Wriston Manufacturing Corporation
...ttitudes of younger employees. 2. Threat of plant closure creating a lack of motivation and negative attitude. 3. The overall environment of the building–40 year-old bathrooms, no employee cafeteria (5 years), and no internal maintenance (i.e. painting). 4. No job security (union contract). Accounting Accounting policies make the Detroit plant a poor performer (Exhibit#6&7). Comparing the plant’s ROI performance to high profit plants is incorrect. The Detroit plant has to support the extreme ends of the product life cycle (Exhibit#5). Recommendations: Short-term (1-3yrs) (Exhibit#1&2); close the Detroit plant as soon as possible and transfer the three groups. Group 1 should be transferred to the Lancaster plant, group 2 should be transferred to the Lima plant and outsource group 3. If outsourcing is not possible, group 3 should be moved to the Sandusky, OH plant. This will create value for the stakeholders and product lines will be all grouped. This will be in line with company’s strategy. The profitable lines will bare the costs for the production of old parts and R&D. R&D must continue for future growth and the Lima plant is recommended. Employees should be offered jobs at the other plants or early retirement. Employment retraining and relocating should be arranged through the HR department or hire a HR company to assist employees that are not interested in moving. Management from the Detroit plant should be moved to fill the “lack of sufficient management” throughout the division. Long-term (3-5yrs) (Exhibit#3&4): the company should build a new plant to facilitate R&D and there aging parts products. Start negotiations with Detroit for tax brakes and incentives to rebuild the plant in Detroit before leaving. Advanced technology for low run product and short line organize must be designed for short run operations, reducing production time. Cross-functional integration and concurrent development of process and products should be incorporated into the new plant design. The new plant should be planned for the existing product lines where there life cycles are declining. An ERP system should be implemented for HED. Start with accounting system division and incorporate product line and divisional performance. The ERP system should be evaluated for future bolt on systems to accommodate future department consolidation to reduce repetitive operations. Analysis and Implementation: The 20 year NPV to close the plant (Refer to Exhibit#1) is $18 million with $25 million one time tooling cost and a $6 million employee terminations cost. The IRR is 58% and payback is 5.87 years creating value for the company. Group 1 should be moved to the Lancaster plant which is under construction and able to take modifications for the transfer. Move group 2 and R&D to the Lima plant and utilize plant. Moving R&D must continue for future growth and moving to Lima will lower division disruption and lower cost. Outsourcing group 3 will increase value (Exhibit#1&4). If Group 3 cannot be outsourced (Exhibit#2&3) then it should be moved to Sandusky, OH. Do not drop the replacement brake parts but strategically use technology to make this division profitable. ...