Restructuring of heating technology company HKR

Challenge

Faced with growing competition, the Vaillant Group decided to restructure its subsidiary HKR. The project encompassed a situation analysis, the identification of cost-cutting potential, planning the restructuring measures and relocating the company’s component assembly activities to less expensive Vaillant sites. This needed to be accomplished while ensuring the uninterrupted supply of the modules and components needed by the Vaillant Group during its peak winter selling season.

Success

With carefully planned restructuring measures that led to annual savings in the millions of Euros, Globalise ensured that HKR was fit for the future. Production was relocated in half the time originally scheduled, without any production shortfalls.

Interview with
Interview with Dr. Carsten Voigtländer
CEO of Vaillant Group

Dr. Carsten Voigtländer, CEO of Vaillant Group

Dr. Carsten Voigtländer, CEO of Vaillant Group

Dr. Carsten Voigtländer has been CEO of the Vaillant Group since January 2011. From September 2009 to September 2011, he was Managing Director of the Technology division. Prior to joining the Vaillant Group, he was a research scientist at the Institute of Thermodynamics at Braunschweig Technical University in Germany, held various positions at Neumag, and has been CEO of Oerlikon Textile.

The Globalise manager began by analyzing the status quo. What did he find?

The analysis of machinery utilization showed that it was far from optimum. We were producing large amounts of inventory that had not yet been sold and our costs were high. The interim manager also analyzed the numbers and sales figures of all the orders from the last six years and compared them with the market prices. This analysis showed that our production was only really competitive when manufacturing large series with low machine setup costs, replacement parts and small runs of fewer than 500 units.

“The Globalise manager expertly analyzed HKR in detail and derived perfectly suited actions to solve the problems.”

Restructuring of heating technology company HKR

What characterized the Globalise manager’s restructuring concept?

In principle, it was all about returning HKR to its core activities, where it was capable of competing. One factor here was downsizing the machine fleet and adjusting the personnel to go with it. The second issue was to significantly improve capacity utilization levels of the remaining plant. In all, the Globalise manager’s restructuring concept generated several million Euros in annual savings, reduced our production costs by around a third and made HKR competitive again.

What happened once the restructuring concept was complete?

The Globalise manager then went about planning its execution in detail. This included a new layout for the factory building. This not only halved the required floorspace but also identified further potential savings. And he compiled an investment plan for the realization of the restructuring and the new factory layout. Vaillant’s controlling unit audited the manager’s calculations and confirmed that the necessary investments would be fully amortized within three years.

What were the other focal points of the project?

One was relocating component assembly to sites in Slovakia and Spain, including planning the logistics of the move and organizing the required advance production. In the process of completing these taks, the Globalise manager succeeded in achieving the relocation in half the originally scheduled time. The other key issue was ensuring that the Vaillant assembly works continued to be supplied with the components that HKR manufactured. To this end, the interim manager considerably increased stock levels of finished parts to compensate for the period during which no production could take place.

Which of the manager’s skills proved most decisive for the success of the project?

A number of things were particularly valuable, such as his extensive experience with restructurings and production relocations, and his clear and unbiased view of the situation as a company outsider. The Globalise manager dug deep to unearth the facts and then took the necessary action. He drew the map that led HKR back to market competitiveness. We are highly satisfied with his performance.

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