Iron man gone soft

Ole Madsen, owner of Scaneast Co., Ltd. on the 18th of March celebrated his debut on the market for computer software with the launch of a new own-developed product for online auctions – indeed a remarkable shift in business direction for a man, who has for over 30 years had his strength in steel trading.
     The launch day was auspicious. It was also Ole Madsen’ s 60 year birthday, which started with a surprise breakfast party 7:30 at his and Jaana Kopra’s home on a quiet lane off Bangkok’s busy Sukhumvit Road. Dressed in his bath robe, Ole Madsen came sleep-walking down to meet some thirty plus friends, whom his old friend Mr. Steinar Poulsen had been rounding up – and to wake up to the deafening drums of a Chinese lion dance troupe arranged by his wife Jaana.
     The new software program, which was launched later on the same day, is called Real Time Auction 1.0. It enables companies to conduct private on-line auctions among the company’s suppliers/buyers via the Internet, at a fraction of the cost of larger and more complicated similar systems. When the program is installed, the company can send its suppliers an email with an invitation to log into their auction on the Internet using a special password on a specific time, where the auction will
take place for a limited time, of for instance one hour.
     Some change for a man who came to Thailand as early as in 1966.
     Ole Madsen grew up in Aarhus, where his father was an engineer with Hans Skaarup Maskinfabrik. He left school after the tenth grade to become an apprentice in the trading department of ลrhus Oliefabrik, where he worked among others with the company’s trade on Sri Lanka.
     When he was drafted for military service, he was selected for sergeant training and later served in the communications troops. When his time was up, Denmark had just decided to join the peace keeping force in Cyprus, and Ole Madsen joined as a volunteer for half a year to serve on the very first Danish contingent to be sent there.
     Upon his return, Ole Madsen first moved to London to attend an intensive English language course. This opened the door for him to a job with SGS, and after only four month employment, he was offered an interesting position in Thailand.
     “I arrived Bangkok by plane on 14 May 1966. I still remember how incredibly hot I thought it was on that very first day,” Ole Madsen recalls.
     For the next four years, Ole Madsen worked for SGS all over Thailand, inspecting and verifying among others oiltanks where his Thai staff would lower him down inside the tank.
     Then in 1970 he set up his own company called Madsen Ltd. Partnership. The partner was his friend M๘rup, who was at the time a consultant for Siam Cement. The business idea was to trade in mineral ore, especially tungsten, fluoride and antimony. Later, when the new Thai business law was introduced in 1972, this partnership was transformed into his current company Scaneast Co., Ltd. with the required 51 percent Thai shareholding.
     From 1970 to 75 one of Ole Madsen’s major business activities was covering the Canton Fair held two times per year, where most everything going in and out of China was traded.
     “The fair would start with two days in Hong Kong at the Mandarin Hotel, waiting for the visa to be granted. Then we would go by the Star Ferry across to the Kowloon train station, two coolies from the hotel, would carry our trunks, radio, some food and some bottles of booze strung up on a bamboo pole from the hotel to the station. The lower deck of the Star Ferry was exclusively for coolis carrying goods in those days, a sight not seen today. The train would take us up to Canton, where most of
the foreign traders were required to stay at Tung Fang Hotel – the only decent option available,” Ole Madsen recalls.
     “It was a practical arrangement for the Chinese, because all communication with our clients was done by telex. To send it, you had to type the tape and hand it to the telex operator, and somehow our counterparts in the negotiations, always knew where our limits were. Still we had to negotiate for about fifteen days, until on the last day we could eventually close the deal.”
     “Another peculiarity was a regulation at the hotel, that when you were not in your room, you had to leave your door open!”
     As early as in 1972, Ole Madsen also had a chance to visit Beijing.
     “I didn’t get any business done, but it was very interesting to get a first hand impression of China at that time, which was during the years of the Cultural Revolution.”
     In business, Ole Madsen early on diversified from mineral ore into agricultural commodities like jute, kapok, rice, sugar, and coffe. Trading in steel – today his main business activity in terms of volume – was added in 1972.
     From trading in rice, it was a natural move for Scaneast to start trading in machinery for rice mills too. Less obvious was Ole Madsen’s move into the freezer business.
     “We were for many years the agent for the Swedish freezing equipment manufacturer Frigo Scandia. When we started, there was only one freezer installed in all of Thailand. It was a good business. Most of the freezing plants you’ll find today in all the seafood factories and chicken processing plants of the CP Group are for instance sold by us,” Ole Madsen says.
     But when Frigo Scandia was taken over by the American company FMC, all contracts with agents world wide were cancelled. In Thailand, FMC also took over Ole Madsen’s staff. New winds were also blowing within the markets for most of the agricultural commodities. The use of jute for bags and carpet backing declined with the introduction of nylon. The demand for Kapok disappeared when rubber foam was introduced. Rice started at an early stage to be traded directly without the need of brokers.
     Steel remained, however, a good business. While 90 percent of brokers elsewhere in the world closed down during the 90’s, Ole Madsen has remained firmly in business.
     “We saw the development coming, and hooked ourselves up with a large Ukrainian company,” he explains. As the broker between the Ukrainian steel company and the Asian steel mill clients, it is the job of Scaneast to obtain the orders and solve any problems related to the delivery of the steel to the client.
     Steel is traded either in the form of billets, slabs or scrap. Billets are transformed by the steel mill into construction steel, slabs into plates and coils. Scrap iron is melted and made in to various steel products.
     “We sell and deliver about 70,000 tons of steel billets or slabs every month to most of the steel mills in Thailand,” Ole Madsen says.
     “As for scrap we currently sell around 300,000 tons per a year.”
     When the customer has placed his order, a vessel is chartered to transport the steel from Ukraine to Koh Si Chang. Here, the cargo is loaded onto barges, which takes it up the river to the steel mills.
     Ole Madsen’s move into software started with a project in 2000 to launch one of the first ever e-commerce portals on the Internet for trading in metals, called MetalMerge.
     “My partners were a Greek and a Russian, and we thought we were going to make loads of money. The idea was good, but the software available simply didn’t work. Nobody could find out how to fill in all the information the system required. You have to remember that what you are up against, is the time it takes to make a telephone call!
     “The software people promised improvements and never delivered. We never had a customer who could use the software – and today the website is mainly a news site for market information.”
     By the time Ole Madsen pulled out of the project in August 2001, he found himself stuck with a lot of computer hardware, a database with 7000 customers within bulk commodities, and a handful of IT people and thought of how best to put the stuff to work.
     “When we had been shopping around for the auction system for MetalMerge, we were always presented with demos, never an implemented system, so you never really knew, how it worked in pratice. And they charged to the tune of 130,000 dollars for their programs.”
     So Ole Madsen decided to set up his own software development company called Onlisys.com, and the first program they would create, was one he knew was in great demand: A fast and simple auction program at a fraction of the cost he had been up against.
     “It should be a program, which people could download and try out themselves for seven days free of charge. And if they decided to buy it, the price should be one tenth of the price of the programs, we had been looking at!”
     Real Time Auction 1.0, which he launched on 18 March, took one year to be ready for marketing, but is still only priced at 10,000 dollars. It takes two minutes to fill out the information needed to conduct an auction and invite your bidders. And once you have conducted one auction, you can keep it as a template for next time, and only modify the few things which might have changed.
     “One more thing: The system works as it is, it doesn’t need modifications,” he adds.
     The program will easily pay for itself in reduced purchasing prices or higher sales prices. The system doesn’t care whether your requested best price is for pencils or animal feed.
     “All the invited bidders who have logged in with each their unique password can see the price move down/up as their competitors post their offers. They don’t know who is bidding, but as the last minutes on the clock starts ticking, there is a real incentive to re-calculate your profit margin and move down/up with them.”
     And as there is no room for private dealing, owners no longer need to wonder how their purchase manager’s minor wife suddenly can afford a new car.
     When Ole Madsen met his wife Jaana, his first wife had three years before moved back to Denmark with their four children, two girls and two boys, who were all born during Ole Madsen’s first six years in Bangkok.
     “We met on the day after my 40 year birthday – in Patpong – but it really wasn’t anything like what it sounds.. I mean, Patpong…” Ole Madsen tries to explain.
     “You see, every Sunday there was a jazz band playing at the Napoleon, a restaurant there, and everybody used to go there to listen to jazz in the afternoon.”
     Jaana, who was in Bangkok on vacation, has later frankly admitted that she first fell for the tall Dane’s handsome legs and deft dancing. When her vacation was over, she went back to Finland, but soon she came back to Bangkok to work as a tourist guide. Six years later, today 14 years ago, Jaana and Ole Madsen decided to get married.
     When not spending his time with Jaana, Ole Madsen is known to be an active player in the golf section of the Scandinavian Society Siam, of which he was Chairman from 1995 to 1996, and over the years he has also devoted much of his time to voluntary work within Rotary Bangkok South of which he was President from 1996 to 1997.
     But also on this front, Ole Madsen seems to be ready for a major surprise move.
     “I had a chance to try Gokart driving recently. It is actually more fun than you might think. If you haven’t tried it, you should. I have already decided to try to do some more of that,” he declares.

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