A veteran industry consultant spent the last four years reviving a failing metalcasting company. Following is a first-hand account of what he took away from the experience.


Daniel Marcus, TDC Consulting Inc., Amherst, Wisconsin


badly neglected iron metalcasting facility and a World War II vintage machine shop, cleaning up a longstanding legal/ environmental mess, integrating separate metalcasting and machining businesses, achieving ISO 9001:2008 compliance, rebuilding the management team and major elements of


B


Lesson 1: The Financial Turnaround Is the Easy Part Turnaround managers


must essentially make something out of noth- ing, and do so quickly, often against significant opposition. But surpris- ingly, the turnaround was the easier part of the past four years’ journey, mainly because most of the staff was enthusiastic about do- ing business in a new way. Change and results came fast, so much so that key managers


spoke of a feeling of “running downhill” during the early period. We first changed the product mix, which quickly led to huge improvements on the shop floor. Overtime hours, for example, were quickly cut to fewer than 300 per month from peaks of more than 3,000. Quality improved markedly too, as jobs that clearly did not fit the facility’s capabilities were eliminated. Prices and surcharges also were corrected, and the most egregious of the money losing jobs and customers were asked to leave. The hourly and administrative payrolls were downsized, too. On the financial side, the results were as expected. Within


six months of the turnaround’s beginning, we had achieved a sevenfold increase in return on sales, and by the end of the turnaround year, the returns had nearly doubled again.


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eginning in October 2005, what started out as a straightforward, six-month turnaround manage- ment assignment evolved into a four-year odyssey. The turnaround began with the company’s financial rescue, but it also came to include renovating a


the hourly workforce, orchestrating major improvements in quality, safety and white- and blue-collar productivity, transitioning from one ownership generation to the next, and ensuring continuous profitability despite the worst business downturn in living memory. Now, with these commitments fulfilled, several lessons can be distilled from this extraordinary experience.


(Editor’s Note: The name of the company and other details in this story have been concealed for reasons of client confidentiality.)


These results were accompanied by a consistent top line, a reduced production workload, unprecedented profit sharing and dividend payouts, and commensurate improvements in balance sheet strength. In addition to important structural changes, the more


difficult process of behavioral change (a process that never ended) was begun early in the turnaround year. Some of that change was fun and easy, as when I told the shipping super- visor (who had spent a lifetime being told to ship everything that wasn’t nailed down) to stop shipping when we had hit our monthly target. The look on his face was priceless and the impact dramatic. But for the most part, the process of behavioral change—essential to any organization’s ultimate success—was predictably slow and painful.


Lesson 2: More than Ever, It’s All About Improvement The chief executive offi-


cer’s first job is to control the business—to install effective management systems and instill essential management discipline so the company’s finances, operations, market- ing, quality and human re- sources come under control. But what then? Simply put,


MODERN CASTING / March 2010


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