Manufacturing Turnaround & Cost Reduction
Precision engineering manufacturer — £40m turnover — 280 employees across two sites
The Situation
A precision engineering manufacturer operating from two facilities in the West Midlands had seen its gross margins compress steadily over three years — from 28% to under 19%. Turnover had held at around £40m, but the profitability that had sustained decades of family ownership was disappearing.
The immediate triggers were well understood: raw material cost inflation, an over-reliance on a small number of automotive contracts with aggressive pricing terms, and a workforce structure that had grown organically without reference to actual production demand. What was less clear to the board was where the real profit drivers sat within a complex product mix of over 400 active SKUs, and which operational changes would move the needle fast enough to avoid a cash crisis.
The business had six months of runway at the prevailing cash burn rate. Its relationship with its funder remained intact, but the bank had made clear that the next quarterly covenant test would be the last without a credible remediation plan on the table.
Our Approach
Taiga was appointed to the board as interim Chief Restructuring Officer with a mandate to diagnose the real economics of the business and deliver a cost reduction programme within six months.
The first task was a granular product profitability analysis — something the existing management information had never provided. By rebuilding the costing model from the ground up, incorporating machine utilisation data, actual cycle times, and fully allocated overheads, we identified that roughly a third of the product range was either loss-making or contributing margins below the cost of the working capital required to fulfil them.
With that analysis in hand, we designed and led the implementation of a structured cost reduction programme across three workstreams:
- Product rationalisation: Exiting or repricing 140 SKUs that were eroding margin, while protecting the core contracts that generated genuine value.
- Operational restructuring: Consolidating production across the two sites to eliminate duplicate overhead, reducing headcount by 35 roles through a managed redundancy programme, and renegotiating key supplier contracts.
- Working capital discipline: Tightening debtor collection processes and renegotiating payment terms with the top 15 creditors to release trapped cash.
Throughout the engagement, we provided the lender with monthly progress reporting against a clear set of milestones — maintaining the transparency and credibility needed to preserve the banking facility while the plan took effect.
The Outcome
The cost reduction programme delivered £3.2m in annualised savings within the six-month engagement window. Gross margins recovered to 26%, the business returned to operating profitability in the fifth month, and the covenant breach that had threatened the banking relationship was averted.
Equally important was the change in how the management team understood their own business. The product profitability model we built became a permanent part of the monthly reporting pack, giving the board ongoing visibility over which work to pursue and which to decline. The business retained a leaner, more focused operation — and the management team had the tools and confidence to sustain the improvement without ongoing external support.