To: Richard Sullivan
From: xxx
Subject: Wriston
There are two major decisions facing Wriston at this point in time. Firstly, what needs to be done with the Detroit plant? Secondly, what is to be done with ?Group 3' products?
Standing alone, the Detroit plant loses money year-over-year. However, it is difficult to compare Detroit to the other plants in the Heavy Equipment Division (HED). Detroit is a job-shop and has a diverse low-volume product offering. The other plants in the HED are flow-shops and focus on high-volume streamlined operations that maximize profits.
Detroit plays an important role in the HED. The plant is solely responsible for manufacturing replacement and discontinued parts for the HED. In addition, Detroit is the only plant in the company that produces two product lines. Detroit focuses on producing many low-volume products, allowing other plants to specialize on profitable high-volume products. Detroit has also been responsible for developing many new products over the years.
The company has historically evaluated plants based on stand-alone profitability. This is not a fair assessment of Detroit's role within the HED. Detroit, as a job-shop, sacrifices efficiency for variety of products. As a result, primarily because the plant could not compete for capital with other high-volume plants, the company under-invested into Detroit and allowed it to deteriorate into its present condition. Consequently, Detroit has the highest overhead in the entire company and these added costs further decrease profitability.
The deteriorating conditions in Detroit have pushed its workforce into a state of flux. The plant has a high ...