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The challenge was clear: managing a double integration while reaping the best know how of Prysmian and General Cable legacies in North America to build an even stronger company. NA CEO Massimo Battaini explains that it couldn’t have been done without listening to both sides and picking the smartest solutions.
“Without this strong team spirit, we wouldn’t have made so much progress,” Massimo Battaini, North America Chief Executive Officer at Prysmian Group.
Without being presumptuous, we are near our goal. We jump-started the integration process a few months ahead of June 6 by focusing on 3 essential value streams. The first, preserving the customer relationship, our greatest asset. We re-organized our agents in the field, so we’d have just one face in front of our customers. This helped establish clarity for the market. The second, focused on protecting our revenue, which included mitigating risk within the business by leveraging our cross-selling opportunities given our newly combined product portfolio, innovations, commercial strength and manufacturing capabilities. The third, focused on capturing the cost saving synergies; addressing the overlap and redundancies within the organization, leveraging our new scale, combining production, and consolidating our products. Twelve months down the road, I’d say that we have achieved 90-95% of cost synergies and implemented significant commercial cross sales. Now we are working on further integrating our internal systems, such as SAP, which will take 2 1/2 years.
The challenge was to manage a double integration. Prysmian Group was acquiring General Cable, a big change for legacy General Cable employees, but likewise, Prysmian was nearly tripling its size in North America, creating an equally challenging change for legacy Prysmian employees. At the same time, we were working with our Group in Milan in new ways, all having positive effects, but challenging in their own right to navigate. Listening and understanding how others do things -- from financials and pricing to managing customer relationships, was essential to our success. It was also the most rewarding aspect. Now we can say that this combined company has the best approach, the best pricing, and the best product range, supply chain, manufacturing processes and the like. We are stronger, together.
I would say a bit of both. We have decided to adopt General Cable’s design system CableBuilder across the Group. For SAP, we will adopt General Cable’s planning tools and pricing tools in the new SAP S4 to also benefit the entire Group.
There was plenty of concern at the beginning because we had two different customer bases. Prysmian had a stronger focus on end users, where as General Cable was heavily involved in the distribution channel.
We reassured distributors we wanted to leverage relationships with General Cable’s sales force to help Prysmian expand and grow our sales. Once we clarified this with our distributors, they appreciated the approach and in turn, started seeing additional benefits of having a wider product range from Prysmian over time.
Services are a key area where we intend to invest more time and more effort.
The Prysmian way of managing service was to target a high level of service but not to invest in a high level of inventory, whereas for General Cable, it was easier (thanks to additional inventory) to maintain a high level of service. I think the truth is in the middle of both strategies. You can decide to be less restrictive on inventory policies because in some cases, the stock availability is key to improving and enhancing your revenue.
The improvements are twofold: physical improvements and human improvements.
Physical improvements involve the increase in our product range, customer base, manufacturing footprint, shared IT systems, increased innovation know how, etc.
The second, but most important, are the human improvements. We’ve noticed a stronger team spirit across the region, enabling us to be faster, to capture plenty of opportunities and overcome many issues. Without this strong team spirit, we would not have made so much progress. Not only do we have strong assets, but the mindset of our people has been extremely powerful. Our shared passion and spirit of cooperation have ensured we all move forward, together, towards our common objectives.
A steady state of natural attrition is common in North America and we are in line with industry averages. Nonetheless, we are always focused on retention and building a shared culture where employees can build long term careers.
One of our focus areas is communication between managers and their employees to gauge whether they’re happy. The new size and global scale of our company allows us to provide our people other roles or areas to work within the organization, ensuring the best fit for all.
A strong leadership role is definitely key to keeping the integration on track. The alignment of the NA leadership team, their cooperative approach and focus on common objectives have made the difference and helped the entire NA organization progress quickly through the integration. It is important that our leaders share the same goals and set positive examples within the organization. This is essential and has a direct impact on all those they interact with, whether a direct or indirect member of their team.
Once we get past Q3 or Q4 of this year, synergy benefits will fade away and our future will be based on our ability to grow revenue. Our teams have spent considerable time generating new ideas that drive growth through cross selling, product differentiation, innovation and new services.
It’s up to us. We have the best manufacturing footprint and a strong supply chain with distribution centers. We have the best and widest product range in North America. We have competent and highly knowledgeable people. We are now a powerful machine able to capture all these opportunities.
I would say, we have all changed. Prysmian Group North America is a newly combined region, and all were impacted by the changes. What was key was our ability to benefit from the best combined know how from the 2 legacies to build an even stronger company. We had to communicate, listen, and learn from what each company had to offer and then implement the smartest solutions. We have all had to adjust to the changes, but our shared passion and common goals keep us moving forward.
One of our challenges was with finance, because we had different systems and a different way of defining profit and loss. Prysmian used a contribution margin and General Cable used gross profit. Now the team in Finance is on the same page working in new effective and efficient ways.
The sales function also made radical changes. We had to reorganize our external sales force and agents to consolidate the activities and ensure one face in front of our customers. Every function has realized that there is much to gain from combining the skills coming from the two legacy groups. This has improved all aspects of our business.
All business units had much to gain. Telecom probably had the most, General Cable and Prysmian were working in different product segments with virtually no overlap. T&I had some overlap because we were essentially selling the same type of product but to different customers. In Power Distribution, we had a lot of complimentary services with overhead lines. Our Specialties business also had overlap, complementarity, and a strong plant footprint. There has been a lot of opportunity to cross sell to each other’s customers. The ability to sell these legacy products to the entire region will continue to be an important driver for growth in 2020.
We have much we can both learn from and share with colleagues around the world. What we may be working on or developing in North America may benefit another region, and vice versa, so, maintaining a continuous and open dialogue with Milan and the Group is the benefit of being part of such a global company. We are now the 2nd home region with strong access to a wide set of skills and capabilities, which will be a solid boost to our Group’s profits in 2019 and beyond.
