From resentment to blind resistance, turnaround artists have troubles, too

12-hour workdays, solitary dinners, lots of enemies

Confidentiality is the watchword for turnaround specialists. They are under strict orders not to let anyone - not people in the industry, not people in the town where they parachute in for their work - know that they are on the case. But one specialist spoke at length with Staff Reporter Robert Sherefkin on the condition that his anonymity, and that of his company and customer, be protected. With the specialist's approval and assistance, Sherefkin transformed those interviews into this first-person account.

I'm the guy on the shop floor of a failing auto parts company, a supplier to one of the Big 3. It's my recommendation that will determine whether this company lives or dies.

I'm surrounded daily by the clamor of conflicting demands from scared, angry creditors. Bankers, vendors, employees and the automaker customer all want their share of this parts maker's shrinking financial pie. If I pay the employee health insurance bill, there will be no money next month for steel to make parts.

The owners are the most upset. They resent the automaker for sending in my turnaround firm to manage their privately held company. They especially resent paying my $10,000 monthly expenses for the turnaround they believe they could have accomplished themselves if they had a little more time. They've conveniently forgotten that it was their banker who slammed shut the lending window, denying them the cash to pay their bills.

They resist me because they stand to lose big. They know I'm winding down the business they struggled to build. But if they continue to fight, I'll be forced to advise the automaker to shut off the emergency operating cash, pushing the company into bankruptcy. Then they'll lose everything.

It's about the customer

My goal here is not to save the company but to represent its customers' best interests - minimize costs and deliver the needed parts.

To that end, I have the power to sell assets, fire people, renegotiate contracts, shut down unprofitable operations - almost anything to reverse the problems that got this company into trouble. It helps a lot to be an S.O.B.

It also helps to have a Big 3 automaker behind me. The automakers often have the legal authority to step in at many suppliers to ensure the flow of parts to their assembly lines. In this case, the owners understand that without their largest customer, their company is worthless.

This company didn't grant a right-of-access agreement as a condition of getting the automaker's business. But once things began to unravel, they had no choice. If the automaker had pulled its business, the end would have been swift and ugly.

I've already decided this company's fate. But it troubles me. What about the human costs, the hundreds of breadwinners who may not be able to make mortgage payments?

This job is like no other CFO job I've held. I joined a turnaround firm because I looked forward to an exciting job rescuing companies and working for the common good. And turnaround specialists are handsomely rewarded for their long, stressful days on the road. A resume like mine, with years of experience and an MBA from a prestigious university, can fetch $200,000 and more in annual pay and bonuses.

Not glamorous

Life on the road is brutal.

After a 12-hour day, I take dinner alone and then retire to a small motel room at the edge of town. Every Friday afternoon I board a commuter plane for the flight to Detroit, and then I drive to my suburban home. After 48 hours with my family, I'm back in the cauldron. Call it the loneliness of the long-distance turnaround specialist.

No one is at fault for this company's impending failure. The decline in new-vehicle production coincided with the bottom of the capital market cycle. Where do you find investors who will put money in a low-margin business in an industry groaning under excess capacity?

This company's days are numbered as I shift production to competitors, but it's just a matter of time until some of them falter too. So for now, my job is to keep up employee morale until I turn off the lights.

As for the owners, they're still hoping for a white knight with a bale of cash for a last-minute rescue. But as one turnaround pro said, denial is more than just a river in Egypt.

Tags: Suppliers

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