Heritage Appliance Company recently announced plans to construct the River Woods manufacturing plant, replacing the company’s original, flagship facility adjacent to the company headquarters in Edgemont. In announcing the new plant, the company stated that to the extent possible it would be staffed by Edgemont plant personnel and that the excess personnel would be transferred to other Heritage plants in neighboring states.
Heritage management views the River Woods facility as the plant of featuring new methods of production and lower processing costs and requirements. In a recent press release, the Heritage CEO noted that replacing one of the least automated plants in the industry with a plant forms of production not previously seen in appliance manufacturing.
Heritage Appliance is also using the River Woods plant to pilot a new decentralized management structure. In the past the firm’s marketing activities were directed from the home office by a vice president. Manufacturing operations and certain other departments were under the control of the company’s senior vice president. In this centralized, functional, arrangement none of the company’s four plants had a general manager. Instead, each department in a plant reported on a line basis to its functional counterpart at the home office (e.g., director of production, director of engineering). In contrast, the new River Woods plant manager will be responsible for the management of all functions and personnel, except marketing and sales.
There is general consensus among the top management team that the long-term viability of the firm depends on the success of this initiative. However, some have expressed concerns about the difficulty of the task facing the River Woods general manager. They point to the shift from the functional lines of communication and accountability to a plant-level focus, as well as the challenges of upgrading the...