Reference no: EM132701152
Wilford Machine Tool Company Case Study
For 85 years, the Wilford Machine Tool Company had provided quality product to its clients, becoming the third largest U.S. based machine tool company by 1990. The company was highly profitable and had an extremely low employee turnover rate. Pay and benefits were excellent.
Between 1980 and 1990, the company's profits soared to record level. The company's success was due to one product line of standard manufacturing machine tool. Wilford spent most of its time and effort looking for ways to improve its bread-and-butter product line rather than to develop new products.
The product Line was so successful that companies were willing to modify their production lines around these machine tools rather than asking Wilford for major modifications to the machine tools.
By 1990, Wilford Company was extremely complacent, expecting this phenomenal success with one product line to continue for 20 more years. The recession of the early 1990s forced management to realign its thinking. Cutbacks in production had decreased the demand for the standard machine tool. More and more customers were asking for either major modifications to the standard machine tool or a completely new product design.
The marketplace was changing, and senior management recognized that a new strategic focus was necessary. However, lower-level management and the workforce, especially engineering, were strongly resisting a change. The employees, many of them with over 20 year of employment at Wilford Company, refused to recognize the need for this change in the belief that the glory days of yore would return at the end of the recession.
By 1995, the recession had been over for at least two years, yet Wilford Company had no new product lines. Revenue was down, sales for the standard product (with and without modifications) were decreasing, and the employees were still resisting change. Layoffs were imminent.
In 1996, the company was sold to Cook Engineering. Cook had an experienced machine tool division of its own and understood the machine tool business. Wilford Company was allowed to operate as a separate entity from 1996 to 1997. By 1997, red ink had appeared on the Wilford Company balance sheet. Cook replaced all of the Wilford senior managers with its own personnel. Cook then announced to all employees that Wilford would become a specialty machine tool manufacturer and that the "good old days" would never return. Customer demand for specialty products had increased threefold in just the last 12 months alone. Cook made it clear that employees who would not support this new direction would be replaced.
The new senior management at Wilford Company recognized that 85 years of traditional management had come to an end for a company now committed to specialty products. The company culture was about to change, spearheaded by project management, concurrent engineering, and total quality management.
Senior management's commitment to product management was evident from the time and money spent in educating the employees. Unfortunately, the seasoned 20-year-plus veterans still would not support the new culture. Recognizing the problems, management provided continuous and visible support for project management, in addition to hiring a project management consultant to work with the people. The consultant worked with Wilford from 1997 to 2001. From 1997 to 2002, the Wilford Division of Cook Engineering experienced losses in 24 consecutive quarters. The quarter ending March 31, 2002, was the first profitable quarter in over six years. Much of the credit was given to the performance and maturity of the project management system. In May 2002, the Wilford Division was sold. More than 80 percent of the employees lost their jobs when the company was relocated over 1,500 miles away.
1. Could project management have been used for those projects involving modifications to the standard machine tool line?