Jones Ironworks Inc.

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Jones Ironworks Inc.
Background
Frederick Jones was a master blacksmith who emigrated from England to Erindale, Ontario where he set up his shop. From this small shop, Fred Jones plied his trade, shoeing horses and making wonderful wrought iron works, using simple forges and hand tools. His works can still be found in the village of historic structures like St. Peter’s Church, a masterpiece that sits high above the Credit River. In the true spirit of Frederic Jones, all the products are hand shaped and forget out of solid steel. Each piece is solid piece heated in a forge until red hot iron is shaped by hand, one part at a time by a master blacksmith. Frederick jones Ironworks offers an extensive selection of historically correct heritage designs by North American masters who plied their trade in a an era when the design and quality of wrought iron was in keeping with the architectural pieces they were embellishing. The wrought iron works of over 100 years ago still grace the ground and building today as a testament to the quality of solid hand forged iron. Frederick Jones Ironworks offers hand forged wrought iron fence, gates and posts in several traditional designs and heights. Available in a variety of traditional designs and heights, these award winning, heritage-inspired products will last a lifetime. Fredrick Jones Iron Works serves the Canadian market from its headquarters in Ontario, and serves the U.S. market from its new distribution center in Charleston, South Carolina. Executive Summary

Jones Ironworks Inc. case was set in Detroit, Michigan in the year of 1973. This case talks about the hand, dirty dangerous works done by men for an extremely low wages starting at $1.75 per hour. The Jones Ironworks industry is not a growth industry. Other gray iron foundries are closing due to declining auto industry. They are moving to lighter materials (oil crisis), new materials tech. The job that Jones Ironworks involves is a job shop specializing in heavy duty gray iron castings that needs a very strong back, work in dismal conditions. The average hourly rate is $3.85, fringe benefits are 20%; base rate is $3.75, $.50 raise after for four months is 125 men on each of two shifts (usually 122 actually come to work). Throughout the years profit margins have been declining and currently are very low. If Frederick Jones Inc. is not able to raise prices, customers will eventually leave. Suggestion:

* switch from hourly pay to a unit of production system for foundry workers * $10.00/unit that passes inspection (only 13% increase over actual cost per hour) * Freddie says the switch won’t cost the company anything Based On:

* Currently no incentive for employees to be efficient
* Pay rate is too low for type of work, contributes to very high turnover (400%)

Case Analysis
I generally agree with the arguments presented by Freddie Jones. I agree with his claim that payment system should be changed from hour rate into piece rate as to stimulate the employees’ incentive to produce efficiently. When paid by hour rate, the employees have no financial incentive to work efficiently because that paying system does not get their earning related to their productivity so. On the contrary, the piece rate will encourage higher efficiency and production to some extent, because the more they produce the more they will earn. Under that payment system, the employees are financially motivated to work hard and efficiently to get more earnings. Pay based on production should motivate employees to be for efficient in the harsh working conditions. I do not believe the pay is too low. The employees are coming from unemployment agencies and offer very minimal skills. Employees that tend to not be able to hold onto a job may contribute to the high turnover rate, with pay being only one factor. Freddie’s calculations seem reasonable to me, although a 13% pay increase is a significant...
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