Lorman Lumber Case Study
Case Study 2
What “Wood” You Do?
Background/Summary:
Lorman Lumber is a publicly traded company with widely held shares. Its Yamica location in rural Oregon is one of the company’s largest. The purpose of the plant is to process and treat wood, which it does through a number of facilities. The Sawmill began producing lumber products in 1947, which it does by peeling, milling, and chipping raw wood. Lorman has a known record of producing good profits, and will often pay out generous performance-based bonuses to executives. Although the Yamica plant is somewhat outdated, it is still considered to be efficient and profitable. Starting in 1968, the company began using new methods to condition and pressure-treat wood products through the use of preservatives. These chemicals, Creosote and PCP, are reported in recent data that suggests a possible link to various health disorders. The problem lies with a number of drainage ditches surrounding the plant that drain into the Mohegan River, which then leads to Yamica’s municipal water intake two miles downstream. The river is also used for recreational fishing, and houses sensitive fisheries. The plant’s drainage ditches are screened to remove the required level of contaminants by the EPA. This case focuses around Ben Watson, a young managerial accountant and assistant production manager for Lorman Lumber Co.’s Yamica sawmill. Ben has been with the company for six years, where he is working on an analysis of a proposed capital investment to recapture and recycle wastewater by refitting the Sawmill with a closed cycle system. Ben is under significant pressure because of this project: • • The data collected for the analysis is based on educated estimates, which given the sensitivity of the project, creates an uneasy feeling. The number of people affected: While the town of Yamica could have potential health problems from contaminants, the town relies heavily on employment at the Sawmill.
After meeting with the CEO of
What “Wood” You Do?
Background/Summary:
Lorman Lumber is a publicly traded company with widely held shares. Its Yamica location in rural Oregon is one of the company’s largest. The purpose of the plant is to process and treat wood, which it does through a number of facilities. The Sawmill began producing lumber products in 1947, which it does by peeling, milling, and chipping raw wood. Lorman has a known record of producing good profits, and will often pay out generous performance-based bonuses to executives. Although the Yamica plant is somewhat outdated, it is still considered to be efficient and profitable. Starting in 1968, the company began using new methods to condition and pressure-treat wood products through the use of preservatives. These chemicals, Creosote and PCP, are reported in recent data that suggests a possible link to various health disorders. The problem lies with a number of drainage ditches surrounding the plant that drain into the Mohegan River, which then leads to Yamica’s municipal water intake two miles downstream. The river is also used for recreational fishing, and houses sensitive fisheries. The plant’s drainage ditches are screened to remove the required level of contaminants by the EPA. This case focuses around Ben Watson, a young managerial accountant and assistant production manager for Lorman Lumber Co.’s Yamica sawmill. Ben has been with the company for six years, where he is working on an analysis of a proposed capital investment to recapture and recycle wastewater by refitting the Sawmill with a closed cycle system. Ben is under significant pressure because of this project: • • The data collected for the analysis is based on educated estimates, which given the sensitivity of the project, creates an uneasy feeling. The number of people affected: While the town of Yamica could have potential health problems from contaminants, the town relies heavily on employment at the Sawmill.
After meeting with the CEO of