Evenflo Company, Dayton, Ohio

Situation & Problems:

Robert Amter was appointed Executive Chairman and operated as Chief Executive Officer of Evenflo Company. Evenflo is a leading $300 million in sales manufacturer of baby products:  bottles, car seats, strollers sold into the Wal-Mart, Toys R Us and Target mass merchant channel segment.

» Registering operating losses at its Mexico City subsidiary for three consecutive years;

» Incurring operating losses and low productivity at its Tijuana, Mexico wood plant;

» Selling 3 million wooden gates annually at an operating loss  – largely to Wal-Mart;

» Procurement and procurement planning operation was ineffective.

Corrective Actions & Results Achieved:

Tactical actions implemented to make the Mexico City subsidiary profitable included:

» Reduced salaried headcount from 121 to 68. It was bloated at 35% of total headcount, almost double an effective level.

» Reduced Stock Keeping Units (SKUs) from 250 to 175.

» Rationalized the customer base by turning over small, non-productive customers to distributors.

» Raised bottle prices 15%.  Wal-Mart accepted the price increase.

» Reduced direct and indirect hourly labor content by 5%.

» Funded several process improvements to improve through-put.

Mexico City’s restructuring generated a positive Operating Income in the third month of $3 million annually.

To fix the operating losses at its Tijuana plant and its gate business, initiated developing a wood manufacturing plant in China.

» The Tijuana plant assembles wood gate and  crib components.  All the components are purchased components via outsourcing from Chinese vendors.  Prior to outsourcing the components, Evenflo’s Wisconsin plant produced the components from raw wood and assembled the gates and cribs. Resulting costs were higher with the China outsourcing and Tijuana assembly option versus the Wisconsin facility.

» The best manufacturing option was to develop a process that converted raw wood planks into finished components ready for assembly into finished product.  At the same time, improve productivity and through-put in the Tijuana assembly plant.  In the second year, integrate finished product assembly into the China plant with the improved state of the art assembly process.

» The capital cost for the China initiative was kept to a minimum by leasing a 109,000 square foot Shanghai plant for the annual cost of $265,000 and by sending the Wisconsin plant’s refurbished equipment to the new China plant.

Poor performing procurement was related to a weak organization and under-performing managers. To correct this defect, terminated managers and promoted top performers from the lower ranks of the organization.

» One example of poor performance: Prior management had closed the USA car seat and stroller manufacturing plant. It had contracted with a Chinese outsourcing manufacturer. The Chinese manufacturer secretly patented Evenflo’s designs and raised product prices 9% within months of effecting the agreement. The procurement documents did not adequately protect Evenflo. It would have been almost impossible to reverse the situation in the Chinese legal system.

To correct this high cost and untenable situation, we initiated  an evaluation of the cost/benefit of establishing a company managed, China based car seat and stroller manufacturing plant.

Particularly impressive was Evenflo’s marketing and sales function. Evenflo was taking market share from its competitors in car seats and feeding products by superior product line strategy and execution of its ideation plans. Its sales managers have developed close relationships to the highest levels in all its customers – a critical factor in this competitive channel segment.

At same time, Robert Amter also Chief Executive Officer of Springfield Precision Instruments Inc. and worked on a due diligence with Silver Point Capital.

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