Manufacturing Footprint Optimization – Vehicle Supplier

Situation

• Global tier 1 automotive supplier with multiple manufacturing and assembly facilities
• Challenges included increased competition, higher raw material costs, aggressive cost-down expectations from customers and high labor costs
• Several major customers recently announced sweeping restructuring plans of their own including facility closures and consolidations
• Client had undertaken rounds of plant consolidations, but had not achieved targeted profit improvements

Actions Taken

• Applied AlixPartners’ MFO approach to identify and implement opportunities to dramatically reduce manufacturing costs
  • Developed footprint strategy utilizing proprietary model
  • Conducted detailed implementation planning including development of budgets, time lines, scorecards and communications
  • Utilized program management tools to drive execution of plans
• MFO effort focused on increasing profits in North America, and keying in on major controllable cost categories (labor and OH)
• Plan included transitioning parts of three facilities from the U.S. to Mexico, and one within the U.S.

Results

• Client is on track to achieve $21 million of ongoing savings with a return on invested capital of nearly 60%
• Significant amount of cost risk eliminated through cross-functional teamwork
  • Approximately $10 million in facility costs reduced by creative, lean layout of existing facility in Mexico
• Despite overall complexity (broad product mix, cross border relocation, union considerations, multi-modal logistics, etc.), production moves were executed on time and under budget
• Successful transition of program management to client personnel