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Turnaround of laminated flooring manufacturer Witex

Case Study

Challenge

A market transformation accompanied by a rapid drop in prices led to the insolvency of laminated flooring manufacturer Witex. After several changes of shareholder, H.I.G. Capital Europe took the company over, planning a comprehensive reorganization. To make a success of the profound restructuring measures required, an Atreus manager was hired. He was charged with finding new solutions and enabling the company to be handed over to a strategic investor. 

Success

Atreus succeeded in restructuring Witex and giving it a future, through an extensive reorganization. The laminated flooring manufacturer’s high overheads were reduced and excessively complex processes slimmed down. The Atreus manager assumed a role as intermediary between staff, stakeholders and customers. He also developed durable, systematic solutions. 

Interview with Jörn-Marc Vogler, Principal at H.I.G. Capital Europe

Witex had gone through a protracted period of serious difficulties when H.I.G. decided to go in. What were the company’s problems and what had caused them?

In the early ’90s, Witex had a good start as the manufacturing pioneer in Germany, but then soon found itself confronted with collapsing prices for its specialty laminated floor products. Laminate quickly lost its status as a high-tech product. Instead, the entry of large producers meant DIY markets were flooded with the material. The solutions developed by Witex didn’t manage to establish themselves as the market standard and the commodification and drop in prices ultimately drove the company into insolvency. 

 

"After a successful phase as market pioneer in the manufacture of laminates, Witex fell victim to price erosion and the downgrading of its specialty to a mass product. Together with Atreus, we wanted to put the company back on the road to success."

You want to know what Atreus can do for you in a similar situation?
Contact Rainer Nagel, CEO.

+49 89 452249-400 Rainer.Nagel(at)atreus.de

"Atreus found a manager with exactly the required profile. In less than 18 months, he achieved what everyone else had failed at doing for many years."

But it had proven impossible to restructure Witex, even under new stakeholders.

Looking back, it is apparent that the insolvency administrator was primarily interested in gaining liquidity for the company. So it wasn’t a restructuring that was aimed at the long term. The two investors that followed also restricted themselves to relatively modest measures, such as adjusting capacities. Nor was a break-out from the narrow positioning as a laminates specialist to a provider of “floating floors” realized. 

So why were you optimistic that H.I.G. would be able to achieve the turnaround?

We of course discussed and analyzed the situation very critically. But the established markets with specialist buyers and the product expertise available in the company still held value potential that we thought could be profitable with the right management strategy. 

Jörn-Marc Vogler was a Principal at H.I.G. Capital Europe and expert in participation management and turnaround situations up to August 2013. He took the Witex stake through to a successful sale. Prior to that, he was an investment manager at Arcadia.

Jörn-Marc Vogler

Jörn-Marc Vogler was a Principal at H.I.G. Capital Europe and expert in participation management and turnaround situations up to August 2013. He took the Witex stake through to a successful sale. Prior to that, he was an investment manager at Arcadia.

How did the Atreus manager get the company back on track?

For one thing, it was essential to realize a strategic approach, through which the required activities were derived from a systematic situational review. The second aspect was the manager’s ability to actually implement the defined concept himself. The company’s excessive overheads were reduced, which meant cuts – a more than 25 percent reduction of staff was one of them – but in the final assessment, this not only saved Witex, it actually gave the company a real outlook for the future through its sale to the Windmöller Group. 

What prerequisites did the Atreus manager have to bring with him?

Alongside extensive experience with similar situations, he needed a good knowledge of the industry and personal assertiveness. Another factor in his success, however, is that he came from outside the company and had no vested interest in continuing with past decisions. In my view, the analytical distance to the company history and the freedom to think independently that someone initially has when he comes from outside the company are key characteristics of interim managers. 

""The Atreus manager was capable to think and act within short time frames and therefore solved in 18 months what had been unsolvable for many years previously.""

Atreus is the leading interim management provider in Germany and one of the largest in its field in Europe. We solve difficult operational management and transformation problems quickly and reliably. Contact us and find out how we can help you master your situation with management expertise that is available at short notice and that is the perfect fit for you.

Atreus is a co-founder of Globalise – the market’s leading and largest provider of international interim management. Accelerating change and delivering success. Worldwide. Structured as a global group of leading interim management firms, Globalise has the reach to support you in solving your company’s most important issues around the world.