The Austerity Turnaround (Operational Restructuring)
Sector: Construction | Region: Asia (Subsidiary of Intl. Group) | Size: 240 Employees
The Challenge: A subsidiary of a global construction conglomerate, employing 240 staff in Asia, was bleeding cash. The local entity had over-expanded during a boom period and was now burdened with high fixed costs and a portfolio of non-paying clients. The international parent company was willing to provide limited support but demanded a clear path to self-sufficiency or they would pull the plug.
Our Solution: We implemented a “Deep Freeze & Reset” strategy. The goal was to shrink the company to a defensible core and slowly rebuild.
Execution:
- Settlement Campaign: We launched an aggressive legal and commercial campaign against non-paying customers. Instead of lengthy litigation, we negotiated settlement contracts: This brought in immediate, critical cash flow.
- Workforce Rightsizing: Painfully but necessary, we executed a redundancy plan affecting 60% of the workforce (140 roles), removing all non-essential overhead and consolidating project teams.
- Skeleton Mode: The remaining 100 staff were placed on a “minimal operation” (austerity mode). Salaries for senior management were temporarily deferred, and all non-project spending was frozen.
- Parental Lifeline: Demonstrating this decisiveness unlocked a conditional cash injection from the parent group to cover the severance packages and stabilize working capital.
The Outcome: The company survived the “winter.” By shedding half its weight and recovering bad debts, the cash burn stopped. After 22 months of austerity, the company stabilized, achieved break-even, and slowly began hiring again—this time with strict financial controls. It remains active today as a leaner, profitable specialist builder.