Basic materials

Basic materials are indispensable in manufacturing processes. As they are often in limited supply, they are subject to strong fluctuations in demand and price. Basic materials are used by process industries whose high investment needs leave them little room to maneuver to respond to shifts in demand. To hold their own in this environment, these companies have to continuously adjust their operations and business models to the changing market conditions.

In the past few years, our basic materials team has assisted many clients in Germany and abroad in maintaining their competitive edge and improving their market position with lasting effect.
We have successfully supported our clients in adjusting their strategic alignment to market needs, adapting their organization and processes to new requirements. In restructuring and performance improvement projects, we have made our clients' cost structures more flexible, taking into account all strategic, financial and operational aspects. Our consultants' engineering expertise enabled us to suggest and discuss technological improvements. These improvements were achieved by optimizing both operational processes in the plants and the production networks. We assisted our clients in drawing up business plans to improve planning reliability and adjusted pricing to current market conditions.

Key segments in the basic materials industry are metals (F/NF), construction materials, glass & ceramics.

After 5 years of industry upturn and rising metal prices the ferrous and non-ferrous metals industries have been hit hard by the world financial and economic crisis.

Global decline in metals demand

Main customers of the metal industry are particularly influenced by the current economic crisis: Automotive, Engineering, and Construction. Customers of the metal industry suspend maintenance measures and projects to prevent shortages in liquidity. Customers are faced with a declining production and additionally try to reduce their inventory.

Global decline of metal prices

Strong overcapacities built up during former boom phases, customers' speculations on further price declines, low scalability and flexibility of production processes and a strong decline in demand have lead to historic low levels of metal prices.

Strong production decline and fixed costs pressure

Reductions of order income in Europe, USA, Japan, and Brasil by 40-50% have lead to low utilization levels. Various measures ranging from short-time labor agreements to temporary shutdowns of smelters and processing facilities are used to decrease massive fix costs pressure.

Working capital-, liquidity- and refinancing problems

High stocks of finished goods increase working capital and financing costs, banks have become more restrictive in granting loans, commercial loans insurance companies have generally reduced their default guarantees. Accordingly, investments have been reduced to prevent shortages in liquidity.

Restructuring programs and consolidation tendencies

Metal producers and processors have started restructuring programs (capacity adjustments, cost reductions, performance improvement), especially smaller players have to leave the market while market leaders typically take over their volumes.

Industry turnaround expected in Q3 2009

Early indicators show first recovery tendencies in the second half of 2009 (IFO Geschäftsklimaindex). In some industries, the bull whip effect of full warehouses throughout the value chain additionally delays the turnaround for producers and processors.

Our projects demonstrate that we help clients solve their problems by focusing on key issues and applying proven know-how, approaches and tools. We have a proven track record of skillfully implementing pragmatic concepts developed jointly with our clients. Our clients also welcome our technological savvy, the financial impact we can create and our strong regional network, particularly in the growth regions of Asia and Eastern Europe.

The construction materials team offers outstanding consulting expertise along the entire value chain of construction materials producers, commerce and related services. We consider the particularities of the industry and its players, whether they be small and medium to large-sized, family-owned or listed, local or international companies.

For more information please visit our page Construction materials

The Glass machinery industry feels the negative effects of the current financial crises too. But beside the decline in the traditional sheet glass sector the photovoltaic segment has developed into a successful business sector with potential for further growth.

Our approach covers all strategic issues for this industry, from reducing costs to achieving operational excellence to supporting growth. In the environment characterized by medium-sized players we tackle different issues in holistic cost reduction or operational excellence programs.

Furthermore, we develop strategies to expand business fields and boost sales. Growth strategies come into play when coordinating the product portfolio, developing new service business models, and making the sales organization more professional. Opportunities for optimizing the cost base can be found in product design, improved purchasing and supply chain management and the professionalization of the global footprint.