Ownership Assignment: “Whitehall Group Assists $55M Injection Molder - Chrome Plater in Turnaround”
Our Client’s Challenge
- Corporate ownership needed to bring their company back to profitability after multiple years of significant losses. Without a successful turnaround effort the company would have to file for bankruptcy protection.
“Project Company” Issues
- The company had a loss of $7m in the previous year
- Major cost issues coupled with declining sales/utilization threatened the sustainability of the company
- Order to delivery delay threatened current and future contracts
Whitehall Actions
- Whitehall personnel served as an Interim Management team: CEO, VP Quality, Controller / Cost Accounting, Lean Initiatives Facilitator
- New business development to drive revenue growth and capacity utilization
- Implemented “war room” environment with daily metrics and accountability process in place, driving scrap cost / cost of poor quality down, schedule attainment up, labor force and cost stabilized
- Conducted a comprehensive headcount reduction while sustaining profitable growth
Results Delivered
- Drove $7M annual loss to break-even in six months
- Headcount reduction of 70 ($2.1M of cost reductions) over six months
- Scrap reduction from 40% to 8.7%
- Schedule attainment from up from 80% to 95%
- On-Time Delivery improved to 98%
- Plant utilization from 75% up to 86%
Our Client’s Challenge
- Our Tier 1 client needed to quickly address a financially troubled supplier situation whose quality and delivery problems challenged the clients supply chain and manufacturing flow.
- The client needed to decide quickly to either execute a turnaround plan at the supplier or absorb the supplier, at a high cost, into their own system
“Project Company” Issues
- Negative cash position; company was in bank default and needed to refinance but was not financeable given their current condition
- Numerous quality complaints; chronic backlog and major delivery issues
- Company had absorbed production volume from several other suppliers to the client and the simultaneous launches during the transition were unsuccessful
Whitehall Actions
- Stabilized the supplier’s situation with our Tier 1 client and broader customer group
- Assisted in improvement of cash management; provided a clear cash forecast, and developed daily and weekly cash budgets and forecasts
- Assessed and provided oversight to physical inventory
- Assisted in the management of the major customer group and advised on next steps regarding involvement of additional customers and accommodation agreements
- Assessed operational efficiency and assisted company in reducing cost of sales and improving throughput and quality - assessed company total costs and assisted in reducing all costs
- Improved existing banking situation in short-term; ultimately facilitated refinancing
Results Delivered
- Whitehall Group recommended maintaining the company as a supplier, executing the turnaround both operationally and financially, and facilitated the refinancing with a bank we referred to the company
- Ultimately Whitehall Group delivered $2.2M sustainable operational savings; $1.2M cost of goods sold reduction and $1M in inventory related savings
- Productive Hour of Work cost dropped from $10.20/hour to $4.72/hour in five months
Our Client’s Challenge
- Client had suffered a large decrease in profitability after expanding operations from one facility to three facilities over a five year period of high growth
- Client was seeking $1M+ loan from bank to build new plant, given new customers and revenue growth – bank referred company to Whitehall Group for Operations Assessment
- Whitehall Group assessment revealed lack of production control systems, preventing management from determining true performance of production operations
“Project Company” Issues
- Without good systems and metrics, downtime issues were significantly impacting productivity; excessive headcount (both direct and indirect) and related overtime; excessive scrap was also decreasing line productivity
- Inadequate planning / scheduling and inventory control causing excessive inventory, both in Raw Material and Finished Goods
- Ultimately, there was an artificial capacity constraint due to under-utilization of existing physical plant and equipment given lack of lean production fundamentals
Whitehall Actions
Developed and implement a visually-controlled accountability system, from the shop floor up to senior management, incorporating metrics and processes to support the corporation’s strategy and goals to restore profitability.
- Developed metrics required to track performance, and implemented trend charts and materials tracking by the individual press
- Implemented visual controls on shop floor for production scheduling and inventory control; designed and implemented War Room summary boards at area and corporate level
- Implemented Daily Accountability Meeting and Weekly Production Meeting
- Document required processes and procedures, and roles and responsibilities for staff
- Identified shop floor resources available for reassignment or headcount reduction
Results Delivered
Whitehall recommended and implemented a plan to reduce the number of facilities from three to two as opposed to investing in a fourth facility. By consolidating operations into two facilities, the company returned to profitability. Whitehall’s recommendation allowed the company to avoid additional investment expense, and also significantly reduce the cost structure. Impact was cost of goods sold savings of $1.8M annually, an inventory reduction of $500K, and a CAPEX avoidance of $1M as a result of providing an effective capacity increase of 20%+ from prior year base via increased throughput.
Our Client’s Challenge
- Private Equity firm needed to evaluate a target company in a short time period to decide whether or not to pursue an acquisition of the automotive interior business
- The client firm primarily needed to know what actions were needed to improve the company’s business model and financial results should it decide to acquire
- The firm initially contacted Whitehall Group for a quick, one-day tour of plant operations
“Project Company” Issues
- Management’s financial performance did not demonstrate the ability to achieve the financial projection requirements for operational improvements and efficiencies
- In addition, the organization was below minimum staffing levels to achieve plan
- There was no detail of an executable operations plan by management to deliver the financial plan and requisite improvements
- The corporate financial reporting functions within the company were inadequate
- The financial responsibilities at the plant level were also inadequate and resulted in significant inventory write-downs and variances from standard costs
Whitehall Actions
Developed and implement a visually-controlled accountability system, from the shop floor up to senior management, incorporating metrics and processes to support the corporation’s strategy and goals to restore profitability.
- Whitehall Group provided “next day” response with senior team for initial visit to all plant locations, which lead to a comprehensive assignment including operations and financial due diligence; operational assessment and improvement roadmap; and interim corporate management while new owner sourced new management team
- Whitehall Group staff personnel filled several critical organizational gaps on first day following close of acquisition to stabilize and supplement the company’s manufacturing organization, including plant managers, cost accounting, and lean transformation roles
- Whitehall Group identified and implemented operational improvements to secure savings from baseline performance (labor, materials and overhead) to drive earnings improvement
- Assisted in the hiring and transition of key operational management and staff positions
Results Delivered
- Near term realization of $5M in savings (annualized) during first 16 weeks of project; identified another $7M of tangible savings opportunity
- Client hired Whitehall Group project lead as VP Operations to deliver on remaining $7M of identified savings
Our Client’s Challenge
- After inheriting a portfolio of companies, a family trust needed to evaluate the best course of action to maintain and/or increase the value of the portfolio holdings
- After evaluating profitability the family learned that the overall portfolio was losing money due to the poor financial performance of the companies within the portfolio
- Following the evaluation, the family trust asked Whitehall Group to assess and fix the companies so they could be sold at a fair price. The first assignment was a $3M aerospace and defense coatings supplier with labor costs alone that were greater than sales
“Project Company” Issues
- Net income at a loss of approximately $300,000 per month
- No formal business plan or strategy in place at the company
- No established budget to guide spending or accountability
- Overall lack of proactive management tools and metrics
- No operator, supervisor, or management accountability for performance
Whitehall Actions
- Right-sized all elements of company – cost and expense reductions (COGS and SG&A) driven by identifying “waste” in process and significant headcount reductions
- Reduced duplication of efforts and facilities in multiple facility environment – optimized operational footprint
- Implemented Key Management & Operations Metrics and War Room
- Lean Process Improvement – Engineering and Manufacturing Processes
Results Delivered
- Company improved from negative earnings of $3M+ annually, to breakeven within the first 5 months
- Projected earnings (EBIT) for the coming fiscal year is projected to exceed $1M –– a $4M turnaround
