TMA / UCLA Team Case Presentation

This article summarizes a real-world case, Accuride Corporation, presented by a TMA team at the UCLA Anderson School of Management on October 26, 2010. It illustrates how a Chapter 11 filing can buy a company some time, but that fundamental changes in the organization must be made to avoid a return of insolvency, as the company’s high fixed costs and low margins, even in good years, were not seriously addressed by management, but could have been, as discussed in an Alternate Ending to this story.

How Inventory Distorts Cost Information

Inventory is an integral part of every product oriented company, whether it is a distributor, assembler, or vertically integrated production operation. It is normal for otherwise capable business, financial, production, and material management people to make major decisions that are intended to reduce cost that fail to take ALL costs into consideration, and so run awry.

An Unthinkable Turnaround Story

The discussion of Semco SA, in his remarkable book, The Age of the Unthinkable, Joshua Cooper Ramo provides remarkable insights for those interested in the rapid performance improvements required by turnaround work. Semco SA is a truly amazing, break-all-the-rules turnaround. Set in Brazil, in the 1990s, when inflation was running 1,000% /year, in an economy where 1 in 4 companies went bankrupt, and the government had seized 80% of all cash, Semco made some remarkable changes and resumed profitable growth at a 40%/yr rate. We should all know about this one.

Synchronized Production as a Turnaround Strategy

In a turnaround situation, cash is everything. Summarized here is the manufacturing turnaround strategy I have used to achieve major reductions in working capital and permanent production cost – sizeable positive cash flow impacts – fast.

How Close IS a Bankruptcy?

Don’t let a lack of understanding of just how devastating a bankruptcy can be to your company’s equity value and control prevent taking pre-emptive action to maintain control of the company’s fate – BEFORE the police are chaining the doors to the facility. Otherwise, the work of many years, even of a lifetime, and the equity value the company has built up can shrink to nothing in a startlingly short time period.