Turning parking into an export product

31.5.2016

jarmo&jukka
Mr. Jarmo Järvinen (left) and Mr. Jukka Riivari (right) at Leanpark offices in Helsinki

“You must seize opportunities when they emerge”, says Mr. Jukka Riivari, managing director of Leanpark. The company aims to deliver robotic parking systems to the world’s metropolitan cities. The company’s owners want to do their part to solve the challenges of growing urbanisation and build better cities for people in Doha, Qatar as well as in Lahti, Finland.

Long-term industrial automation entrepreneur and inventor Mr. Jarmo Järvinen had an idea: what if cars were not parked by people, but instead by a robot that would efficiently put them onto “shelves” in as tiny space as possible, just like goods in a warehouse? The whole indoor car park would then only require a fraction of the land area needed for a conventional parking lot.

Järvinen presented his idea to Mr. Timo Teimonen in business incubator Newentures. Teimonen was already familiar with the parking problems resulting from urbanisation from earlier construction projects, and he was convinced of the potential of Järvinen’s proposal. Järvinen founded the start-up company Leanpark under the wings of Newentures in 2008.

A lot has happened since then: product development, a prototype, and extensive testing. The first robotic parking systems were contracted by a Finnish construction company, YIT, a residential and business property in Lahti city centre as well as in Lahti’s railway station, where passengers can park their cars safely while continuing their journey by train or bus.

The tower of Helsinki railway station, the Ferris wheel of the Helsinki amusement park, and the landmarks of the centre of Helsinki can be admired from the top floor offices of Leanpark located in the heart of Helsinki. The company is implementing major projects abroad this year. Their plans are ambitious and their goals are lofty. A commercial breakthrough is only a matter of time.

“It would be easiest for us to build parking systems nearby, but we are reaching out quite far”, says Mr. Jukka Riivari, managing director of Leanpark.

Leanpark is very ambitious, and punches above its weight.

It would be easiest for us to build parking systems nearby, but we are now reaching out quite far.

Riivari has previously acted in managerial positions in many international companies. At the beginning of 2015, he began his work as the managing director of Leanpark, with the goal of taking the company into the international markets where the demand for smart parking solutions is greatest.

Jukka
When Jukka Riivari is not on travel visiting customers, he works in the Leanpark flexi space

Urbanisation squeezing out space for cars 

Urbanisation is a well-known phenomenon around the world. Already more than half of the world’s population live in cities, and this migration is continuing. It has been estimated that every day 120,000 people move to cities.

At the same time, the number of cars is increasing, The first car, the Ford model T, was sold in 1908 In 2013, only a little over 100 years later, there were already one billion cars in the world. Leanpark estimates that the number will increase to two billion in the next decade.

If half of all people are living in cities, most of the cars will be there, too. Where will all the cars fit then?

If, for example, we have to park 400 cars, we need 9,500 square metres of space in a conventional car park – an area slightly bigger than a normal football field. If a concrete multi-storey car park is built, the need for space will be halved to 4,400 square metres.

“We can cut this figure in half and fit 400 cars in just 2,000 square metres”, Riivari says.

How is this possible?

A robot takes care of parking

In Leanpark’s robotic parking system, cars are driven straight into an airy, bright parking room in the car park. The white walls and fresh-looking wood panelling of the room, designed by industrial designer Harri Koskinen, are far from a shabby concrete multi-storey car park.

The driver steps out, walks to a screen outside the parking room and confirms the parking. When the door of the parking room closes, the robot takes control. An autonomous shuttle lifts the car together with the platform on which the car is parked, carries them to a lift that moves the car vertically. When the shuttle reaches a free shelf position, it parks the car in it and returns back for the next parking task. Cars can be packed very tightly in a small place because there is no need to drive, walk around or open car doors on the shelves.

“We only need 2,000 square metres of land instead of 10,000 square metres. This means that in places where land is expensive, people are immediately interested in the robotic parking system”, explains Riivari.

When the car is needed again, the driver orders it from the screen in the corridor. The robot fetches the car, and at best, the car reaches the parking room at the same time as its driver.

Expensive estate boosting exports

Trams rattle along Kaivokatu, and the area in front of the railway station is flocked with people day and night. Real estate in the centre of Helsinki, where Leanpark’s office is situated, is the most expensive in Finland. However, the prices fall considerably when you go just a few kilometres outside the city centre. The situation is different in metropolitan cities, such as London and Abu Dhabi, where land is far more expensive.

“If you buy land beside King Faisal Road, the main street in Riyadh, Saudi Arabia, it will cost 35,000 Saudi riyals per square metre, which is slightly less than 10,000 euros”, Riivari says.

If LeanPark’s parking system requires 2,000 square metres instead of 4,500, the savings will be 2,500 times 10,000 euros, i.e. 25 million euros. The sum is enough to build an entire robotic parking system.

“Of course this plays a role in where it is profitable for us to go”, Riivari concludes.

According to Riivari, the property investment market in Finland is limited. Therefore, it is necessary to seek customers from abroad. In spring, Leanpark will launch its first overseas project in London.

Exporting Finnish expertise

When a robotic indoor parking facility is delivered overseas, approximately half of the materials come from Finland, and the other half is sourced locally, which helps Leanpark gain a foothold in a new market and makes robotic parking a good export product.

“It is easier to attract local interest when we also activate local businesses”, Teimonen says.

According to Teimonen, industrial exports are also facilitated by Finland’s reputation as a country of high technology and engineering skills, so Finnish expertise is not questioned. Leanpark has competitors in Germany, for instance, where the property sector is large. However, most of its competitors come from India or China, which means that Leanpark cannot compete on price and must focus specifically on expertise and quality.

It is profitable to export robotic parking systems, because the value of just one overseas project can be millions of euros. As a result, the company can grow into a high-revenue enterprise. According to Teimonen, larger companies and more diversified business are needed in Finland.

“There are more than a hundred companies in Germany whose revenue exceeds one billion euros. Finland, though, only has one company, in the gaming industry, whose revenue amounts to billions.

Middle-East
A design for a park and ride application in the Middle East by Leanpark. Robotic parking frees up real estate land and opens up new development opportunities close to public transportation.

The brave take risks

When a robotic parking system is sold overseas, the role of financing, and also risk, becomes more prominent. In Finland, the role of Leanpark is to sell through major construction companies, which have a dual role and are typically important developers as well. However, the market overseas does not consist of construction companies, but parties wishing to implement innovative properties. This means that Leanpark must act in a different way and assume the role of a construction company.

“When a potential customer requests an offer in Finland, they typically have plans ready and ask you to implement a specific project, and ask how much it will cost. Abroad, we must start from the beginning and describe the whole project and what we offer”, Riivari says.

A lot of planning work already has to be done in the offer phase, which increases the cost of sales. Therefore, when the project is implemented, it must generate a substantially better net result of financial operations than what is required of a subcontractor in the construction business.

The value of the project offered to Qatar, for example, is approximately 20 million euros, while Leanpark’s revenue last year was less than 2 million euros.

Riivari says that people in Finland in particular have doubts about Leanpark. Why are you trying to sell a risky project like that? Would it not be wiser to focus on smaller projects and proceed one step at a time?

“Of course there are risks in this. We have so far implemented projects worth a couple of million euros, so a 20-million-euro project is big and more complicated than our earlier projects. But if we only sell small projects, we must sell them for quite a long time before we can make our business significant”, Riivari concludes.

“If we only sell small projects, we must sell them for quite a long time before we can make our business significant”.

According to Riivari, the bank has constantly believed in this small company and its opportunities for growth. Mr. Marko Eriksson , account manager for Leanpark Oy at Nordea, says that the bank is happy to support innovative companies and their development projects by together implementing a financing solution, for instance. However, this requires a convincing business plan and predictable operations.

“The bank is also ready to take risks in projects that it considers viable and that have success potential”, Eriksson concludes.

In export projects, for example, Nordea acts together with Finnvera, which shares some of the financier’s risk.

If you want to succeed, you must think big 

According to Riivari, people in Finland think that a start-up company must grow one step at a time. However, if you don’t dare to take some risks, you won’t achieve outstanding results either. If you take small steps down the road, many competitors will overtake you from the left and right. You will then be wondering what happened, because after all you had the best product.

“It is fruitless to hope that you can quickly become a world-class player in a new business area by keeping each step very small”, Riivari says.

According to Marko Eriksson as well, newly established companies can easily find themselves standing still if entrepreneurs do not dare to make brave decisions.

“Global players do not usually come to your doorstep to ask what you could offer. In the global world, innovations spread as soon as they become public, so flexibility, speed and, above all, the boldness to act are the keys to success”, Eriksson says.

This means that you should think bigger than what you are permitted to. According to Riivari, it is important to believe in what you are doing. If robotic parking systems can be used to create better cities, they must be built even if they cost 25 million euros and the project ends up being ten times bigger than what has been implemented before.

“You must seize opportunities when they emerge. You may have to wait for the next opportunity for a long time, or it may never appear at all.”
Translated from an original article by Nordea in Finnish:  https://ajassa.nordea.fi/yrittajat-kasvu/kansijuttu/parkkipaikasta-vientituote/

For more information

Leanpark Oy/Ltd
www.leanpark.com
Timo Miettinen, CMO
Timo.miettinen@testi90.avaruus.net