This article is taken from the book "Royo. A Family, a Company, a Legacy," written to mark our 50th anniversary in business.
Every month, from Invext Corporation, we share a snippet of our history, full of multiple learnings and values that help to understand where we come from, how far we have come, and what we want our next steps to be. We hope that sharing our vision can help or inspire other family businesses to believe that the best way to honour a legacy is to create a new future for it.
You can read the previous chapter here
The crisis that tested us
From 2008, the Spanish, European and global economies took a turn. Having successfully embarked on international expansion years earlier was a safety net for Pascual. The “great Spanish recession” lasted until 2013, although it continued for a few more years until the economy fully recovered.
In September 2007, when the effects of the recession began to be felt, we thought it would be a matter of two or three months, but it lasted almost six years. It was very tough. In previous times, we were rolled out the red carpet to get into banks, but they took it away overnight. We were asked to provide guarantees and pledge our personal assets to secure business operations, or the bank would withdraw all the credit and financing we were already using. During the six-year period of this crisis, nationally we lost eighty percent of our turnover in the Spanish market. If we hadn't started exporting to Germany at the time, we probably wouldn't be here.
For the company, this multi-level crisis caused a serious growth crisis. Despite all efforts to avoid it, the company had to implement a difficult path to ensure survival: a Regulation of Employment File (ERE). The dismissal of part of the workforce, due to the social and emotional implications it had, was one of the hardest moments we faced.
However, we were well prepared to resist. The introduction of improvements in the organisation's processes and planning made sense in the crisis scenario. For a company to be able to overcome a situation as adverse as that experienced in Spain during those years, it was necessary to adapt to the circumstances, optimise processes, and improve productivity and competitiveness.
Confidence in the strategies and actions implemented, in the management team and in the employees was the trident that allowed Royo Group to have a beacon to emerge from the crisis and secure its future.
The Royo brand values involve always doing what we say we will and keeping our word. We achieved success because we weren't just thinking about the money we were going to earn, but about how to grow to serve and deliver even better.
The international venture proved essential in cushioning the significant drop in consumption that occurred in Spain. Other companies in the sector disappeared from the market.
Another of the key factors that helped the company's survival was the implementation of lean manufacturing. Lean manufacturing in Spain's factories. This was a qualitative leap that began in 2012 and became one of the most significant structural changes in Royo's history. This working methodology, which originates from the automotive industry and was implemented at Toyota from Japan, is essential for operating in ultra-competitive sectors with markets whose complexity and demands do not stand still. The results were not long in coming, with improvements in productivity, order service, and management of Stocks and cost reductions.
To strengthen European markets, focus on the latest innovation and design, and maximise industrial efficiency were the three pillars that supported Royo Group in emerging from the crisis of that era.
Invext also had to restructure to overcome this difficult period. Starting in 2012, it began a new era with an aggressive plan for asset rotation and capital restructuring, which led to the sale of all the Royo business's industrial units. This, combined with the liquidity obtained from H.I.G.'s incorporation into Royo Group's capital, allowed Invext's strategic plan to outline a new scenario for the development of the family strategy until 2030.
In 2012, Pascual displayed his utmost generosity and vision. In a gesture that highlights his selflessness, Pascual donated part of the group's shares to his children to facilitate the transition to a new phase. In this way, he made us feel the responsibility of leading the project personally. We didn't think he would make that decision. Donating the shares was a way of stepping back, but he once again showed intelligence and generosity with his decision.
From this stage, we can extrapolate several business lessons:
1- Transformation as survival. A company is a long-distance race that needs good long-term foresight, but also a fast response capability.
2- Generosity and trust in the next generation (in difficult times). Delegating during times of crisis is even more difficult, but trying to maintain control at all costs can be a bad idea. Trusting in the decisions of others in these circumstances is a rare display of generosity.
Raúl Royo – CEO Royo Group
