Separation was not painless, but it gave the Holmatro Industrial team the sense of ownership and entrepreneurship needed to enable sustainable, profitable growth.
Ben van der Knaap
Managing Director, Holmatro Industrial Equipment
Empower Teams Through Separation
Holmatro provides innovative hydraulic equipment for rescue, industrial, and special tactics applications worldwide.
Ownership
Segmentation gave the industrial team a sense of ownership and entrepreneurship.
For more information on this story, contact
Ben van der Knaap, Managing Director, Holmatro Industrial Equipment: [email protected]
Goal
For years, the Holmatro industrial products business operated with its own sales, service, marketing, and R&D teams while sharing manufacturing, procurement, logistics, IT, and finance departments with its rescue tool business. Holmatro wanted to solve the issues that resulted from this structure, including unclear financials, internal competition for shared resources and services, and an inability to manage or optimize the industrial business.
Process
The solution was to segment the industrial and rescue business to understand the financial performance of each and allocate the proper resources to support each one to run independently. First, they had to determine which products and customers they would continue supporting. They did this through product line simplification (PLS) using 80/20 quads.
Next, Holmatro created a preliminary zero-based budget to determine if segmentation would be viable financially. They discovered that some cost-cutting was necessary for it to work, so they devised a plan to reduce headcount. In the Netherlands, this meant informing and cooperating with a Work Council. Specifically, the company had to demonstrate that 80/20 was about creating sustainable, profitable growth and not just a way to reduce costs. Likewise, it was important to explain the 80/20 approach to the remaining team members and demonstrate how it would drive business growth and offer them new opportunities. Keeping the team motivated and excited about the future was key to the successful segmentation of the industrial business.
The physical separation of manufacturing involved relocating some CNC machining equipment, assembly benches, and staff members from Holmatro’s primary manufacturing facility to their own building. In doing so, they had the autonomy to operate independently from the rescue business. With that said, separation was not painless. Each side had to adapt to not having access to previously shared services.
Results
Segmentation gave the industrial team a sense of ownership and entrepreneurship. They were proud to be part of Holmatro Industrial. And they were equipped with the clear financial information they needed to optimize the business and benefit their most important customers. Now the team is leveraging product innovation to benefit customers and create a stronger moat in the market. This will enable sustainable, profitable growth with existing and new customers.
Key Learnings
- Separating the production and processes from the Rescue unit was not painless. Rescue had to adapt to not having access to some resources that were previously shared across both business and likewise for the newly segmented Industry business.
- It was important for the executive team and the entire organization to support the strategy to segment the businesses in order be successful.