Sands Corporation manufactures parts for machinery of Aircrafts, automotive and agricultural equipment. Started in 1943, Sands Corporation has successfully set up 3 plants employing a total of 2750 workers. All the plants have almost reached their full production capacity as a result, due to the increasing Government contracts, shortage of land and labour in the existing plants, Sands Corporation needs to set up a new plant. No other leasing space is available. Thought the government Contracts formed an extensive part of the contracts; they did not reap many profits (Exhibit 2). But Sands Corporation undertook them keeping in mind the earning of goodwill and future contracts.
Cost comparison of the new plant sites, Hampton and Kimberly. Hampton: The start-up and running costs for the plant in Hampton would be $620,480/- and $3,554,500/- respectively (Exhibit 1). It is located in a small town. Pre-start up survey pointed out to the fact that there was a shortage of labour, mainly skilled and semi-skilled. Though the government encouraged a site here, it was not a core clause of setting up the plant here.
Kimberly: The start-up and running costs for the plant in Hampton would be $651,770/- & $3,255,640/- respectively (Exhibit 1).. Located near the main plant, top administrative personnel would remain the same as that of the main plant and were already experienced regarding the strike in the main plant in March 1961, hence would be versed to handle if a similar situation arises at Kimberly. The site employees will still become members of the National Union. The land here has high resale value in case in future such option is thought for.
Transportation cost would remain the same in case of both the above sites. Construction will take 4 – 6 weeks to complete and Government orders will require delivery starting from 10th April 1962 i.e. approx. 8 months. Grace period given for the same is 7 days, after which from 18th April 1962, a penalty...