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A Turnaround in the Oil and Gas Handling Equipment Industry

A provider of oil and gas handling equipment based in the Houston area was struggling to get profitable. Historically this company prided themselves on being the niche provider in the industry, allowing their customers the ability to customize their orders. As the overall oil and gas industry began to decline, and customers valued standard low-cost solutions, the company’s operations were not sustainable.

Background

From 2013 – 2017 the company had exchanged owners two different times. Also during this time, they experienced a major consolidation of multiple sites into the Houston based facility. At the time HPS was brought in, the company was experiencing significant cash flow issues and had not been profitable in a number of years. They were on credit hold with many suppliers, barely being able to make pay roll. On the brink of closure, Hilco Performance Solutions was brought to identify quick and impactful changes to the business.

Impact

  • HPS first performed an assessment on the indirect labor of the organization identifying savings of ~$1.2 in FTE reduction.
  • We partnered with three oil and gas industry veterans to address the inefficiencies in the machine shop. We found the shop floor was adding unnecessary steps in the process such as back welding, excessive x-ray and hand filing, despite these not being required for safety standards or customer requirements.
  • We educated the leadership team of the right KPI’s to track success.
  • To reduce spend and right size inventory, our team checked every new PO before submitting it for purchase. We coached the procurement team to look for part substitutes and even cancelled open orders on parts they did not need.
  • We provided a deliverable outlining how to reorganize the facility to support a more efficient flow of the manufacturing process.
  • Hilco identified quick hit cost savings that resulted in an immediate reduction in monthly expenditures by $150K


Steven Tanzi

Managing Director - Hilco Performance Solutions
stanzi@hilcoglobal.com
847.504.2468

Steven has over 25 years of both industry and consulting experience in diverse manufacturing industries performing executive, operations, supply chain, maintenance, finance and business development roles.