Case Study: Navistar

Navistar
The following is a recommendation to create a more robust, in-house recycling system at the Navistar International Corporation truck assembly plant in Chatham, Ontario. In the included rationale and financial analysis you will find several reasons why the timing for a restructuring of our current waste disposal system is correct.
The reason for this analysis is that, as a company, we are at a crossroads of sorts. We are receiving pressure from both the national headquarters and the Ontario 3R regulations to reduce at least 20% and 50%, respectively, of our waste that goes to landfills. We also have internal cost pressures associated with sending our waste to landfills. If we do not act swiftly in the near future the competitiveness of our company will be compromised. We are currently a leader in environmental policies and processes but this is a fast growing point of differentiation and if we don’t stay on the cutting edge we will get left behind and lose our competitive advantage in this area. Also, if we don’t act now we may be behind the curve and cause ourselves financial hardship when new, more stringent policies are enacted by the government that have real monetary damages attached to them.
Recommendation:
In an effort to provide financial benefit to the company and to comply with both internal and external waste reduction demands the following is a proposal to revamp our current recycling policy. The idea is to incorporate approximately 316 recycling stations throughout the plant (where necessary) to collect solid waste. This waste will then be sorted and moved to an internal processing station where the materials would be sold to outside firms or disposed of properly if they hold no economic value. This project would require the skills of a new employee, a plant recycling coordinator. First and foremost we would want to hire or promote a person into this position because they would be critical in the initial planning stages, implementation and logistical problem solving for the new system. We would allow this recycling coordinator relatively free reign with weekly progress meetings to make sure our goals of reducing waste are being accomplished.
Rationale:
The most important information used in deciding which direction to move in is found in Appendix 1 and includes a financial analysis of the two options. Important assumptions were made to enable this analysis. First off, one of the most important assumptions that defined the decision is that we would be able to find regular workers to cover the hours that would be required to sort the items in the new recycling system. It would be part of the job description of the recycling coordinator to find the required 160 hours a week (it is stated in the case that 2 people for each shift would be necessary to work the recycling program) that are needed to cover the sorting operations. We believe this is a reasonable assumption because of the number of employees currently in service. There are 2082 people employed in the plant working on average 40 hours a week. If we assume that 50% of them are unfit for doing the sorting for one reason or another that leaves (2082/2)*40 = 41,640 possible hours of flexibility. The time spent sorting would only amount to 160/41,640 = .4% of total available hours. With all that time to work with it should not be that difficult to become .4% more efficient in operations in order to free someone up or reassign people who may be idle for one reason or another. With this assumption in mind we calculated the financial analysis of the two project and found that they both options had a positive net present value because they both cut our solid waste costs. By going with the do it yourself approach we would save $196,647.70 and by going with the contractor we would only save $82,499.90 over our current solid waste costs of $253,260. When presented in this matter, the choice is easy.
On another note, this newly revamped recycling plan will allow us to exceed both the 20% reduction in waste, established as part of the GREEN program and the targets set by the 3R regulations, by a wide margin. If all wastes (except general wastes) are sorted and sold for revenue to outside sources that only leaves us with 19.3% of our total waste going to the landfill. This greatly exceeds expectations and should position us to be an industry leader in waste management for years to come.