Beware of P&L Plant Hire costs
I had been appointed to turnaround an engineering company that was losing £100,000 per month on a turnover of £20 million, the appointment was clarified at 2000 hours on Thursday evening for me to start at 0830 Friday morning.
I duly arrived at the site and went into reception (which was excellent to look at water feature, fish etc etc.)
The Chairman met me and we walked up to the board room where I was introduced to the incumbent Managing Director, who on being told that I had been appointed, immediately tendered his resignation and walked out of the board room.
I had been given a time line of 4 months to identify where the losses were being incurred and the strategy to get the company to sustainable profit and growing order book.
First part to note was that directors never seemed to leave their offices, if a conversation was required then the employees were called over the tannoy and they had to make their way to the executive office (wasting a lot of time) so by day 5 this had been changed such that directors went to the people.
Each day at 3 PM senior managers and the production director had tea in the production directors office come what may, even stopping other meetings to attend the tea party, Day 7 this was stopped as well
By end of month 2 I could see that we could/would be down to losses of £10,000 per month once the production programme efficiencies were taken into account, (reduction of head count etc)
All through month 3, I was looking for the extra savings and within the P&L there was a line item Plant Hire, which was coming in at around £5000 per month, I had walked the shop floor and warehouse any number of times and had been told the company owned everything outright, so where was this Plant Hire?
Towards the end of the month I asked the Production Director about the Plant Hire, who roared with laughter and said he wondered how long it would take before I picked this up; again with great gusto he pointed to the reception area and the water feature and fish and plants and noted that was the Plant Hire!!
He was dismissed the same day and we got the business to net contribution the following month.
Out of interest I phoned the plant hire company and said we would like the plants etc taken out as we were not interested in paying for them, they noted to me that the goods were not worth travelling out to pick up and I could dispose of them as I saw fit.
Moral of the story beware of P&L Plant Hire costs.
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