The competitiveness advantage formed by industrial M&A is not only reflected in the dimension of “scale effect”.
After acquiring China’s packaging business of Boer Asia Pacific at a price of 250 million US dollars, ORG Technology has achieved significant growth in the two piece can business with Boer’s factory in the past three years.
“From 2020, 2021 and 2022 to now, the sales volume of ORG two-piece cans ranks first in the industry; before the integration of Boer Asia Pacific, this number is the fourth”. Shen Tao, president of ORG Technology Co., Ltd., summarized and pointed out that.
Through business comparison and difference analysis, ORG learned from each other, reorganized its customers and regional layout, formed a special line for regional business, and effectively optimized human resources and management, financial and internal control systems, which further improved its productivity and energy efficiency.
From the perspective of data, the company’s multiple production lines of the original Boer factory have shown outstanding performance in terms of capacity and human resource optimization, which also means that the integration of Boer factory has basically ended and has shown phased results.
“1+1＞2”
as the leading enterprise of food and beverage packaging in China, ORG is mainly engaged in the R&D, design, production and sales of metal packaging products for food and beverage.
Under the leadership of Zhou Yunjie, the chairman of ORG, the Boer Asia Pacific Factory acquired by ORG has provided strong momentum for the company’s metal packaging production since it was put into operation in 2019.
According to the integrated report data, Origen merged with Boer Asia Pacific, and the annual capacity of two pieces of cans at the initial delivery was 13.17 billion. Three years later, without large-scale investment in technological transformation, the number reached 14.24 billion, which means that the annual production capacity has increased by 8%.
What is the “secret” behind the integration of Origen and the original Boer factory capacity to the successful release?
Shen Tao, president of ORG, pointed out that in terms of capacity coordination, ORG gave full play to its regional advantages to deploy orders for production, so as to reduce the transportation distance and avoid the loss caused by the frequent transfer of cans. Production strategies such as spare parts sharing, enhanced communication between plants and secondment of the same spare parts also enable the company’s spare parts inventory to be effectively controlled.
On this basis, ORG has re-planned the regional layout of the production line.
Among them, in order to strengthen the share and comprehensive competitiveness of the company’s products in the western market, the Beijing production line of the original Boer factory will be moved to Baoji factory from May 2020.
In addition, Foshan Line 3 has been relocated to Jiangmen, Shaanxi has added Line 2, and production lines in Qingdao, Zhejiang, Guangxi, Shandong and other provinces and cities have been accelerated to a certain extent.
In view of the low production efficiency of the original Boer factory, under the “two line converging”, ORG not only focused on solving the old problems of the equipment of Boer factory that has been out of repair for a long time and the maintenance frequency is low, but also strategically treated the purchased production line as the same as the original factory, and adopted "high standards and strict requirements”.
After the acquisition of Boer Factory, ORG not only reformulated equipment maintenance regulations for each equipment, but also improved the efficiency of capacity utilization.
In terms of indicators such as qualified rate of unit consumption, the original Boer plant is required to comprehensively benchmark the original ORG plant. The two types of factories rank on the same platform in the Group’s business division and compete well, which has become an effective means to increase the product qualification rate.
The power of integration is triggering a series of chemical reactions in the case of ORG’s acquisition of Boer Asia Pacific.
Make the best points of each side
Through the optimization of production capacity and human resources, the strategic position of the company’s two-piece tank business has emerged. The 2021 annual report shows that the strategic position of the company’s two-piece can business has emerged, the annual business performance is outstanding, and the company continues to deepen cooperation with the main core customers of the two-piece can.
Merger and reorganization is the best way for the healthy development of the industry.
By means of mergers and acquisitions, reducing the disorderly competition in the market is a resource saving method compared with the continuous construction of new plants by enterprises.
However, mergers and acquisitions are not easy.
“We should keep a low profile, be fair and transparent, and learn from each other.” Shen Tao pointed out.
According to him, Boer, as the largest tank making company in the world, is much more advanced than us in terms of information system, internal control, and the use of financial management tools. We are also learning from Boer.
At the same time, ORG’s top priority is to change the inefficiency of Taiyuan in Portia.
In order to better match and optimize the combination and adjustment of the capacity and market demand of the new ORG two-piece cans nationwide after the merger and acquisition, and at the same time to benchmark the personnel structure of Baosteel, COFCO, and ORG’s internal six factories, the integrated human resources work has always focused on the adjustment and optimization of the personnel and management structure of various factories in Boer.
ORG’s overall performance management system (BSC) structure has also undergone adjustment in this process.
While merging with the management functions of the Two Piece Tank Business Division, the sales, supply chain, finance, human resources, IT and engineering functional departments have made some structural adjustments. Since the three years of integration, the internal system has been further streamlined and efficient.
The second problem ORG faced was that the difference between the original Boer management culture, especially the performance management concept and ORG had once become a problem to be solved.
For example, the performance policy of the original Boer Factory has been implemented for many years, and cannot be adjusted in time with the changes of the enterprise’s annual business objectives and market.
Under the original Boer’s performance management system, the level of the personnel bonus standard is determined by the comprehensive assessment results of monthly output, efficiency, product qualification rate, etc., but the performance differences between teams, posts, and individual employees cannot be reflected in the individual performance bonus. Factory managers cannot directly adjust the bonus distribution of employees, and the overall enthusiasm of employees is not high.
In view of this problem, the company finally anchored the concept of “unification of human resources policy and ORG Group” and took a series of effective measures.
At present, ORG has released the group version of the Employee Manual to the original Boer factory, and its employees have synchronized with the group in terms of salary payment time, performance bonus policy, travel policy, etc.
It is through learning from each other that both Origen and the former Boer Asia Pacific have achieved a “new look”.
The biggest difficulty and the richest mine
Shen Tao said that the most difficult part of integration is cultural integration after mergers and acquisitions.
It is precisely by crossing this threshold that ORG has reaped the greatest achievement of this acquisition. At present, the 9 ORG factories have achieved a more diversified regional distribution pattern, and have been relatively perfect in terms of regional layout, market location, etc. ORG’s core competitiveness and industrial moat in the field of two-piece cans have been optimized and widened.
“Through benchmarking, the stability of cadres and the fairness and transparency of problem solving, we let our colleagues in Boer Asia Pacific see ORG’s sense of service to customers, see that ORG represents the team spirit of market-oriented competitiveness, and feel ORG's cultural characteristics, spirit and working attitude.” Shen Tao introduced.
During this period, ORG improved the income of middle and grass-roots employees, explored and selected a group of leaders from Boer Asia Pacific to enter the enterprise management, and the cultural integration between the two sides was basically completed.
Cultural integration is difficult and rich mine.
Strategic acquisition can not only be regarded as a reorganization process of winners and losers, but also an organic combination of different cultures and different talent structures.
At present, in the international business of ORG, some customers are introduced by the old customers from Boer Asia Pacific, “relying on service, word of mouth”.
Shen Tao believes that the two-piece can business is still a “sunrise industry”.
From the industry data, the per capita consumption level of two pieces of cans in China, especially the canning rate of beer and other products, still lags behind the international market.
Shen Tao predicted that the two piece can business would still maintain an annual market scale growth of 5% - 8% in the future.
“At present, in the distribution of the two tank industries, the scale gap between the top three is still small, and the demand for industry integration is still large; the industry still needs to continue to merge if it is to truly become a leading enterprise.” Shen Tao said frankly.
According to the plan, ORG currently has three important tasks, namely, old line transformation, increasing investment in blank areas, and improving international business.
The integration of the two piece can business is only one aspect of ORG’s forging growth force curve. With the gradual improvement of the comprehensive packaging solution format, ORG’s brand planning, packaging design and manufacturing, filling services, information assisted marketing, sports marketing and other mutual empowerment will outline a new high-quality industrial development blueprint.
