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How Prec-Cast overcame the crisis |
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Written by Jan Mainka
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Sunday, 24 January 2010 |
“We, as a company, have survived the crisis,” Béla Bokodi, director of Prec-Cast Kft the Hungarian subsidiary of the Regensburg-based Wolf group told participants at the recent European region meeting of consultancy HLB International. HLB’s Hungarian partner HLB Klient Holding is Prec-Cast’s accountancy firm.
The crisis threatened Prec-Cast since around half of the aluminium-cast parts manufacturer’s customers are in the automotive sector, including BMW, General Motors, Scania and Volkswagen. Prec-Cast suffered a 25% fall in turnover last year. Bokodi attributes the fact that his company survived such a fall in sales largely to having reacted to the challenges in time and to the right extent.
“Having observed that foundries like ours were being forced to close in the US, I realised what lay in store as early as spring 2008,” Bokodi said. Despite a certain level of resistance from the German parent company and the Hungarian management Bokodi undertook precautionary measures immediately. In May 2008, when most companies still had an illusion of security and the Lehman Brothers crash was still some time in the future, he ordered a hiring freeze.
From July he began to reduce the company’s staff numbers gradually, mainly by releasing temporary workers. Bokodi meanwhile reduced the company’s stock, which by December was around 50% below the usual year-end level. Staff numbers had also been cut from 1,200 to 800 by the end of 2008.
In tandem with the staff cuts, Bokodi began an extensive rationalisation programme to ensure the absence of production bottlenecks. Production processes were optimised, preparation and reworking times reduced and different elements of production linked more closely: “we were surprised how much potential for cutting costs we found on closer inspection,” Bokodi says. In a year the company managed to reduce its costs by 35 per cent, 15 per cent of which was from cutting staff costs and 10 per cent from improving working procedures. It reassures Bokodi that the level of the cost savings has been significantly more than that of the company’s fall in turnover: “I prefer to have a buffer than to be put under pressure by the market and have measures enforced later.”
In this way his company is also in a much better position to face potential future challenges.
When asked whether there is anything he would have done differently, Bokodi answered candidly: “it wasn’t good, for example, that we indiscriminately put all investment projects on hold at the same time. They included programmes that were indispensable for the expansion of our markets. That was a mistake which cost us valuable time.” In retrospect Bokodi says he would have carried out the staff cuts more carefully: “now that we are over the worst we often notice that we are missing certain key employees and their know-how.”
The fact that the Wolf group as a whole has come off fairly lightly from the acute phase of the crisis is, according to Bokodi, down not only to the right decisions being made at its four sites in Germany, Slovakia, Hungary and China, but also the group’s optimal combination of locations: “if we had only had production sites in Germany and Hungary, the crisis would probably have hit us much harder,” the director adds.
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