Pontiac Plant Case Summary

MICHIGAN MANUFACTURING CORPORATION

The Pontiac Plant, 1988

Case Report

Summary Statement: The Pontiac plant started functioning in 1914 and had several problems and issues with respect to its profits and expectations. The UAW had posted its concerns and even considered on the decision of closing the plant.

Noelle Allen, the Vice President of the heavy equipment division(HED), proposed three alternative solutions to tackle the problems associated with the Pontiac plant.

1. Close the plant as soon as possible and transfer product group 1 and 2 to other plants

2. Invest in plant tooling in an attempt to develop a viable operation for at least the next 5-10 year period

3. Build a new plant.

I have made considerations of all the points and

The Heavy Equipment Division(HED) mainly focused on manufacturing on and off highway axles, brakes, drive trains and suspension components . The target customer is the North American transportation industry. The plants in HED division of MMC are Specialized by Product Lines to minimize the Fixed Investments and measure the complexities associated with each plant.

The Pontiac Plant is the oldest plant of MMC. The profitable products were shifted to other plants all across North America depending upon the various customer demands. In 1987 the MMC had 9 plants operating and 1 under construction. The plants had different measures of their complexity depending upon the range of the products the company used to manufacture. Complexity basically can be measured in 3 categories: product line, product families, and product model.

The product line is a very important measure for complexity. Roughly, there are three product lines in the HED i.e. on highway axles, Off highway axles and brakes. The market demand for a new product manufactured at Pontiac grew kept on growing for several years and hence the production was transferred to a new plant specifically built or acquired for it. Several key factors that contributed to the poor performance of the Pontiac

Although the profit margins of Pontiac Plant is low with several issues coming up everyday, it is absolutely critical for Pontiac, at this point of time, to maintain good relationship with the workers and maintain a good reputation with the United Automobile Workers of America. Investing in in plant tooling and attempting to develop a viable operation requires negligible capital investment and in turn promotes a ray of hope and communal harmony amongst the workers of the plant. Furthermore, this alternative directly addresses to the major problem of Pontiac plant i.e. all the machineries are antiqued , the overhead costs are high and the workforce does not have the zeal , enthusiasm or the motivation to work hard for the company. Considering the present challenges that Allen is facing today with respect to the Pontiac plant , this is perhaps the only solution with a minimum investment that can not only increase the communal harmony in the workplace but also increase sales of the plant which would eventually stabilize the Pontiac plant for few years. This decision by Allen would indeed boost the morale of the employees and in turn help the revival of Pontiac plant which is old and