• Apparel
• Creditor
• Debtor
• Distribution
• Government
• Healthcare
• Management
• Manufacturing

CRISIS MANAGEMENT - CASE STUDY 1

Functioning as an interim Chief Operating Officer, ESBA turned around an $80 million family-owned men’s wear manufacturer that was being managed by the family’s second generation. The founder (first generation management) was a typical entrepreneur who managed all facets of the business personally and did not delegate. He was extremely proud that all the Company’s products were manufactured in the US and was determined to keep it that way. The Company made some unwise investments in several “side” businesses at a time when its competition was sending work offshore. A new more competitive marketplace resulted in lower gross margins and the Company began to lose money.

The founder suffered a massive stroke. The next generation of the family did not have the requisite skills and experience to manage the business or to compete in the marketplace. The family recognized that the situation was beyond their ability to manage and hired ESBA to provide an interim Chief Operating Officer to turn the company around and help develop the family’s management skills to run the business long-term.

Over the course of ten (10) months ESBA accomplished the following:

• Functionally restructured the Company to enhance communications, focus authority and accountability at the lowest practical levels, and clearly define the roles of all managers, especially family members.

• Developed manufacturing capacity offshore and closed seven of eleven domestic facilities, which doubled the Company’s gross margin.

• Installed an MRPII system to promote detailed production planning and inventory control systems to balance finished goods inventories and accommodate increased lead times needed to manufacture offshore.

• Negotiated new financing which provided the Company with $1.5 million in additional working capital.

• Hired a professional Chief Operating Officer to run the Company and train the third generation for eventual succession.

• Established a formal cost savings function within the Company that identified and implemented more than $2 million of annualized cost savings.

ESBA continued to work with the new Chief Operating Officer to insure that the original plans were implemented, and to assist in developing a formalized succession plan for the next generation.

CRISIS MANAGEMENT - CASE STUDY 2

The Board of Directors of this publicly held pharmaceutical and cosmetics manufacturer engaged ESBA to provide interim corporate executives including the President after the former President was fired for cause. The Company is a manufacturer and international distributor of a variety of poultry vaccines, small animal care products including pharmaceuticals, and a private label manufacturer of a variety of sophisticated cosmetic products based on a patented and proprietary manufacturing process.

Apparently, management had directed personnel within the Company to violate USDA regulations regarding the manufacture and distribution of poultry vaccines including violation of US Customs regulations regarding illegal shipments of products to countries under a US trade embargo. The Company was under active investigation by various governmental agencies including the SEC, USDA, and US Customs. The entire senior management team was tainted by their involvement in these actions. Not surprisingly, the Company’s stock was suspended from trading.

As crisis managers, ESBA personnel assumed interim positions as President and Chief Operating Officer, Vice President of Sales, Vice President of Operations, and Chief Financial Officer.ESBA immediately worked to stabilize the operations by restructuring the organization to focus accountability and responsibility at the appropriate levels. Virtually the entire senior management team was terminated over the course of the first four weeks of ESBA’s involvement. These terminations included the VP of Sales, the VP of Operations, the VP of Cosmetics Manufacturing, the USDA Regulatory Affairs Manager, the Manager of Poultry Vaccine R&D, the senior Production Manager for Poultry Vaccines, and the Human Relations Manager. These personnel were replaced by a combination of promotions from within and outside professional managers. A Credit Manager was hired to manage accounts receivable, improve cash flow, and strengthen credit policy.

ESBA established a prioritized step-by-step plan of attack for addressing the internal operational problems, which included assigning responsibility for individual action items to the appropriate managers with deadlines for accomplishing each item. ESBA also coordinated the Company’s cooperation with the various federal investigations to insure that these were “put to bed” as soon as possible and the Company was recognized for cooperating with regulatory authorities.

Over the course of a very intense five-month period, ESBA stabilized the Company and established an orderly, logical, and practical approach to running the business. This included the adoption of a comprehensive production planning function to insure that scarce resources, in terms of both people and money, were applied to maximize production to support current sales. An experienced Vice President of Operations was hired from a competitor to revamp management and supervision in the poultry vaccine operation to improve productivity and resolve the regulatory problems.