This company was financed by private equity and had grown very quickly through a buy and build strategy. The core of the company was a subsea technology niche for which they had become well known and respected over more than 40 years. The company had acquired a diverse range of businesses many of which had been entrepreneurially founded and managed. However, market for the core product range dipped through external economic forces and the order book dried up overnight.
The key issue for the owners was to resize the core business in line with market forecasts and ensure that bank covenants were met. There was considerable internal opposition to closing sites and a good deal of diplomacy had to be employed to complete the task.
The core business had a number of sites globally, and the objective of the assignment was to design and implement a sustainable manufacturing footprint.
The first phase was an operational business review for all of the sites to establish capacity and growth potential. A single site was chosen to be the manufacturing hub, with an engineering technology, design and service centre at another location. A closure plan for the remaining sites was developed and implemented. A performance improvement initiative was then set in motion for the remaining site to improve the available capacity.
The group successfully passed its bank covenants and in addition saved $20m over 3 years. The business today has survived and prospered. It is still a leader in its niche technology market.