Working with the Board of Directors developed a detailed restructuring plan to resolve the issue. With Board approval management bought-in for a consolidation of plant activities. Moved all manufacturing to the California plant and arranged for the two products that required local production to be produced through toll manufacturers. Closed the remaining two plants and moved the assets to California. We were also able to sell both of the closed plants within one year.
As a result, a $13 million operating loss was reversed enabling the company to obtain maximum profitability.
After meeting with all departments, sales, marketing, finance, plants and R & D we determined the problem was in R&D. Collaborated with R&D and instructed the department on what exactly needed to change in the products. After two months of failing to meet timelines or changes, our recommendation was to replace the head of R&D. After this change was made, products were modified and blended to meet both customer and consumer demand.
The plant began operating year around and capacity was increased from 70% to 110% requiring the company to import from another of its plants in South Africa.
Working with advice from environmental law attorneys a loophole was identified in the legislation that would exempt the new product from registration. Notified EPA of the new product launch and non-registration.
The product generated $2.5 million net profit on four million pounds of product sold during what would have been the two year process to register the product.
Working with management and gaining an insight on the long-term importance of this ingredient we traveled to China and negotiated a long-term contract with a company to build a plant and supply 30 million pounds per year of this ingredient. We also located a local Chinese company to injection mold the company's buckets, leading to the import of a finished product. This broke a pricing hold in the market that had existed for 20 plus years. All five producers filed anti-dumping against the company leading to a 77% anti-dumping duty being assessed. Over a two year period we initiated plans to overturn the penalties.
On appeal, the company gained 74% reduction of duty and was returned $12 million held in escrow during the two-year appeal process.
Breaking the pricing hold in the market helped the company go from 0% ROS on $206 million in sales to 10.4% ROS on $500 million in sales within five years.
Due to competitive pricing on the internet for the same products, the retail dealer segment was losing interest in promoting this company's product base. The company had one brand of product that sold to retail dealers and internet company's as well.
We worked with management and visited several of their larger dealers. Our solution was a new internet policy that was implemented and gave the retail dealers more protection while still allowing the internet company's to be competitive. This policy became the strongest policy in the industry, and is now being copied by manufacturers globally.
Over a three-year period, the new policy generated more than 51% revenue growth.
Specializing in management consulting
Our assignment was to look at their operation and create a consumer products division using their existing technology. The first product created was fairly simple. We took one of their existing products and created retail packaging for hiking, camping, boating, international travel, and emergency preparedness. The second product was more challenging. Again, we took one of their existing products and created retail packaging targeting the laundry aisle in major grocery and discount department stores. The product is a small tablet of dry bleach and competes against all the major liquid bleach suppliers already in this space.
In two years both products are now available. The first product is now available in most of the major sporting goods stores in the U.S. The second product is now in several national grocery store chains and in approximately half of the Wal*Marts in the U.S.
We analyzed the niche company, and recognized that the technology could compliment the company, rather than competing with it. As the niche company was European-owned, it had a bigger impact on the French market than the U.S. market. We structured an acquisition proposal and approached the corporate owners with the proposition. Secured anti-trust approval from both the U.S. and U.K.., negotiated a buy-out of the company, and concluded the entire acquisition within five months.
As a result, the acquisition positioned the combined brands at #2 in the U.S. marketplace with a growth rate faster than the market as a whole. It also elevated the company's position in the E.U. that contributed to a further acquisition in France the following year.
After reviewing and approaching the three key competitors, it was determined that all three either did not want to sell or were not in the desired price range. Showed the company that none of the three competitors had a recognized consumer brand and all three had failed to establish a solid foothold in the market. Our suggestion was to develop a new brand and enter the market. After two years of constant pressure one competitor was presented an offer for acquisition and they accepted. Kept the created brand and the acquired brand, closed two manufacturing plants and two toll manufacturers, and consolidated corporate offices into the current company structure.
Within three years the company achieved the #1 position in the mass market.