An internationally active Swedish group of companies (43,000 employees) in the lock and fittings industry had acquired an owner-managed, medium-sized company with a long tradition in the sector. The company management planned to use the acquisition to relocate the casting and machining of aluminum products to a plant in Romania. The company wanted to use the labour cost advantage, leverage synergies and optimize the capacity utilization of the plant in Romania. The interim manager was commissioned with the planning, management and implementation of the production relocation and the handling of the German site on the basis of a 15-month project contract.
Delivery capability and quality ensured during the relocation
The most important requirement was to relocate production while maintaining delivery capability and guaranteeing quality criteria. The site in Germany was to be closed after the relocation of production and the employees were to be compensated and made redundant via a social plan. Business processes such as warehousing, product support, internal and external sales were to be integrated into another site of the group of companies in Germany. The interim manager drew up a detailed project plan in close consultation with the client's vice president and the responsible plant manager in Romania. He also calculated the project budget.
During planning, the interim manager identified four project phases that were critical to success:
- ensuring delivery capability and continuous business operations during the relocation and start-up phase
- building up the infrastructure at the Romanian plant
- transferring expertise from the highly manual production process to the relocation country
- handling the site in Germany
After a kick-off meeting with the executives and department heads, a core team was defined with clearly designated responsibilities, and four smaller project teams were formed for the individual phases. A particular challenge here was to gain the commitment of the team members. At this point, it was already clear that the majority of the team members employed in Germany would lose their jobs once the project was completed. Ultimately, the German managers and employees supported the project professionally and with great commitment until the end.
Developing an efficient production layout and gradually enabling the Romanian plant
The interim manager identified the critical products to ensure delivery capability. He had additional tools designed and manufactured for the Romanian plant in the German tool shop. This meant that production in Romania could be started up in parallel with a pronounced learning phase. As production expertise increased there, production in Germany was gradually scaled down and ramped up in Romania. This ensured product-related delivery capability with consistent quality throughout the entire relocation process.
Setting up the infrastructure at the Romanian plant was equal parts challenge and great opportunity. There were already numerous production areas within the plant. However, the quality requirements and standards left a lot to be desired. The opportunity was to set up production optimally and efficiently without having to take external constraints into account. Based on many years of experience from production in Germany, the project team had created an optimal and efficient production layout, which was then implemented.
Implemented knowledge transfer from Germany to Romania
The transfer of know-how from Germany to Romania and the establishment of production and quality standards in the relocation country represented the biggest challenge in the project. Romanian employees, who would later act as transformers, were trained and educated at the German plant over an extended period of time. In addition to purely technical skills, the mindset and personality of the selected employees were particularly important. The selection was made in close consultation with the Romanian plant manager and the future Romanian production manager.
With the start of the relocation phase and the commissioning of the first production processes in Romania, knowledge carriers from the German plant were sent to Romania for a defined period of time in order to ensure a secure transfer of knowledge and a smooth production start-up. The special feature was that these employees acted in the knowledge that they would lose their jobs after completing the project task.
Location in Germany wound up and social plan implemented
The fourth sub-project of the interim manager was the winding up of the location in Germany. Business processes such as the warehouse system and warehouse organization, product support, internal and external sales were integrated into another location of the group of companies. The supply chain management system was completely redesigned and implemented. The key processes here were the control of orders to the plant in Romania and the establishment of a new and additional warehouse, including warehouse logistics.
In addition, the interim manager was involved in the severance and dismissal of the remaining employees. With the support of employment law and on the basis of a redundancy plan drawn up by HR management, the interim manager held individual discussions with the affected employees together with the HR department. The social plan was implemented successfully and smoothly in compliance with labor law requirements. The intensive discussions with the workforce and the relatively long lead time due to the duration of the project were essential. Many employees had already found a new job when they left the company.
Production successfully relocated within 15 months and client very satisfied
The relocation of production was successfully completed after 15 months. All quality standards had been established, the technical documentation had been completed and the internal transfer prices had been finalized. The Romanian team's new approach enabled further potential for improvement in terms of process efficiency and cost-effectiveness to be leveraged. To further secure and support the newly established production, the core team from the former German plant was sent to Romania for a further six months.
On the positive side, it was clear that strong friendships developed between the employees of both plants and cultures and that there was no trace of rivalry or resentment. This made the transfer of knowledge much easier. Due to the different cultures and familiar standards, ensuring flawless, continuous product quality will nevertheless remain a challenge in the future, which will be ensured through clearly defined process descriptions, intensive technical exchanges and regular audits.
The client is very satisfied with the implementation and outcome of the project. The Group is already planning to relocate further similar products from its plants around the world to the production facility in Romania and to expand the plant into a competence center.
