Partner & Managing Director, Munich
PFW is a leading aerospace and defense supplier to major commercial aircraft makers. In 2011, the company was growing fast—too fast. Its two leading clients wanted the company to ramp up production for a new series of aerostructures, but the company had been suffering for years from a host of internal problems and it couldn’t finance the engineering costs for these products. As PFW veered toward insolvency, one of its leading clients stepped in. The client acquired a majority share in the company and sought to stabilize PFW’s supply chain—and save the company. Led by its new management team, PFW turned to AlixPartners to help it develop and implement a wide-ranging operational turnaround plan.
Hands-on partnership makes a big impact
We arrived on-site at PFW’s headquarters in Speyer, Germany, and quickly discovered the numerous issues plaguing the company. First and foremost, PFW lacked a clear manufacturing strategy, and that lack had led to duplications of assets, technologies, and labor across its plants. Next, the AlixPartners team discovered that PFW’s purchasing decisions were inconsistent and decentralized and that too many employees lacked critical product development skills necessary. All of those things meant that millions of euros were slipping through the cracks.
First, we tackled some of the immediate issues to fix one of PFW’s most crucial programs and stop the company from bleeding cash. Next, we worked with PFW teams on-site for 12 months to build a strategy that would help the company both reduce costs and grow sustainably over the long term. Specifically, we developed step-by-step plans that would reduce overhead, rein in procurement costs, increase productivity, build efficient production networks, hire and retain engineering talent, and improve lines of communication between different business units. All told, we identified more than €60 million of annual savings over five years. We kicked off the plans by deploying teams that would support the implementations by working hand in hand with company executives. We kept the momentum going by developing a tracking tool for measuring savings realizations. We supported the management team’s weekly progress review meetings. And we even took an interim management position to manage the divestment of one of the company’s UK subsidiaries.
When it really matters
Working closely together, PFW and AlixPartners launched a successful operational turnaround in just over a year, and without an external cash infusion. In fact, our results exceeded improvement targets in every functional area. Impressed with the outcome, PFW’s management and shareholders have since then asked us to work with them on several other projects beyond the initial stabilization project. The additional projects include the aforementioned ambitious procurement cost reduction program and a strategic and tactical turnaround prior to the company’s divestment. From 2012 onward, the company has reported strong financial performance and steady growth. In short, this hundred-year-old company was saved, and its management is now focusing on expanding into the future.