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Challenge

Resulting from an acquisition of a smaller, yet more mature rival, the consumer goods company now faced many challenges when integrating the two very different manufacturing and distribution center networks and operational philosophies. While the acquiring company focused on a national, centralized, and vertically integrated network, the smaller company placed a heavy emphasis on regional operations, with separate manufacturing and distribution facilities. These regional facilities were aging, outdated, and inefficient, resulting in lower productivity and high operating costs.

Since the primary driver of the acquisition was to enhance manufacturing capabilities, increase market exposure, and realize synergies in operations, the consumer goods company needed to quickly integrate the two networks.

Five target regions were in scope for this initiative and the
company brought together an internal integration and expansion team, consisting of finance, operations, real estate, human resources, legal and a third party logistics manager. The team’s mission was to create regional “super” plants to handle production, warehousing, and distribution that were optimized to provide coverage to the combined company’s sales and retail network.

Altus Group joined this team to provide its expertise with network operations, location analysis, site selection, and incentive negotiation.

Solution

Our team of advisors worked directly with the integration team to analyze the newly commingled operations, identify redundancies and gaps in the network, assess the costs to upgrade existing facilities, and outline various scenarios to optimize the manufacturing and distribution network.

Due to the expansive nature of the network, the team developed a project scope for each of the targeted regions. Within each region, the scenarios included different outcomes including consolidations, expansions, closures, retrofits, or new facilities.

For each scenario, our advisors worked closely with the integration team to determine the optimal solution by conducting location analysis and cost reviews, performing site selection for new sites, identifying and negotiating tailored incentive packages to support the various projects, and presenting the findings to the integration team.

Results

The integration team selected and executed on projects within the five targeted regions, leading to state-of-the-art, modern facilities and a plant network optimized to support the growing sales and retail channels.

The project included capital investment of $61 million and job creation and retention of 750 positions.

To enable this investment, the company relied on the incentive packages Altus Group negotiated and secured, totaling near $15 million including cash grants, refundable tax credits, property tax abatements, training cash, and other cash equivalencies.

By establishing an integrated approach and enlisting the services of Altus Group at the beginning of the planning process, the company was able build, develop, and execute on a strategic plan positioning the company for future growth and success.

Services provided

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Last updated on July 29th, 2019 at 05:25 pm

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