Awc Inc

Topics: Revenue, Costs, Expense Pages: 8 (2343 words) Published: October 7, 2012

Letter of Transmittal
August 20, 1991
Mr. Alex MacDonald,
President and Owner,
AWC Inc.
Subject: Recommendations for installation of emission control systems Respected Mr. Alex,

I submit herewith recommendations for the installation of exhaust system and a second welding line considering the best interests of AWC Inc.

Management Consultant

* Word Count: 49

Due to slowdown in construction industry over 1989-1991 period, AWC is facing intense competition in the industry. The margin of AWC has reduced to 3 percent. Upcoming free-trade agreement between U.S. and Canada would further add to its woes owing to low cost products of U.S. To counter the competition, AWC has developed a low-priced high-quality door design which has led to significant increase in AWC’s sales. This new design requires double usage of welding line. Thus, AWC either has to operate in second shift or buy a second welding line. Over previous few years, the laws pertaining to releasing environmentally harmful fumes inside or outside plant have been strengthened. Since AWC does not have any emission control system currently, it runs the risk of being fined heavily. The probability of being fined is only 0.002 but the health implications on the employees can be huge, ranging from respiratory problems to cancer. The two available options for emission control are exhaust system and air recirculating filtration system. The criteria for the evaluation of options are: financial impact, employees’ health concern, ethics and abidance by the law. If AWC installs exhaust system or air recirculating filtration system, it would incur a cost of $240,000 and $400,000 respectively. It would not face any penalty or legal action as it would abide by the law. AWC would be ethical in doing so and would also mitigate the risk posed to the health of its workers. Since AWC has increased sales because of the new product, the installation of either equipment could be supported by the revenue generated, saving the company from a financial burden. If AWC does not install any emission control system, it would not incur any costs but could be penalized as much as $500,000 if gets caught. Although none of the employee’s health has suffered in the past, AWC would pose a huge risk to its employees especially now when the welding has increased. Also, it would be unethical to do so. Thus, AWC is recommended to install exhaust system and a second welding line.

* Word Count: 345
Table of Contents
Situation Analysis4
Problem Statement5
Criteria for Evaluation6
Evaluation of Options6
Action Plan8
Exhibit 19
Exhibit 29
Exhibit 310
Exhibit 410
Exhibit 511

Situation Analysis
AWC Inc. is a small-scale Southern Ontario aluminum fabrication plant. AWC employs 100 people (Exhibit 1). It is employee friendly and also works for community welfare. Thus, AWC has a highly motivated and loyal workforce. Also, many of the present employees are the second-generation employees for AWC. Since there are more than 37 competitors operating in southwestern Ontario, slowdown in construction industry over 1989-1991 period has further added to the cut-throat competition and reduced the profit from earlier five to seven percent to only three percent. To survive the competition, Alex, President and owner of AWC, has reduced the workforce through attrition with much heartache, drastically cut prices, margins and profits, and increased efficiency. The implementation of Canada-U.S. Free Trade Agreement in the near future will further add to the competition in the aluminum fabrication industry because of the lower priced products offered by U.S. To counter the competition, AWC has recently developed a superior door design. Because of its lower price and higher quality with respect to comparable...
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