Turnaround of an old family run company

Manufacturing

Manager:

Mr.P. B.

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  • Customer:

    Confidential

  • Role:

    Consultant & designated Managing Director.

  • Location:

    Switzerland

  • Turnover:

    CHF 20 million (2003)

  • Time frame:

    6 weeks, Nov. to Dec 2003

  • No. of employees:

    approx. 90.

About the Customer

The client was a Swiss leader in high-tech Steel Reinforced Concrete Elements often specially designed and manufactured according to customers’ specifications. Many elements were used as supporting elements in construction of bridges, towers, tunnels, etc. Due to the widespread product portfolio and very flexible production facilities, the company was involved in many building projects through out Switzerland.
The family owned Company was run fully unprofessionally. The owner was too old and weak to have any control or oversight over the Company’s operation and success.

Testimonial from Сustomer

The “original” owner was highly satisfied about the restructuring concept and measures elaborated by Mr. P.B. This concept was of significant importance and beneficial for the selling negotiations with the new investor group.

Situation (Challenge)

The Company was running at a loss and the actual Management was not able to pinpoint the totality of problems respectively the real causes. The Board of Directors decided therefore to engage a professional Manager who should first analyse the situation and come up with recommendations on how to make the Company profitable. Suitable candidates were interviewed and Mr. P.B was selected for the Job. He was also offered an option to take over the Managing Director’s function, in case the BoD would approve the turnaround programme.

The analysis showed following main causes and weaknesses:

  • Wrong respectively unprofitable products in the portfolio.
  • “Organically” grown organisation structure with unclear tasks and responsibilities as well as “company in company” structure and functions.
  • Untrained and incompetent employees in key functions.
  • A far too limited no. of employees possess Production and Product related technological know-how .
  • Highly wasteful use of electrical power, the single highest cost element. Operational model does not take in account costing favourable supply models of the Power Supply Company.
  • Machinery in very bad condition and many of them out-dated.

Solution (Achievement)

Once the analysis was done, the concept of the solution was basically given:
Total reorganisation of the of the Company organisation structure, clear definition of tasks and accountabilities, training and selection of adequate personnel (internal and external). Introduction of a cost object accounting system, allowing to support the decision of which products should be kept in the product portfolio or even have to be pushed in the market. Make or buy as a basic principle for cost optimisation, was proposed additionally. Finally the production was instructed on how to save electrical power but also by shifting the electrical power consumption towards the more economic times, where and whenever this was feasible.
A long list of all possible measures to be taken was then presented to the Board of Directors, which accepted it in its entirety.
The BoD informed soon after the approval of the reorganisation programme, that the Company will be sold to an investor group, which will replace the existing Management by its own Management Team.

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