Electronics / Security / Electric Cabling / POS Display


Summary:

Business turnaround to positive cashflow and profitability, build and implement a strategy for the company to become the profitable growth engine of the group

Date:

1996 – 1998 (22 Months)

Assignment:

Electronic Security Industry: Return to Profit & Leveraged Growth

Role:

Managing Director

Assignment Length:

22 Months

Background:

The parent company was a UK listed plc, whose core business was the production of electronic security equipment for use in a range of markets from the defence industry to home security.

The assignment business, operating from 3 sites initially, had a declining sales line and high fixed and variable costs due to prior year expenditure anticipating core market growth that did not materialise.

Additionally, both the CEO and the Operations Director had left the business in a short space of time, 6 months earlier. The strategy for the business was written at main board level for local adoption and c. 25% of the workforce “across the board” had been made redundant.

Morale was at a predictably low ebb and revenues from the defence sector side of the Group were being constrained due to increasing delays in defence project spend.

 

Assignment Brief:

As interim Managing Director, to bring the business back to month on month profitability, produce a clear strategy for renewed profitable growth and to implement it.

 

Outcomes:

  • In 3 months, operational control was established.
  • Obtained plc board agreement to make the business the growth engine of the Group, based on a detailed 3-5 year strategic plan produced by the new management team.
  • The company restructured to form 4 separate business units, acting as P. & L. centres. The strategy developed was based on the extended use of existing manufacturing technologies and under utilised people skills to serve markets and customers where rapid growth was possible. The business grew both in terms of profit and sales and had over 50% of the Group’s capital investment in year 1. In the first year, sales were £14.6m. By the end of year 2, the run rate was £24m and the plan for year 3 was to end at a £40m run rate, with improving profitability.
  • The original core Security business became the proud possessor of international manufacturing and design capacity (UK and Italy) as part of the strategy developed to shorten the route to market in the sector. Work was undertaken to consolidate a common approach to product development and export activity, to over 60 countries. In addition, a PCB population cell was constructed to supply c.20% of all board requirements for the company. This was done at costs lower than bought in price from the Far East, generally for the lower volume products.
  • The Power Cable Business Unit had a £0.5m investment as the centre piece of the plan. The project team specified & installed a new sheathing line, secured a £100k DTI grant & brought on board an acquisition for £150k to enhance margins, & strengthen commercial links. A 100% sales increase to £15m was implemented for year 1.
  • The Technical Moulding business plan was to grow sales to £10m in 3 years. The team defined ways to reduce time to market resulting in a £150k investment in 3-D CAD, plus changing injection moulding machine profiles as demand increased. The team extended its OEM customer base aggressively over several months and the portfolio broadened with other added value operations such as in-mould printing. Gas injection moulding was the subject of a further capital request to aid expansion in the white goods sector. Clients included Candy, JSB Electrical & Premier Hazard. Downstream added value operations were extended via the substantial assembly operation used for security products. Emergency lighting assembly work was won as a result of being able to offer ‘one stop shop’ production to clients at highly competitive prices. 7-Figure sales were achieved in plan year 2, with the potential to obtain ‘beyond plan’ annual sales of c.£15m from years 2/3 onwards.
  • The new Retail Solutions business, providing Point of Sale Display and promotional items for use in the cosmetics industry achieved c.£6m. sales in its first year of operation. This was achieved by taking a high technology approach to creative design, with manufacturing substance via the range of processes available within the company. Key new clients included Coty-Rimmel and Virgin Vie.
  • Functions shared by the business units were re-engineered. This included work in supplier rationalisation giving c.£0.8m/yr savings; re-building a highly talented multi skilled Technical function & establishing a crucially important PCB population cell in production. A factory margin improvement project was established, which, coupled with timely management accounts led to raising profit from, 1.6% to 7.6% R.O.S. & 5% to 26.4% R.O.N.A. in year 1.
  • Company morale was high, with good line communications established throughout the business.
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