Productivity Problems Faced by the Detroit Plant of Wriston Manufacturing Corporation

To: Richard Sullivan From: im79111 Date: Jun. 1, 2011 Re: Detroit Plant – Heavy Equipment Division (HED) This memo is to identify and analyze the key issues of Detroit plant in Heavy Equipment Division and provide reasonable solutions to the management team. 1， Background Heavy Equipment Division (HED) of the Wriston Manufacturing Corporation is a large axle and brake manufacturer, which accounted for approximately 11.2% of the Wriston’s total revenues. There are 9 on-stream plants in the division and a new one is still under construction. The Detroit plant, the first plant of the division, was facing finance and productivity problems for several years. To address this problem, we are trying to review the situation to assess the feasibility of whether the plant should be closed, and what corresponding actions should be taken. 2 , Issue The Detroit plant acts as an incubator in the division, almost all the products have been developed in Detroit, but when the products became mature, it will be transferred to other plants. As a result, the Detroit plant currently produces 3 categories of low-volume products, on-highway axles, off-highway axles and the replacement parts for all three of the division’s product line. It is operated as a job shop, the complex 20-product-families compounding reduce the producing efficiency and limit Detroit to generate enough profit. Since the plants will be reviewed separately by ROA, Detroit could not compete with other flow shops like Saginaw, the investment was kept on declining for 8 years. Compare with other plants, Detroit has a very heavy overhead burden. Many of the machine tools are out of date. The facilities are unplanned and may need to be repaired or replaced in a short term.

Except the hardware problem, the Detroit plant also have big problem with their labor. The hourly employee ages were polarized into either below 30 or above 50, the absenteeism and turnover rate is high, which will reduce the effectiveness for no