Steve Wybo: Time of distress? Concerned auto suppliers seek turnaround help as challenges mount – MiBiz
Steve Wybo was featured in MiBiz‘s article titled “Time of distress? Concerned auto suppliers seek turnaround help as challenges mount.”
“It’s a little bit of an odd time in auto in that I would say we are about as busy as we’ve been in many, many years,” said Steve Wybo, senior managing director for Conway MacKenzie, which has an office in Grand Rapids. “We have a lot of auto clients right now, and it seems somewhat counter-cyclical or counter-intuitive in that we still have a very robust cycle going on in terms of sales and production units. … But if you look at what’s happening with Ford, Tesla (and) Adient, there are signs of problems in automotive.”
According to Wybo, who has clients in West Michigan, the number of automotive industry companies seeking turnaround help is up “significantly.”
“But it’s not liquidations and bankruptcies and companies going out of business, it’s more of business performance improvement,” Wybo told MiBiz. “‘Hey, we’ve got a lot of business here, but we are not running as efficiently as we should be.’ Thankfully, for the clients we are working with, (they) are being more proactive.”
“It’s definitely an odd time in auto because if you are not in the trenches, you’d be saying that everyone must be doing great. … How could OEs and suppliers be struggling?” Wybo said.
Wybo cites the example of one client that has almost doubled in size to service the new launches, but is “absolutely struggling because they’ve spent so much time in launching new business.”
“I know there’s some distress in the supply base right now because of new launches,” he said. “You’re going to spend all of this time and money on these new launches, then the industry is going to soften a bit, and if you chew through your capital and your revenues go down 5 to 10 percent, that could tip these companies over. We’re seeing that right now.”
Wybo assures that the automotive industry is not heading into a dire situation like what it faced during the Great Recession. Still, some companies could face stiff challenges even if the market retrenches only slightly.
“You will see some suppliers go out of business because they were under capitalized, they had a few hiccups in these launches, and they are forced to do a quick sale,” he said.
As a nationwide turnaround and restructuring firm, Conway MacKenzie helps companies with financials as well as operational and strategic actions, or “micro-managing” a company during a launch so “costs don’t get out of control,” Wybo said.
For middle-market clients, Wybo is instructing suppliers to focus on margin and liquidity.
“It’s great to get new business, but if you don’t have a sophisticated launch process, if you don’t monitor your profitability on a weekly basis relative to your quotes, and … make sure you’re managing profits, these costs can get out of control very quickly,” he said. “The next thing you know, you are working Saturdays and Sundays, and double time and triple time because you get behind.”