our employees various insurance schemes.
Purchasing
Veidekke spend a total of NOK 10.9 billion on goods and services in 2009. This comprises NOK 7.7 billion in Norway, 2.1 billion in Sweden and 1.3 billion in Denmark. In other words, we are a large buyer of goods and services, and we have a good opportunity to influence suppliers in other areas than price. All of our suppliers are obliged to follow Veidekke's safety and environment standards and also ensure that any subcontractors follow the same standards.
Long-term cooperation with subcontractors
As opposed to some other players in our sector, we have a clear intention of giving priority to long-term cooperation with our subcontractors. This gives us an opportunity for closer interaction with individual businesses and also allows us to exchange experiences in the corporate social responsibility area. We also experience that the chance of constructive influence in the entire value chain increases with long-term relationships, and our goal is to develop together with selected suppliers.
80-20 strategy
Both Veidekke and the local communities where we operate benefit from a well-functioning and stable contracting market. Our sector has however traditionally been vulnerable to financial cycles. For many it has been difficult to price projects correctly, as prices rise sharply during the building period and devour the calculated margins. For many, the result has been poor profitability despite periods of growth. For this reason we have in cooperation with an analyst carried out a project in order to better understand the market drivers in our supplier market. The goal has been to find the optimum balance between long-term and short-term contracts that can ease tendencies towards sharp price rises and thereby contribute to a well-functioning market where inflation is moderate and predictable. The group's current policy is that 80 percent of goods purchases are from defined primary suppliers, while the remaining 20 percent are open for other parties. In this we we also ensure regular contact with the market and thereby have a better idea of how prices will develop.
