Circle Plastics Products, Circleville OH
Challenge
- This Midwestern plastic injection molder serviced the automotive and appliance marketplaces. The company had been hit by sales and margin decreases due to increased competitive pricing especially from off-shore competitors and the resulting loss of some long-term customers.
- Additionally, the owner/entrepreneur who had run the company for over 20 years wanted very much to retire.
- There was $3 million in debt and an annual operating loss of almost $2 million.
- Covenants on bank loans were not met, cash availability under existing collateral formulas had dropped to dangerous levels and changes were clearly required to stabilize and save the company.
Solution
- Developed a weekly detailed cash forecasting discipline to control liquidity.
- Planned and executed a corporate reorganization, which realigned management responsibilities and dramatically reduced headcount and costs.
- Implemented revised pricing and marketing strategies to stop and more importantly reverse the top line and gross margin erosion.
Results
- The company became profitable again within 90 days.
- The secured lender regained its comfort with the security of its loan.
- The owner who almost lost his total investment in the company retired with a multi-million dollar payout from the sale of his business.
