The Mexican sister company of a mechanical and plant engineering company (automotive supplier) had unexpectedly slipped deep into the red following the construction of a new site and the relocation. The local management seemed overwhelmed by the situation. There was no longer any transparency or confidence in the accounting and reporting systems. The auditor refused to certify the annual financial statements for the time being. The current interim manager was appointed by the parent company as a troubleshooter. He was tasked with analysing the causes and defining and implementing solutions in order to achieve a turnaround as quickly as possible and restore confidence in the organization.
Causes of the poor earnings situation identified
In his holistic analysis of the company's situation, the interim manager identified several causes for the imbalance. For example, the new plant was clearly oversized for the local market. In addition, the sister company had failed to adequately qualify and integrate the new employees. Only 50 percent of the workforce had moved from the old site. In addition, the processes were not adapted to the conditions after the relocation. Finally, the management had been overburdened by the extra workload of the new building and relocation and had therefore neglected the operational business. Costs and sales prices had developed negatively in an uncontrolled manner.
Restructuring concept created and implemented in working groups
Since there were weaknesses in numerous parts of the organization, the interim manager set up a number of working groups to develop solutions. Under his technical leadership, for example, a cross-functional group redefined the relevant processes in logistics, from order processing to delivery. At the same time, the interim manager initiated the organizational and personnel separation of controlling and accounting management. Both departments revised the internal and external accounting processes.
Intensive training in all areas increases expertise
The interim manager also made a significant contribution to improving expertise with extensive internal training for all key functional and business areas. He also reviewed price calculation and cost controlling - and made corrections where necessary. To ensure sustainable organizational development, the management team was strengthened by a Chief Finance Officer on the recommendation of the interim manager.
Theoretically, it would have been possible to outsource the unused capacities of the new location to external interested parties in order to reduce costs and generate revenue. However, such attempts were not successful.
Turnaround achieved after 10 months - workforce re-motivated
The turnaround was achieved after 10 months. The audit certificate was issued before the end of the year. Transparency and trust in the organization and processes were restored. The interim manager handed the project back over to local management.
The success, regular group events and the very intensive and open communication of the interim manager significantly boosted the team's scratched self-confidence.
The project was implemented with 1 week of presence per month - further management was carried out remotely.
Lessons learned: relocation projects are not just logistical in nature. Processes, organization and changes must be taken into account. Relocation projects are often politically influenced. Operational management is usually unable to cope with the additional burden of extraordinary projects. Specialized external support increases the chances of success.
