Gad

"The situation was not entirely easy for Hans and Gad. Both were young, insecure, and inexperienced, and were perceived by the seasoned businessmen that Ruben had previously brought in as “daddy’s boys”. Moreover, they were very strictly held – and dominated – by Ruben. Other employees had first had to prove their competence before they were promoted to leading positions. No one had gotten a job on the basis of their name. And many of them had warned Ruben against placing the boys in leadership positions. These warnings had not primarily come because people wanted to protect their own careers, but rather out of concern for Gad and Hans. It was clear that they would not be taken seriously unless they had first earned their spurs elsewhere. But the stubborn Ruben didn’t want to listen to the advice. For him, it was most important that the boys were quickly schooled so that they later could take over his role. It was also important for him that they got leading positions since the only chance he had to socialize with them was through work. Thus, they constantly talked about various problems and solutions within the business. This would not be possible if the boys were given subordinate positions. Then, other employees would immediately react and probably loudly oppose the fact that their subordinates – Hans and Gad – had greater influence than they did as managers. Therefore, there was only one solution for Ruben: to make the sons CEO and Vice CEO respectively."

"During the 1980s and up to the purchase by Gad, Tetra Pak had acquired a market-leading position, especially for aseptic packaging systems. However, this dominant position began to be questioned by competitors as well as within the EU. In 1983, the Norwegian competitor Elopak, with its Pure-Pak packaging, accused Tetra Pak of abusing its dominant position. During the legal process that followed, the EU also began questioning the highly successful and ingenious business model that Tetra Pak had used from the start. The model was based on selling or leasing the packaging machines and primarily making money by selling packaging materials to dairies. Tetra Pak also attached a service agreement to the packaging machines, committing to solve any operational problems at short notice, as well as handle maintenance, deliver spare parts, and train the staff. However, the service agreement was valid only if the dairy used Tetra Pak’s paper materials. The terms of the agreement could vary somewhat from country to country. What Elopak objected to was not Tetra Pak’s business model but their practice of “dumping” the price of paper materials for pasteurized packaging."

"When development had progressed this far, Ruben decided that the milk packaging business should be placed in a separate company. He was well-prepared: as early as 1946, he had applied for the registration of Aktiebolaget Alicante to have on hand in case the tetrahedron became something. Now was the time, and in 1950, on Erik Torudd’s suggestion, the small 10,000-krona company Alicante changed its name to Tetra Pak. It was also decided that the company should be registered in 57 different countries—big plans were being made within the walls of Åkerlund & Rausing’s headquarters. But for now, there was no actual business in Tetra Pak. The development work was still being conducted within the framework of Åkerlund & Rausing. The shares that Ruben had so far been the sole owner of, were transferred after a couple of years to Ruben’s three sons, Gad, Hans, and Sven. They each received 25 percent. The remaining 25 percent went to the partner Holger Crafoord. The sons also took over Ruben’s share in Åkerlund & Rausing. The Rausing share was controlled through AB Vapor."

"Gad also wished to appear as everything all at once: industrialist, prominent inventor, competent chemist, great archaeologist, protector of the humanities etc. Gad was a skilled archaeologist and his academic career was crowned with a lectureship at Lund University. If Gad had had the opportunity to focus solely on archaeology, a professorship might not have been impossible."

"Nils Andersson and Gad enthusiastically took on the new project. But despite both of them constantly disparaging Americans and Frenchmen, who were already using the method successfully, their own results were poor. And both Gad and Andersson refused to consult anyone who already mastered the method. Quite soon, people began to wonder what was happening with the project. The reports gave clear signs that something was not right. And they never managed to show any paper where the plastic really stuck. “It’s damn strange that the paper department can’t make paper in the Eagan machine when everyone else apparently can,” Hans commented irritably on the missed development. “It’s not strange at all; they insist on doing everything themselves and refuse to learn from others’ experiences,” Erik Torudd replied. It was not until a year after the construction started that they figured out the temperature required for the plastic to really adhere. And that was due to an accident at work. A temperature regulator had malfunctioned, and the temperature of the extruder had begun to rise uncontrollably. Only then did the plastic adhere. The accident taught the Tetra Pak team something that the French and Americans had known for a long time. Only another year later would the method work well enough that it could be reliably used in production. But then, on the other hand, there were problems with Dupont, who was the rightful patent holder. “There is undoubtedly a patent infringement,” the company’s own patent engineer Tage Norberg also stated when the matter was discussed. However, Tetra Pak was saved by the fact that Erik Torudd had been shown the method already in 1951, and at that time there was no patent. Thus, Dupont had no legal ground against Tetra Pak. For the second time, Tetra Pak had cunningly appropriated a machine design."

"The situation was not entirely easy for Hans and Gad. Both were young, insecure, and inexperienced, and were perceived by the seasoned businessmen that Ruben had previously brought in as “daddy’s boys”. Moreover, they were very strictly held – and dominated – by Ruben. Other employees had first had to prove their competence before they were promoted to leading positions. No one had gotten a job on the basis of their name. And many of them had warned Ruben against placing the boys in leadership positions. These warnings had not primarily come because people wanted to protect their own careers, but rather out of concern for Gad and Hans. It was clear that they would not be taken seriously unless they had first earned their spurs elsewhere. But the stubborn Ruben didn’t want to listen to the advice. For him, it was most important that the boys were quickly schooled so that they later could take over his role. It was also important for him that they got leading positions since the only chance he had to socialize with them was through work. Thus, they constantly talked about various problems and solutions within the business. This would not be possible if the boys were given subordinate positions. Then, other employees would immediately react and probably loudly oppose the fact that their subordinates – Hans and Gad – had greater influence than they did as managers. Therefore, there was only one solution for Ruben: to make the sons CEO and Vice CEO respectively."

"Meanwhile, Hans had to deal with his father, who was the working chairman of the board for both Tetra Pak and Åkerlund & Rausing. He had great respect for both him and Holger, but most of all for his very determined father. Hans did nothing without first getting his father’s approval. In fact, both he and Gad were much more dominated by Ruben than any outsider could guess. Neither of them made any decisions without first consulting Ruben’s opinion."

"After the meeting in Rome, a solution to the financing problem was finally found: the small subsidiary Purac, which developed water purification technology. The company had great potential, but had not been managed properly. Gad, who had been appointed CEO, thought it was something he could handle with his left hand, but soon had to realize that it was not that simple. However, he was not the man to solve the problems, but since the company had great development potential, Tetra Pak still managed to sell it for a reasonable price, about 15 million kronor, to American Hercules Powder. That was money that was really needed to be able to continue driving the Tetraproject forward. Ruben and Gad were totally against the sale. Gad because he had planned to keep the company as his own little territory - a way to get revenge for the previous defeats within Tetra Pak. Ruben’s opposition was due to the fact that Purac’s water purification technology, a method that had been discovered by chance when there was a need to purify the water for Östanåbruket, could become a global product if the company was managed correctly. Ruben was against all sales of ideas that could develop into something big. But the sale was pushed through by Hans, Ingvar Wenehed, and Erik Torudd."

"Bertil Hagman hastily went to London to discuss the matter with Hans and Gad. After the meeting, they agreed that Tetra Pak would make a bid. Through Jacob Palmstierna, who was about to join Tetra Pak’s board, a signal was sent to Investor’s CEO, Claes Dahlbäck, that Tetra was interested in Alfa Laval. But for Tetra Pak, the contact with Investor was not sufficient, there was another major owner in Alfa Laval, namely the financier Fredrik Lundberg. Tetra Pak was not only interested in buying a part but desired complete control over the company."

"Hans and Gad were very different from each other as individuals – although they resembled Ruben in many ways. Forcing Gad into the company was not a successful move. In the interview we conducted before the TV documentary “Dynastin Rausing,” Gad dismissed the question of whether he had been forced into the company by his father with the comment: “The slave trade was abolished in Sweden by Erik Magnusson sometime in the 14th century.”"

"During the summer of 1995, the Swiss Bank Corporation reviewed its operations, and by August their appraisal was complete. According to the Financial Times, it concluded at nearly 81 billion kronor. When the appraisal was presented to the brothers, Gad suddenly said: “Then I’ll buy.” Gad’s three children, Kirsten, Finn, and Jörn, who had been informed about what was happening, had made it clear to their father that they wanted to take over. Hans, who was completely unprepared, was very surprised but said that saying no was impossible according to him. The transaction was relatively simple, the foundation controlled by the Gad branch transferred 40.4 billion kronor to Hans’ foundation."

"Since Tetra Pak in recent years was making as much money as it did, they could afford quite wild experimenting before concluding a project. The costs were often allowed to rise to between 50 and 100 million kronor before the brakes were applied. In this way, Tetra Pak continued to be an innovation and entrepreneurship company long after the packaging system was fully functional. When Gad and Hans moved from Lund, in connection with the company’s relocation from Sweden, it was a hard blow for the technicians, who had gotten used to having a direct channel to the owners."

"Less than half a year after Gad’s family purchased the entire group, a restructuring was carried out. The group management was abolished, and the company was divided into three industrial groups, Tetra Pak, Alfa Laval, and Alfa Laval Agri. Within Tetra Pak, the packaging machines and paper remained, while Alfa Laval took care of the engineering operations from “old” Alfa Laval. Agri, finally, handled everything needed to keep and milk cows plus storage equipment for the milk. The division into three independent companies was made to avoid the tensions created by the merger between Tetra Pak and Alfa Laval. It was certainly not easy to merge a family-owned business with a company that had been previously listed on the stock market. It wasn’t long before the former Alfa Laval employees began to call Tetra Pak’s people “tetrapacket”."

"After returning to Sweden, Erik Torudd continued to advocate for the use of the S-50 and to apply HP Smith’s method to it. Now, it seemed that the winds were changing within the company. The board of Tetra Pak now included Ruben, Gad, Hans, Holger Crafoord, Erik Torudd, and the company’s skilled lawyer, Carl Borgström. When the dark-suited gentlemen gathered for a board meeting on the morning of February 4, 1952, they decided to build a copy of HP Smith’s machine. Erik Torudd and Harry Järund, who was co-opted onto the board, fought hard against the decision. Both thought it was better to either buy a finished machine or drawings. Otherwise, they risked several years being lost to development. Moreover, they thought it was immoral to copy someone else’s work. But they spoke to deaf ears. Tetra would copy the HP Smith machine. Responsible for the project were the technical genius Nils Andersson and Gad. The decision was bold, but entirely legal. Carr Sherman had voluntarily shown them a design that was not yet patented."

"Many became ill from the fumes. Common for them was that they worked in the small, shabby wooden shed called Siberia, which was isolated from Åkerlund & Rausing’s other buildings. There, they tried to develop a method to coat the paper with S-50 plastic. Under Gad’s leadership, they experimented with the so-called solvent method, which involves melting the plastic in a solvent called benzene. Then the paper is “lacquered” with the ready solution. But the vapors from the benzene were toxic and even Gad had to be hospitalized. The various substances were also explosive, which is why Siberia was separated from the rest of the houses. The risk of explosion also explains the name Siberia. No heat source could be near, and the technicians worked in constant cold."

"Ruben was not only dominant towards his sons but also towards his grandchildren. It was only after his death that they were free to study or work with whatever they wanted. Until then, even that was within Ruben’s control – hardly surprising considering the importance he placed on the idea of a dynasty. To create a dynasty, heirs must meet certain criteria to be able to contribute to the family business. Thus, the room for individual wills is greatly limited, which both children and grandchildren got to experience. In an innovative company like Tetra Pak, heirs are required to either possess specialized expertise or, like Hans and Gad, be trained in the business over a long time. However, the most important thing of all was that the following generations engaged in the role of owners. Among Hans and Gad’s children, there has been a great variation in the willingness to take on an owner role within the group."

"“It’s damn like talking to a fish,” Torudd thought. Although Torudd did not know it, the harsh words took effect. Hans realized that this time it was serious. He contacted Ruben and Holger. In the evening, the three gathered for a dramatic meeting. They agreed that Gad was not up to the role as head of paper production. Ruben, with his dynastic ambitions, was shaken by how serious the situation was. That one of his sons, born with such good prospects, would fail so spectacularly was something he could never have imagined. But there was only one possible decision if they wanted to save Tetra Pak – even Ruben realized this: Gad could no longer be involved with production. Formally, he remained on the board and retained the title of vice CEO."

"The reason Hans wanted to sell simply came from a harsh assessment that the best thing for the future of the Tetra Group was for someone other than the Rausing dynasty to take over the ownership role. At the same time, he considered his age and had long been worried about his health. Both Hans and Gad had a trait – inherited from Ruben – to exaggerate the risks of disease. Even mundane illnesses became for them a reminder of death, which meant that diseases could not be discussed in their presence at all. Employees within Tetra Pak who fell sick and stayed home might very well find themselves reassigned to less important positions when they returned. This was because Gad and Hans considered them too frail to hold important positions. The risk was that they could die. The same applied to themselves; when either of them fell ill, he would hand over important powers, so that everything would be secured if he died. But as soon as it turned out that the illness was not serious, they immediately took back their position."

"The new organization would start when Tetra Pak moved into its own premises. This was planned to happen in a few years. For Ruben, it was time to realize his dynasty plans. Even if it meant that two completely inexperienced sons would get top positions in the company. Gad was 30 and had a degree in chemistry and archaeology. Little brother Hans, who would become CEO, was 26 and had studied economics, business administration, and languages at university. Although forming the dynasty was primary for Ruben, there was one thing he was terrified of: that Erik Torudd would see the organizational plan as a provocation and decide to leave the company as the inexperienced Hans became his superior."

"The new organization would start when Tetra Pak moved into its own premises. This was planned to happen in a few years. For Ruben, it was time to realize his dynasty plans. Even if it meant that two completely inexperienced sons would get top positions in the company. Gad was 30 and had a degree in chemistry and archaeology. Little brother Hans, who would become CEO, was 26 and had studied economics, business administration, and languages at university. Although forming the dynasty was primary for Ruben, there was one thing he was terrified of: that Erik Torudd would see the organizational plan as a provocation and decide to leave the company as the inexperienced Hans became his superior."

"“Yes, yes. That’s probably the price one has to pay for having and having had a competent CEO,” Ruben said resignedly after the negotiations. However, Ruben recovered relatively quickly from his depression. After just a few months, he began to realize that he didn’t have the money it would cost to buy Holger out of the companies. He thought it was just as well that the agreement looked the way it did. If everything developed as he planned, Tetra Pak would soon start to yield substantial profits and then he would be able to earn enough money to buy Holger’s share. In his very special world of thought, he began to see the agreement as an ideal settlement. He was sure that Holger would voluntarily divest the shares after five years. This would finally allow Hans and Gad to take over the conglomerate completely."

"Now Holger could start cleaning up the organization for real. The first action was to put Hans and Gad in their place. “Tetra Pak is bankrupt. It is now under administration. And decisions about expenditures can from now on only be made by me,” he informed them in brusque terms. He was right. The company was ready for bankruptcy if any of the creditors demanded their money back. In fact, since 1956, the company had been obligated to prepare a balance sheet for checking, but they had ignored it so that no outsider would see how badly off it was. “If Hans had not been a son in the house, he would not have stayed another ten minutes,” Holger told Erik Torudd."

"Both Hans and Gad have been involved in a kind of competition with Ruben throughout their adult lives. Since both, like their father, were obsessed with technology and the idea that a company’s success is driven by its technical development, they also wanted to show that they were as great inventors as he was, according to family mythology."