Going to work...

What does a “financial analyst” do? I’ll try to answer that and give you a feel for the flavor and character of the office here in Sully.

The value driver in any manufacturing business is operations (manufacturing): a company functions to produce a particular product. More fundamentally the idea that led to this operation is the true value driver, typically coming out of engineering/research work. Once you have these, the remainder of a company’s internal functions are designed to support and expedite manufacturing. Finance falls into this category (even in the banking industry where the “product” is finance, you could look at the bank as a support industry for businesses that manufacture products). Finance is related to accounting. Accounting is a categorization function. To understand how a business is performing, the various costs and revenues must be put into “buckets” to allow a human to understand it. Accounting is the framework that determines what dollar value goes into which bucket.

Finance uses the tools of accounting (balance sheet, income statement, etc.) but leaves the generation of these tools to the accountant. Finance is first focused on understanding how a business is running (revenue, profits) and second on where to acquire the money required to fund new projects. Using the tools generated by accounting, the financial analyst attempts to understand where a business is functioning well and where it needs improvement. In any large company there are too many moving pieces to allow for easy understanding. The layers of management between the shop floor and the office, combined with geographic distance make it very difficult to “see” where the problems are. Much of business is about “seeing” what is going on when you are not physically present. It is human nature to make ourselves look good, so it is not as simple as just asking the appropriate operations manager. Although firsthand input is always valuable, data that is more objective is necessary. Hard numbers eliminate the weight of personality and exposes who is truly performing. Step one for the financial analyst is to review the accounting statements and process the data in a way that exposes the true story. This means preparing spreadsheets and PowerPoint presentations that tell the correct story in a way that brings focus to the areas that need attention.

Each year the finance team leads a company wide planning process to project sales and profits for the next year. This forecast is then used to evaluate how well a business performs. Each month, on a less extensive scale, the forecast is updated to account for changing conditions, both internal and external. The monthly numbers provide a high level snapshot of performance. It is the job of the analyst to understand the numbers and identify specific actions needed to improve. Once the business performance is understood, the decisions on how to allocate capital can be made. This includes strategic decisions on how much to spend on projects and where the money will come from (cash, loans, sale of stock, etc.).

Now that I’ve talked in generality, what do I do specifically? In Detroit I supported the Light Vehicle Systems (LVS) business. My primary project was to improve the collection of money from customers. As in any industry, not everyone pays on time. This was a learning experience for me, since I had minimal background in this area. In addition, I supported the capital spending decision process. This included reviewing projects submitted for approval and joining the management review meetings. This was an exceptional chance to see how spending decisions are made, as I was sitting in the same room as the President and VP of Finance. The monthly consolidation of the business results came through our department and I assisted with running standard reports. The remainder of my time was spent on ad hoc projects, for example, one was to analyze the individual business units to determine the return on invested capital.

In Sully, I will still be involved in the capital spending process, but at one step sooner in the progression. The last few weeks my time was fully devoted to the annual planning for next year’s forecast. Going forward I will be given a process improvement project similar to the one in Detroit to improve collections, but that is yet to be defined. Beyond that, I have set a personal goal to improve communication with the corporate office back in Detroit. There are many areas for improvement in ArvinMeritor and communication between the geographic regions is a significant one.

Sitting in Sully are five members of the finance team: the VP of Finance for our Body Systems group (an American who worked at Chrysler in finance for many years), my direct manager (a Frenchman with a prodigious memory for history and culture), and two other analysts (also Frenchman, about my age) who report to my manager. Finance is renowned for requiring long hours on the job and my manager and the VP have no qualms with grinding out 16 hour days for weeks, as we did to complete the forecast (forget what you’ve heard about 35 hours workweeks, that’s only for hourly workers, the salaried French can work long hours, but are required to have at least one day off every 10 days). The interpersonal dynamic is very intriguing within the office. A well respected Englishman had been the VP of Finance, but left within the last year. His name comes up periodically, always in a reverential manner as the locals mention something he would say or the way he did things. The new VP has this going against him. He is extremely intelligent, but I can see he is working uphill to build camaraderie with the group.

My manager is a particularly fascinating individual. He speaks excellent English, but at a much slower pace than we are used to. The first night I was in France we went to dinner together and I enjoyed watching him interact with the waiter on the wine and food selections. I haven’t had a long conversation with him about history, but I’m told he knows it all when it comes to France. He is more open to outside ideas than most Frenchman; we guess this comes from his having worked for several years in the US. Early in his career he worked as a manufacturing engineer before transferring to finance. A discussion we had recently exposed this background. To tackle the issue he started using similar triangles. No need to worry about what that means, suffice it to say that similar triangles are a tool more relevant to engineering, and is not a method I would expect in the toolbox of someone with a strictly finance background. As with most of the French I’ve worked with the level of urgency I am used to working with is not there. He allows things to develop at a much slower pace. The other two analysts are very courteous. I have had difficulty discerning what their career aspirations are. They have both been working here for several years and I can see they are somewhat bored with their jobs. We have developed a good relationship; I discovered that they really did not like my American counterpart who left a few weeks ago. I have been complemented that I speak without much of an American accent (basically I speak slowly and avoid using slang); whereas my coworker made no effort to adjust his speaking patterns for the locals. This was not appreciated.

There are several other non-native employees, including the General Manager. The GM is an extreme extrovert; you can see his energy level shoot through the roof anytime someone approaches him. I believe he is originally from Turkey, but he speaks English with expressions that come across well in any culture. I was impressed on my last flight to the US both he and another VP were sitting in coach, and as always he was smiling about it.

Overall an absorbing place to work!