Škoda Machine Tool, a traditional Czech manufacturer of horizontal boring machines and lathes, was faced with the need for a major transformation. Long delivery times, declining sales and negative earnings were threatening its continued existence. Under the leadership of then Production Director and Crisis Manager Roman Latocha, the company took bold steps to change. What obstacles had to be overcome? Roman Latocha, who was one of the driving forces behind this transformation, told us more.
Mr Latocha, what was the initial state of the company when you joined it?
Škoda Machine Tool was historically part of the Škoda plants, which were a symbol of industrial progress in the Czech Republic. However, as a result of restructuring and independence, the company lost key cooperation with the original foundry, which led to complications in logistics and production. In 2015, the company found itself in a difficult situation. Annual sales fell to CZK 700 million and delivery times exceeded 12 months. This situation was unsustainable and threatened its market position.
Which problems did you assess as the most significant? What did you see as an opportunity?
One of the biggest problems was the inefficient organisation of production. Materials were transported via complicated logistics routes between the two main halls, causing delays and increasing costs. A key component, castings, accounted for up to 40% of the cost of producing individual machines, but its supply was unreliable. The company also faced a lack of orders, resulting in under-utilisation of production capacity.
On the other hand, there were opportunities. By expanding into markets in Asia and America, customers who were looking for the quality and reliability of European industry could be reached. In addition, the potential in production processes offered the possibility of reducing costs and shortening delivery times.
What steps have you taken to transform the company?
The transformation began with a thorough analysis of the situation. A key step was the reorganisation of production. A new structure was introduced, divided into three separate sections: bases and tables, stands and their accessories, and spindles with hydraulics. This change eliminated logistical problems and allowed better control over individual processes. A Disain-cost department was created to identify and implement savings in production. For example, by consolidating castings into several types that could be used in different machines, it was possible to reduce costs by 7%. The modernisation of technology and the introduction of new hydraulic elements in the spindles reduced the production time of individual components. Daily production planning and an incentive system based on KPIs increased productivity by 15%. An important aspect was the strengthening of the sales department and the opening of new representative offices in China, India, Russia and Germany. These steps have made it possible to reach completely new customer segments.
What have been the results of these measures?
The implemented measures have yielded impressive results. The company’s sales rose from CZK 700 million to CZK 1,150 million per year, an increase of 64%. Delivery times were reduced from 12 months to 8 months, which strengthened competitiveness in foreign markets. Thanks to the streamlining of production processes, the profitability of individual projects increased by 6-10%. Service, which had long been neglected, increased its share of total revenue from 10% to 20%. The positive results of the changes have led to renewed bank confidence, which has allowed further investment in technology upgrades such as new CNC machines and automation of production processes.
Conclusion and inspiration: The transformation of Škoda Machine Tool shows how management innovation, teamwork and bold decisions can bring about fundamental change. This story is an inspiration for companies facing similar challenges. It shows that combining modern technology, strategic thinking and a focus on quality can ensure long-term success in a dynamic industrial environment. Our BM4U team is full of experienced managers who have experience in such challenging projects. Get them involved and turn crises into growth for your company.