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A long-running family manufacturing business based in Germany established a factory in Brazil more than 50 years ago and had enjoyed buoyant sales as a supplier to the automotive industry.
When the sector experienced a slump in 2015 sales fell by around 60% and the Brazilian side of the business was no longer self-sufficient, requiring regular cash injections from the European parent company to remain operational.
Initial reorganisation took place in an effort to reduce staffing levels and costs but it quickly became apparent that the problems ran deeper and IXPA’s partner in Brazil, iManagementBrazil was approached to provide interim management support for detailed restructuring and change management of the Brazilian business.
iManagementBrazil carried out a detailed analysis of the company’s operations in Brazil and uncovered a number of major issues. The partner chosen to relieve the company of some of its administrative tasks in order to reduce employee numbers was based in Northern Europe where the parent company as based. Their lack of competence and poor understanding of the Brazilian market was contributing to the problem.
Poor quality control on the technical side, outdated machinery and a breakdown in communication over many years between the core founding team and more recent staff had all contributed to a complex and challenging situation that was having a detrimental impact on the health and future viability of the business.
Administrative tasks were brought back in house with a strong focus on cash flow forecasting. A supply chain manager was appointed with significant experience in operational issues to tackle quality assurance, communication and production planning.
The most significant element of the interim change management project involved developing a completely new business strategy. iMB’s change management team knew from experience that a business plan focused purely on budgets would not generate a sustainable business. Our recommendations involved finding new sources of income and increasing customer penetration. The European management were initially resistant but we worked with them to identify new markets and product lines that would specifically generate sales and growth in Brazil.
The entire project took a year and a half. After less than 12 months, the new product line that
iMB’s interim change management team had identified was generating sales and healthy margins. The company also signed a deal to become a development partner with another firm in a similar sector of engineering.
To the shareholders’ delight, the Brazilian factory has not required financial support from the European parent company for more than a year.
iMB’s actions rescued a long-established family business from threat of closure and created one of the most rapid manufacturing turnaround stories of recent times.