case: CMI

Topics: Pile driver, Deep foundation, James Nasmyth Pages: 15 (4826 words) Published: October 26, 2014
9-580-104
REV: AUGUST 16, 1985

BENSON P. SHAPIRO
JEFFREY J. SHERMAN

Cumberland Metal Industries: Engineered
Products Division, 1980
Robert Minicucci,1 vice president of the Engineered Products Division of Cumberland Metal Industries (CMI), and Thomas Simpson, group manager of the Mechanical Products Group, had spent the entire Wednesday (January 2, 1980) reviewing a new product CMI was about to introduce. (See Exhibit 1 for organization charts.) The room was silent, and as he watched the waning rays of the sun filtering through the window, Minicucci pondered all that had been said. Turning toward Simpson, he paused before speaking.

Curled metal cushion pads seem to have more potential than any product we’ve ever introduced. A successful market introduction could as much as double the sales of this company, as well as compensate for the decline of some existing lines. It almost looks too good to be true.

Simpson responded, “The people at Colerick Foundation Company are pressing us to sell to them. Since they did the original test, they’ve been anxious to buy more. I promised to contact them by the end of the week.”

“Fair enough,” Minicucci said, “but talk to me before you call them. The way we price this could have a significant impact on everything else we do with it.”

The Company
Cumberland Metal Industries was one of the largest manufacturers of curled metal products in the country, having grown from $250,000 in sales in 1963 to over $18,500,000 by 1979. (Exhibit 2 shows CMI’s income statement.) It originally custom fabricated components for chemical process filtration and other highly technical applications. Company philosophy soon evolved from selling the metal as a finished product to selling products that used it as a raw material. The company’s big boost came with the introduction of exhaust gas recirculation (EGR) valves on U.S. automobiles. Both the Ford and Chrysler valve designs required a high temperature seal to hold the elements in place and prevent the escape of very hot exhaust gases. Cumberland developed a product that sold under the trademark Slip-Seal. Because it could meet the demanding specifications 1 Pronounced Minikuchi.

________________________________________________________________________________________________________________ Professor Benson P. Shapiro and Jeffrey J. Sherman prepared this case. HBS cases are developed solely as the basis for class discussion. It was made possible by a company that prefers to remain anonymous. All data have been disguised. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management. Copyright © 1980 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685, write Harvard Business School Publishing, Boston, MA 02163, or go to http://www.hbsp.harvard.edu. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of Harvard Business School.

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Cumberland Metal Industries: Engineered Products Division, 1980

of the automakers, the product captured a very large percentage of the available business, and the company grew quite rapidly through the mid-1970s. Company management was not sanguine about maintaining its 80% market share over the long term, however, and moved to diversify away from a total reliance on the product and industry. Thus, when a sales representative from Houston approached CMI with a new application for curled metal technology, management examined it closely.

The Product
Background
The product that Minicucci and Simpson were talking about was a cushion pad—an integral part of the process for driving piles.2 Pile driving was generally done with a large crane, to which a diesel or steam hammer inside a set of...
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