Activities

Surface treatment for the automotive industry.

History

Having worked with the two major French manufacturers for the past 10 years, the company was able to capitalize on its technological know-how.

Customers

The 2 main French car manufacturers

Tier 1 automotive suppliers (to the detriment of their internal capacities)

Foreign manufacturers

Structure

4 production units in France

2 units in Slovakia

1 in Poland

Shareholders

83% held by the founder and 17% by two investment funds

• To meet the requirements set by long-standing customers, the company must follow simultaneously three courses of action:
  • Follow its customers in their relocation strategy
  • Become recognized by Tier 1 automotive suppliers, to facilitate the transfer of R&D programs from the manufacturers to their Tier 1 suppliers
  • Gain access to foreign manufacturers (including in Germany) to maintain its strategic supplier status
• The company bought three other companies, one each in Slovakia, Poland and Germany (former GDR)
  • Financing these acquisitions : medium-term loans, which were to be easily reimbursed owing to the companies’ steady profitability
  • Technical upgrade and subsidiary management plan, which turned out to be efficient in Slovakia and Poland, but not in Germany.
• The French manufacturers transferred their production more quickly than planned:
  • The company’s French factories were forced to operate at excess capacity
  • Management implemented cost reduction and downsizing plans, which were rendered inefficient by the collapse in earnings in France

A financial squeeze

• The company has not been able to bring the income from its foreign subsidiaries back into France: excess liquidity is abundant and financing capacities are insufficiently used.
• French lending institutions refused to follow the company’s move to Eastern Europe, while local banks were reluctant to see excess liquidity being sent to France.
• In this context, the business manager started negotiations with his French banks to make it possible to restructure the group, and asked Dirigeants & Investisseurs to support him in this endeavor.

The action plan focused on four main goals:

• 1 – develop an industrial plan, including a purchasing plan
• 2 – implement performance-monitoring management tools
• 3 – restructure the company to make it less centered around its president
• 4 – reduce infrastructure costs

• Within nine months, plans delivered improved earnings of € 4.1M (evaluated each month and confirmed by the accounting income):
  • reduction of purchasing and materials consumption costs: - € 1.3M/year
  • non-quality costs were reduced by € 0.4M/year and customer complaints by 35%
  • increasing of direct labor efficiency: € 0.6M/year
  • reduction of factories’ and head office’s infrastructure costs: - € 1.8M/an
• These savings are in addition to those achieved in fiscal years 2006 and 2007, and to the increase in profits due to the growth in revenue in the non-automotive activities (operating income of €1.4M/year).