Turnaround and Restructuring in CEE, Part 1 - Change in Market Conditions.
Bohuslav Lipovsky
Providing Executive Interim Managers to navigate companies through Crisis, Performance Improvement, Digital Transformation, Relocation, and Growth Acceleration in Europe, Middle East and USA.
What are the reasons behind the increased demand for Turnaround and Restructuring Experts in the CEE Region?
As expected for a longer period of time, many companies need to completely restructure or at least go through a tense turnaround and market repositioning.
Some of the most common reasons include
In this part, let us have a look at the:
CHANGE IN MARKET CONDITIONS
A company that has been successful in a particular market may suddenly find that demand for its products or services has decreased, increased, or is extremally volatile due to new technology or changing consumer preferences. In such cases, the company may need to make significant changes to its market positioning, operations, supply chain, logistics, and flexibility of labor force to remain competitive.
?A good example is the shift from internal combustion engines (ICE) to electric vehicles (EVs). This is a major tsunami sweeping (not only) the CEE region right now. Let's focus on the top 3 major implications:
?Consolidation within the industry
Smaller players will find it difficult to compete, many of the will go out of business, some will reposition on the market, and some will be taken over by big players.
The big players are already facing a challenge I personally call "Too many shoelaces left untied", i.e. in a need for turnaround due to accelerated growth. The growth is aimed at taking over competitors, and growing revenues, but does not take margin or profitability into consideration.
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?We already have several interim managers in both situations
Increased competition
There is strong competition for dominance between the top 5 market players, as they know that Number 1 and Number 2 will dominate the market for the next period of time, even decades. A good example is the manufacturing of exhaust systems, engine blocks, crankshafts, gearboxes, etc.
The smaller players are facing increased price pressure and frequent changes in orders, being left with little or no options. The benefit of such pressure is that those who react appropriately to the new market conditions will become leaders in new niche segments with higher added value.
The big players benefit from Interim Business Development Managers, someone who knows the right people to talk to either on the domestic market or on the export market. As a result of the small players leaving the market, here we have the majority of Interim Turnaround managers, as the growth in the demand is so huge, that the companies are not able to cope with it with internal resources.
Both groups benefit from Interim Production Directors, and Interim Logistics Directors to adjust the regular production planning and align it with the current challenges in the supply chain, which I cover next
?Changes in Supply Chain
Manufacturers need to source new raw materials, which leads to the development of new supply chain strategies. Over the past years, we have already faced major disruptions to the supply chain due to COVID-19, Re-shoring from Asia to Europe, the Semiconductor crisis, and now the war in Ukraine.
For small and for big ones, the major issue of today is the irregular call-offs from the major OEMs, the demand varies week by week and companies find it difficult to organize logistics, purchasing, and even human resources. And we all know how the price of a single container from China multiplied in the recent past.
Some of my interim supply chain and interim logistics managers already asked me not to contact them with new projects at least for 3 months, as they have been in projects almost continuously over the past 3 years with us. We relocated from Scandinavia to Poland, from India to the Czech Republic, consolidated European Supply Chain footprint etc.
I personally see the majority of companies trying to get ahead of the changes in the supply chain.
What is your opinion?
Bohuslav
Group Controlling Lead / BI Enthusiast
2 年I can only confirm trends mentioned by Bohuslav. Working for the past 7y in Automotive Tier1 supplier, I see that volatility of demand from all OEMs increased significantly in the past 2 years. No specific direction in evolution of demand (up or down), just simply showing extreme swings week-by-week depending mainly on current condition of Global Supply Chain. These swings in demand put all departments under heavy pressure, all of them focusing as top priority on "not to stop the Customer", while retention of key personnel becomes backbone of performance of the Company. Main goal of HR: to prevent loss of knowledge. All these lead to the situation that resilience, agility, teamwork and cohesion inside the Company starts making the difference and being key ingredient in continuously delivering results within turbulent business environment.
Managing Director | Int. CEO | CIO | Board Advisor | Business Partner | | PE | FMCG | Energy | Supply Chain | CPG | Manufacturing | SOE's | "Transformational leaders activate the most valuable resource - People"
2 年Thanks for sharing Bohuslav companies are normally not prepared to generate internally the change and transformation required to drive their strategic objectives. Having said that its definitely doable to build Transformational Muscle with the right partners that can demonstrate a successful track record.
plant director, interim manager, engineer & MBA
2 年Yes, in my view, increasing demand for managing turnarounds, post-acquisition integrations and also greenfield projects has been apparent particularly since last year. I think that the first 2 factors that you described (consolidation and increased competition) has been acting intensively already for many years. But the influence of the third factor (changes of supply chain due to covid, war and generally geopolitical factors) intensified mostly during last year or two. So that third factor is probably in biggest part responsible for very recent increase of demand for interim managers. The re-shoring that you mention generates many plant relocations' projects from Asia to US and EU (and within EU particularly to our CEE countries). Of course those 3 factors are interconnected - due to disturbances of global economy after covid and due to war - also the existing companies in CEE region have to cut costs, improve organisation and effectiveness, consolidate manufacturing footprint, etc. Therefore I agree with you that the demand outlook for interim managers looks quite well for the near future.