Objectives

 

Leverage Facility Strengths

 

Focus on Core Competencies

 

Reduce Costs

 

Eliminate Excess Capacity

 

Develop Lean Organization

 

Reduce Warranty Costs

Integration Plans

1. Facility Rationalization

  •  Ohio: Downsize
  •  Divest: Industrial business next year
  •  Focus: Parts sales/warehouse
  •  Savings: $1 million

2. Operating Expense Reductions

Review and focus on reducing day-to-day operating expenses (e.g., production gases, small tools, work clothing).

Cost Reduction: $929K

3. Potential Outsourcing

Identify and pursue opportunities for outsourcing non-core functions to specialized vendors.

Cost Reduction: $1.8 million

Continued Improvements

Drive further cost reductions through continuous improvement initiatives.

Cost Reduction: $2.1 million (annualized $3.0 million)

Working Capital Reductions

Enhance inventory management, reduce lead times, and optimize schedule management.

Reduction: $2.2 million (Total Inventory Reduction $26 million)

Headcount Reductions

Plant Current Salary Proposed Salary Current Direct Hourly Proposed Direct Hourly Current Indirect Hourly Proposed Indirect Hourly Total Reduction
Acquired Co. 111 111 492 491 110 86 25
Acquirer 46 46 258 250 49 47 10

Implementation Targets

Action Completion Date
Inventory Reduction 12/31
Operating Exp. Reduction 12/31
Ratio Adjustment 10/30
Strategic Plan Improvements 12/31
Facility Rationalization 6/30
Warranty 12/31

Summary of Synergies (in thousands)

Projects / Actions Comp. Date Savings (Current Year) Savings (Full Year) Reduction Working Capital
Headcount Adjustments 7/30 $4,306 $4,306 $0
Assembly Acqd. Co. 10/31 $399 $399 $0
Assembly Acquirer 10/6 $1,267 $1,267 $0
Inventory Reduction Acquirer 12/31 $850 $850 $10,000
Inventory Reduction Acqd. Co. 12/31 $1,368 $1,368 $16,100
Operating Exp. Review Acqd. Co 12/31 $750 $750 $0
Operating Exp. Review Acquirer 12/31 $179 $179 $0
Ratio Adjustment 10/30 $300 $1,200 $0
Downsize Facility 6/30 $1,005 $2,010 $0
Warranty Reduction Acqd. Co. 12/31 $350 $350 $0
Outsourcing - Acquirer 12/31 $971 $971 $0
Outsourcing - Acqd. Co. 12/31 $795 $795 $0
Strategic Plan (Lean Focus) 12/31 $1,800 $2,186 $0
Total   $14,340 $16,631 $26,100

Risks

 

Union Reaction

 

Further Market Softening

 

Loss of Key Employees

 

Conflicting Resources

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