Restructuring Case Study: Turnaround of a Global Components Manufacturer

How a long-established Swiss company with locations worldwide stopped its decline, moved from negative EBITDA to positive EBIT within 18 months, and established the House of Excellence as a steering instrument that secures the turnaround for the long term.

The starting position in 30 seconds

Situation. A Swiss industrial company with a history of more than 70 years develops and manufactures electromechanical precision components for demanding customers in industrial automation and automotive. Production plants in Europe and Asia, sales on three continents, a technologically excellent product portfolio, and long-standing relationships with the world's leading technology corporations.

Complication. Behind the strong brand, the business had started to slide: revenue collapsed by a quarter within two years, from over 200 to 156 million EUR – even the margin turned negative. The causes were largely home-made: on the basis of an overambitious strategic plan, the company had invested more than 100 million EUR and built up personnel within five years. Utilization did not follow; depreciation did. The products were technically brilliant, but in part over-engineered and too expensive. Operations worked in silos, without transparency on process times, scrap, and margins per product group. And with its most important customer, a global technology corporation, the company had lost its status as sole supplier due to capacity bottlenecks – the competition had been invited in. Declining earnings, creeping loss of competitiveness, a growing backlog of problems: the classic state of restructuring.

Solution. No scattergun liberation strike, but a systematic recovery program: create transparency, fix the cost base, reorder the production footprint, systematize sales – and anchor all of it at executive level with the House of Excellence as the steering instrument. How this approach works in principle is described in our article “Restructuring: Mastering the Crisis”. This article shows the implementation in a global manufacturing company.

Step 1: Create transparency – you can only steer what you can see

The first finding was sobering: the company did not know precisely what it earned money with and what not. So the starting point was not a list of measures, but measurability. A consistent product costing system across all plants was introduced centrally at headquarters and then rolled out globally, complemented by monthly tracking of revenue and margin per product group. A task force made process-time and scrap deviations fully transparent and attacked them systematically.

The result of this transparency: the priorities suddenly became obvious. Two product families turned out to be the real earnings drivers; individual groups were running at negative margins. Only this picture made fact-based prioritization possible – the foundation of every effective turnaround and the core of our Corporate Health Check.

Step 2: Fix the cost base – consistently and precisely

On the basis of the new transparency, a rigid cost program followed:

• Personnel costs were reduced by 9 % per year, around 100 full-time positions, primarily in indirect areas and through consistent low-performer management.
• The cost of the most expensive external service, surface finishing, was reduced by 1.3 million EUR with a dedicated task force.
• Further cost potential of more than 2.5 million EUR was identified and realized.

The sequence was decisive: measure first, then cut. That way the program hit the cost drivers instead of the substance. The result: the German main plant turned to a positive EBIT within 18 months.

Step 3: Reorder the footprint – value creation where it is competitive

The labor-intensive cable assembly was relocated from the German main plant to the Asian production site – more than 90 articles, in the middle of the Covid pandemic, carried by a dedicated project team. The effect: manufacturing costs fell by more than 20 %, and the margin in the relocated product area nearly doubled, from around 24 to over 40 %.

In parallel, an end-to-end supply chain management was established: a matrix organization across the entire value chain, from purchasing through stamping, injection molding, and final assembly to logistics, with clear responsibilities and a uniform ERP system as the backbone, rolled out from the main plant to the other sites. Silos became a steerable chain.

Step 4: Systematize sales – from reacting to actively attacking the market

Restructuring does not just mean cutting costs; without top-line growth, every turnaround remains piecemeal. Five sales initiatives were implemented in parallel: a global CRM with a transparent project pipeline, weekly managed funnel management with strategic “must-win” projects, the separation of key account management and regional sales, structured market development in the target segments, and a new compensation model that consistently incentivizes project wins.

The effect was measurable: in a single year, new projects with a total value of around 77 million EUR were won, predominantly with the leading players of the target industries. And the most important customer? Through open communication, transparent exchange, and restored delivery capability, trust was regained. The supplier rating improved and the company was readmitted to the circle of strategic top suppliers.

Step 5: The House of Excellence – a steering instrument, not a poster

Many fields of action do not yet produce a turnaround. The difference comes from orchestration. That is exactly what the company's House of Excellence was built for: focusing the entire organization on the five decisive priorities.

The executive board established a steering committee for this purpose and created clear responsibilities for the five fields of action:

• A product committee secured the future viability of the product portfolio: new product families, R&D roadmap, and an innovation factory.
• The operational market coordination improved delivery capability and delivery reliability with falling inventories across the entire value chain.
• The strategic market coordination steered the more than 100 strategically relevant must-win projects in a results-oriented way; another 200 projects were under close observation.
• The operations steering committee improved productivity, flexibility, and quality through shop floor management in all plants.
• The cross-functional projects optimized the administrative processes: modernization of the ERP system, introduction of product data management, and measures to reduce complexity at all levels – products, customers, and the project portfolio.

The foundation was formed by IT, finance & controlling, and HR.

The decisive point: the House of Excellence is not a chart for the reception area, but the pacemaker of leadership. Each field of action had owners, targets, and a fixed rhythm of reporting to the steering committee. A backlog of measures became a managed system. Those who anchor problem-solving in their own organization this way, instead of outsourcing it to consultants, create value that lasts. We call that Institutional Learning.

The results after two years

• The group again generates a clearly positive EBIT; the German main plant turned from negative EBITDA to positive EBIT in 18 months – through the cost program, transparency, and process discipline
• Delivery reliability improved to around 98 % through product costing, the task force, and shop floor management
• Margin in the relocated product area nearly doubled, from around 24 to over 40 %, through the reordering of the production footprint
• Around 77 million EUR in new projects won in one year and a reinvigorated standing with the most important customer
• Revenue rebound from 156 to around 190 million EUR in the following year. That put the company a full year ahead of its own mid-term plan, which foresees a doubling of the EBITDA margin to over 16 % by the target year

A company with declining earnings and a negative operating result became a profitably growing company again, with a clear equity story – attractive to customers, employees, and investors.

Three lessons

1. Transparency is half the restructuring. Those who do not know margins, process times, and deviations per product and process are restructuring blind. Only measurability makes prioritization possible, protects the substance from the lawnmower, and prevents wrong decisions.
2. Cost reduction and growth belong in the same program. The cost program stabilizes, but only systematized sales with a pipeline, a must-win process, and matching incentives turn the turnaround into a growth story.
3. Without a steering instrument, every initiative fizzles out. The House of Excellence bundles the decisive priorities under the roof of a steering committee, with clear responsibilities, targets, and a fixed meeting rhythm.

Is your company facing similar challenges? In a no-obligation initial conversation, we jointly assess which state your company is in and which fields of action offer the greatest leverage. Get in touch.

Note: This case study is based on a real engagement. The client's name, industry details, and identifying information have been anonymized or generalized.

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Further articles:

Restructuring: Mastering the Crisis (link)

Restructuring Case Study: From Crisis to Peak Performance (link)

Turnaround Case Study: When the Flagship Product Becomes a Risk (link)