Summary: Richard Sullivan, recently appointed vice president in the Heavy Equipment Division (HED) of the Automotive Supplier Group of the Wriston Manufacturing Corporation, scrutinized one more time the P&L forecast for the Detroit plant – part of the lengthy report on the future of the plant which had been prepared by a task force Sullivan had appointed six months earlier. He saw three major alternatives: close the plant as soon as possible and transfer its products to other plants, invest in plant tooling in an attempt to develop a viable operation for at least the next 5- to 10-year period, or build a new plant. In my opinion, I would choose to close the plant and transfer its products to other plants.
Heavy Equipment Division:
•During 1990, the Heavy Equipment Division continued to lead the original equipment field through the marketing of improved products. •Wriston’s sales had been declining for three years, led by a precipitous decline in its other divisions. •HED accounted for approximately 70% of the Automotive Supplier Group’s sales in 1991. •The Automotive Supplier Group accounted for 16% of Wriston’s total revenues, and 28% of its total income. R.
•Upon taking charge at HED, Sullivan found managing the division’s complex set of manufacturing facilities to be among his most challenging problems, because the financial performance varied widely. •In addition, the Lima, Saginaw, and Detroit plants presented problems in 1991. •A third concern for Sullivan was HED’s product line, which seemed to have expanded inexorably for the past two decades. F
The Detroit Plant:
Several factors (most resulting from the pattern of transferring products out of the plant once they reached reasonably high volume levels) had contributed to the poor performance of the Detroit plant. •Investment: The plants to which Detroit transferred growth/high-volume products were usually very...