Client Situation
A global manufacturing company acquired a binational service bureau as a new division that supplied products to contract manufacturers. The division had $6 million in annual sales, but was losing $500,000 per year. Manufacturing operations were poorly managed, the division could not produce the range of products required by the industry, and a single customer dominated the business. During a ramp-up for that major customer, the overseas operations fell apart.
Solution
The company brought in a new division vice president/general manager, now a E78 partner, to stabilize the division and grow it to profitability. The E78 partner first built up processes and quality procedures in each location to stabilize operations. He also identified inflection points that could drive growth within the company’s existing customer base.
The division added a second shift and by leveraging their resources more efficiently realized improved productivity. They were then able to buy and quickly pay for more equipment and operators to achieve even greater gains.
The E78 partner also helped identify the type of new customers the division needed. By bringing in targeted new customers slowly and nurturing them with quality products and customer service, the division was able to add more profitable product lines.
Results
- Sales increased from $6 million to $40 million in four years
- The division was the highest growth division in one of the NYSE Top 50 Growth Companies for four years running
- Profits rose from negative $0.5 million per year to $6.4 million per year
- Return on assets (ROA) rose from negative to 30 percent
