The largest production company (700 employees) of a medium-sized family business had fallen into a veritable crisis. With a turnover of 193 million euros, the losses amounted to a double-digit million figure. As a result, the management of the holding company hired the interim manager with restructuring experience as managing director of the subsidiary in order to draw up a realistic and sustainable restructuring plan. One of the requirements was that the restructuring should not damage the company's very good image as a family business and regionally important employer with a recognized high level of social responsibility.
Analysis reveals a number of problems in production and management
At the time the mandate was taken on, the company had already been without management or plant management for almost two years. As the interim manager discovered in the analysis, this was one of the reasons why a number of problem areas had emerged. These included:
- The company had no suitable mechanisms in place to process the volatile orders economically. Excessive and uneconomical use of temporary staff was one of the consequences.
- The structural staff department was bloated, inefficiently organized and employees were unaware of their individual contribution to the company's success. The management team was also not focused on a single goal and "silo thinking" had taken over.
- In addition, the launch of a new product generation that was important for the future success of the business was highly jeopardized. Due to the inexperience of the project members, project management, timelines, costs and investment planning urgently needed to be improved.
Cost improvement plan developed to process orders economically
As a first step on the way to improving performance, the interim manager developed a cost improvement plan, which began with a hiring freeze. Exceptions were only made for urgently needed specialists and managers. He compensated for the fluctuation of individual employees by reassessing and redistributing tasks. He countered the volatile workload by working with production management and supply chain management to strictly adjust the number of temporary workers to actual demand and also increased the capacity of individual production areas by changing shift models. Furthermore, he pushed for the expansion of employee qualifications in order to achieve their ability to work at several workstations and thus ensure better capacity balancing in the event of fluctuating workloads.
For further optimization, the interim manager reviewed all planned expenditure. He reassessed the planned investments and only realized those with proven necessity and/or appropriate ROI.
Cost drivers in production identified and costs reduced by up to 20 percent
In the analysis, the interim manager identified the production processes "set-up and TPM" and "welding processes" as cost drivers. In order to reduce costs, he optimized these processes in collaboration with those responsible. In this way, plant availability was increased and process reproducibility improved. This not only reduced error costs, but also shortened throughput times. As a result, the production costs of certain products were reduced by up to 20 percent.
Managers focused on measures and targets and "silo mentality" reduced
In order to win over managers and employees for the implementation of the cost improvement plan, the interim manager pursued a transparent communication strategy from the outset. He explained the situation and the measures required to reduce costs and improve results to the plant team.
In addition, he assigned clearly quantified tasks and targets to each manager in the plant team, which were reviewed on a monthly basis. He reassigned individual management tasks. In this way, the interim manager succeeded in aligning the managers to common measures and goals and reducing "silo thinking".
Reorganizing project management for the start-up of a new product generation
In order to ensure the production of the product generation that was important for the success of the business, the interim manager realigned the project management for the start-up. In particular, he recalculated the costs and updated the profitability calculation. The creation of a new schedule and consistent change management contributed significantly to the successful launch of the innovation.
In addition, he used the production processes that had changed with the new product to consolidate the layout of some production areas, thus freeing up space.
Concept developed for fundamental restructuring with staff reductions
After the interim manager had laid the foundation for the restructuring with the cost improvement plan, he developed a concept for the sustainable structural improvement of the company. To this end, he determined the break-even point and the target costs based on a specified multi-year sales and volume plan. As a result, he proposed to the management and supervisory board that around 30 percent of jobs be cut over the next two years, particularly in the area of structural personnel. The company owners agreed to this proposal.
Balancing of interests and redundancy plan negotiated with the works council
Following the decision, the interim manager was able to negotiate a legally compliant balancing of interests and redundancy plan tailored to the needs of the plant within three months with the help of specialist lawyers. The implementation of the personnel measures contained in the plan and the associated organizational and structural changes began immediately after it was adopted.
Restructuring proves successful and| savings targets exceeded
The interim manager's consolidation course was already successful in the 2023 financial year. The savings targeted in the budget planning at the end of 2022 were exceeded by more than 50%. The planning for 2025/26 forecasts a balanced plant result - with losses at roughly the same level as in 2022.
New product generation launched on time and on budget
The new product generation was raised to an unprecedented level of quality through consistent progress tracking and continuous process improvement in production, and the SOP was completed on time and within the specified budget.
The condensed and optimized layout of the plant also enables the addition of further products and services.
