skills/cim-teardown/references/overlay-industrials.md

# Overlay: Industrial / Manufacturing

Use for manufacturing, processing, distribution-with-production, or asset-heavy industrial businesses where throughput, yield, uptime, customer concentration, and maintenance burden drive value.

## Table of contents
1. Decision lens
2. Driver tree
3. Mandatory denominators
4. Typical gating items
5. Kill criteria examples
6. Evidence asks
7. Owner mapping
8. External triangulation when thin
9. Red flags

## Decision lens
- Are plant throughput and backlog claims real and repeatable?
- Do yield, scrap, and downtime economics support the margin profile?
- Is revenue concentration or contract structure hiding downside?
- Is maintenance capex or environmental burden understated?

## Driver tree
Default equation:

`volume x realized price - material cost - direct labor - overhead - scrap/rework - maintenance burden`

## Mandatory denominators
- units produced, shipped, and booked
- realized price by product or customer bucket
- yield, scrap, and rework rates
- uptime, downtime, OEE, or line utilization
- backlog by customer and requested ship date
- on-time delivery and quality metrics
- labor hours per unit and overtime
- maintenance capex and plant repair history

## Typical gating items
- Throughput claims do not reconcile to line capacity, labor, or downtime.
- Margin relies on unusually low scrap, rework, or maintenance assumptions.
- Backlog quality is weak because orders are non-binding or concentrated.
- Environmental, safety, or permit issues could create cash or capex shocks.
- Customer concentration and pricing pressure are worse than presented.

## Kill criteria examples
- `hard pass`: normalized throughput or yield cannot support the required earnings level.
- `price reset`: maintenance capex, scrap, or labor normalization materially compresses margin.
- `pause`: unresolved environmental, safety, or quality issues create unknown liabilities.

## Evidence asks
- production, shipment, and backlog reports
- plant capacity and shift schedules
- scrap, yield, and rework logs
- downtime logs and maintenance work orders
- customer-level revenue and contract summaries
- quality metrics, returns, warranty, and claims history
- environmental permits, notices, and inspection records

## Owner mapping
- plant manager or operations lead
- controller or CFO
- maintenance manager
- quality lead
- EHS or compliance lead
- key equipment vendors

## External triangulation when thin
- environmental enforcement databases
- permit portals
- transportation or logistics context if freight is a major claim
- site and parcel records when expansion is part of the story

## Red flags
- Backlog is quoted without cancelability or customer concentration detail.
- EBITDA assumes little maintenance capex despite aging equipment.
- Yield or scrap is shown without a period-consistent production base.
- Quality or warranty costs are absent from the margin discussion.