GP Strategies reorganizes into two global practices, expects $7M-$9M in savings
GP Strategies Corporation announced a new organizational structure and plan to improve operating results by increasing organic growth and reducing operating costs. Effective January 1, 2018, GP Strategies will be organized into two global practices aligned by complementary service lines and supported by a new business development organization aligned by industry sector. The Workforce Excellence practice will be led by Don Duquette, EVP and will include the majority of the existing Learning Solutions segment and the Professional & Technical Services segment. The Business Transformation Services practice will be led by Deborah Ung, EVP, and will include the majority of the Performance Readiness Solutions segment and the Sandy Training & Marketing segment. Certain business units will transfer between the existing operating segments to better align with the service offerings of the two practices. The company is currently in the process of hiring its first chief business development officer to focus on establishing a structured and more centralized business development capability that will align the company's diverse market sector expertise with its service offerings. In connection with the reorganization, the company initiated restructuring and transition activities to improve operational efficiency, reduce costs and better position itself to drive future revenue growth. The company estimates these initiatives will result in annual cost savings in the range of approximately $7M to $9M. Of the total cost savings, approximately $3M will be reductions in SG&A costs, excluding additional reductions after the company's ERP implementation is complete, which is discussed further below. In addition, approximately $4M to $6M will be in operational savings primarily due to overhead reductions which will result from merging duplicate service lines and consolidation of offices. The company estimates it will invest approximately $3M of the total cost reductions to expand business development and innovation initiatives. The company expects that the restructuring activities will be substantially completed in Q1 and certain transition costs will be incurred throughout 2018.