Wriston Mfg, Co.

Topics: Costs, Better, Cash flow Pages: 4 (1231 words) Published: February 2, 2013
To: Richard Sullivan, VP of the Heavy Equipment Division
From: Frank Kravitz, Manager of the Detroit Plant
RE: The Future of the Detroit Plant

These alternatives won’t fit DP and HED
As you know, I started my career in the Detroit Plant (DP) and hope to end it here. For me and other employees here, DP is a warm but collapsing family. I feel ashamed as the manager because DP no longer generates positive cash flow for the company, as I have been away from work since this prolonged illness. But I deeply believe that DP is still a valuable venture for the division. I strongly request you reconsider about these options. Simply closing the plant as soon as possible and transferring its products to other plants could hurt the whole division from the root. As the Heavy Equipment Division (HED) began its adventure from DP, DP continually contributes itself to other plants silently. Most of our key managers come from DP. The spirit of contribution always stands in DP. Second, our senior employees here are experienced and valuable; most of them already set their homes in Detroit. Early retirement is a waste and too costly for the division. Also those younger employees trained by us probably could flow to our competitors’ plant. Third, DP is still running at 69.6% of its production capacity to meet our customers’ demands. Transferring product line to other plants could increase the delivery costs and influence other plants’ routing production. Furthermore, potential break-off could damage our current customer relationship and our reputation. Investing in plant tooling to develop a viable operation for next 5 to 10 year period probably won’t work. Since basis utilities as electricity, water and fire sprinkler system are inadequate to support daily production, such improvements only on machine tooling won’t increase the whole plant’s productivity. To refresh DP, both recovering the employees’ confidence and updating utilities should be considered ahead. Building a new...
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