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ENERGY TECHNOLOGY: REORGANIZATION OF A MANUFACTURING SITE

Client: DAX group

Sector: Energy technology

Project duration: 20 months

Revenue: 2,3 bn EUR

Contact: Dr. Jörg Schumacher

RESTRUCTURING

Background

The worldwide demand for energy supply systems and components has been growing in line with global primary energy consumption for years, rising by 14 percent between 2005 and 2011. This increase was driven mainly by the Asia-Pacific region. There, primary energy consumption has increased by almost 36 percent since 2005, while in the EU countries there has been a decline of around 6 percent. The demand for energy technology is correspondingly differentiated regionally. In Europe, the market is rather saturated. The focus here is primarily on conversion and modernization of existing plants. By contrast, the Middle East has long been considered the largest growth market. Meanwhile, demand is shifting more and more into Asia. In the emerging markets, especially in China and India, strong economic growth and increasing energy demand are expected over the next few years, and consequently Asia offers considerable potential for energy technology in the medium to long term.

On the supply side, few "big players" dominate the market. European producers find it hard to tap into Asia's highly price-driven sales markets due to high development and production costs. By contrast, Asian providers are increasingly conquering international business. Increasing market penetration, especially by Chinese and Korean producers, intensifies price pressure on local companies. In order to ensure competitiveness in the medium and long term under these conditions, many suppliers are relying on a gradual shift of production from Europe to Asia as part of their organizational strategy.

  • Layoff of approx. 400 employees

  • Introduction of controlling standards and reporting

  • Verification and specification of HR concepts

  • "Interface" central/local organization

  • Operational project management and PMO

  • Implementation of project organization and stakeholder communication

  • Support for staff reduction process

  • Implementation of project monitoring and reporting, task management

  • Introduction of permanent risk analysis and evaluation

  • Identification and de-escalation of political issues

  • Approx. 40 m EUR of fixed cost savings

  • Minimization of strikes, no contractual penalties

  • Avoidance of reputational damage to the client

  • Approx. 25% savings in the restructuring budget