Treasury Transformation through Troubled Times
by Andreas Weindel, Group Treasurer, Webasto AG
The past two years have witnessed troubled times in many sectors, with the automotive industry being one of the worst affected. As a supplier to car manufactures, Webasto has seen a dramatic decline in demand resulting from the severe drop in sales across the European Union, USA and Japan. Although there has been state support for some of the major car manufacturers, this has not helped all suppliers. Many have experienced serious liquidity issues as orders are reduced or cancelled. We have seen competitors become insolvent and also Webasto suppliers’ liquidity situation is partly very vulnerable. Inevitably, banks have been nervous about how much support they can give to companies operating in this industry. That was a concern to us with financing due for renewal in 2010.
A vision for treasury
Webasto had enjoyed international growth over the years with a good number of group companies operating in a fairly independent way in the treasury area. With over 50 subsidiaries globally, it became a business imperative to centralise and co-ordinate financial activities more closely. There was a clear desire to strengthen financial policies, procedures and operational capability of the company; for example, we had no treasury guidelines in place at that time. We also lacked a treasury management system, so it was impossible to achieve an intra month overall liquidity position across the company. There was too little financial interaction across group companies, which made it difficult to co-ordinate a group-wide approach to treasury.
With over 50 subsidiaries globally, it became a business imperative to centralise and coordinate financial activities more closely.
I joined Webasto having had experience in industry-leading treasury departments at companies such as Siemens AG and Nokia Siemens Networks GmbH, so my aim was to bring these experiences to Webasto and develop a treasury department that demonstrated best practices and brought efficiency and control to the company’s financial activities. There were three key elements to our treasury vision: firstly, we wanted to establish treasury as an in-house bank which would provide shared services on behalf of the group; secondly, we wanted to partner more closely with subsidiaries so that we could gain a central view of cash and set a consistent liquidity strategy; finally, we wanted to improve corporate governance by developing best practice policies and procedures.