A UK auto parts manufacturer: Stagnating sales and profits

The issue

PricewaterhouseCoopers was contacted by a UK-based manufacturer of metal based products, including pressed steel parts, doors, bumpers, door rails, and additional specialty products. The client’s customer base includes Audi, Renault, Ford, GM, and PSA. With manufacturing operations in six EU countries, the client boasted €600m annual turnover. Nevertheless, sales and profit were beginning to stagnate. To help turn things around, PwC was asked to provide assistance in answering two fundamental questions:

• What is the optimum support structure for Operations and Engineering/Commercial activities, and how should these support functions be organised?
• What is the optimum business model for Engineering/Commercial for purpose of winning more business and improving margins?

Our approach

In response, PwC recommended a restructuring program of the company’s in-plant support activities in the areas of quality, purchasing, IT, finance and HR; the removal of unnecessary layers of regional and group-wide support activities; and implementation of a leaner management structure.

At the same time, we advised the client to establish a central processing capability for payroll, accounts payable/receivables, asset register, and HR administration. Likewise, in order to strengthen the company’s operations capability, we suggested rebalancing management resources around a new manufacturing strategy developed jointly by PwC and the client.

The outcome

The outcome of this project was twofold: first, a far leaner organisation in terms of support overhead; and second, a corporate support structure more closely aligned with the company’s core revenue-generating activities. Initial savings are estimated at €7-10 million per year.