BoxMax* leads the market, but industry-wide high fixed costs and low prices left it lagging in the red.
- Two packaging companies merged to form BoxMax, an $8 billion powerhouse.
- BoxMax became the clear industry leader in its packaging segment. Unfortunately, the market is a capital-intensive, high fixed-cost business suffering from excess capacity and low prices.
- As a result, BoxMax was posting poor financial returns: it was projected to be $7 billion in debt on negative cash flow of $400 million. BoxMax was Bain to advise on how BoxMax could turn industry leadership into profits.
Bain used external and internal benchmarks to identify key performance gaps.
To compensate for the industry's inherent weaknesses, Bain recommended aggressively reducing costs and improving processes.
With Bain's support, FoodCo implemented the recommended initiatives, generating 15% cost savings and increased flexibility. The company also worked with Bain to put knowledge transfer programs in place so that the improvements would spread to additional plants in the system.
* We take our clients' confidentiality seriously. While we've changed their names, the results are real.