LEGACY PRODUCT ACQUISITION: Pumps and Motors Product Line

Chris PoulinCase Studies

QCC Manufacturing Services

LEGACY PRODUCT ACQUISITION: Pumps and Motors Product Line


Background

  • OE supplier had a product line in the “decline” stage of its lifecycle as it brought a replacement product to market
  • Contractually obligated to provide service requirements 10-plus years after peak production demand

Changes in Market Dynamics

  • Annual product sales decreased from $40mm at its peak to $3.5mm limited production and service level demand
  • Some customers not ready/willing to upgrade to new product line, resulting in a long tail of service/ replacement business

Program Economics

  • Manufacturer losing money on the product
  • Poor handle on true costs (original allocations no longer relevant)
  • Reduced economies of scale
  • Heavy customer leverage in other products made it difficult to raise prices

QCC Solution

  • QCC acquired the product line, including intellectual property, inventory and fixed assets
  • QCC lowered costs by optimizing manufacturing processes and supply chain management around the smaller volumes
  • Manufacturer’s resources and floor space were freed up to focus on design and conversion to new product line, improving ROI
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