Synopsis: Northwest Canadian Forest Products Limited is a company that owns and operates five saw mills in British Columbia and Alberta, Canada. They produce lumber for construction in a few different countries. The President of the company is dealing with a tough situation with one of her mills in Jackson, British Columbia.
The mill in Jackson is her least productive mill and she soon has to make a decision that could cost the company a substantial amount of money. She has the choice of either investing 50 million in the weak Jackson mill or to invest more that 50 million in a new mill high demand area.The president has been informed of the many complaints from the managers and supervisors, but nothing seems to be the right solution. The Jackson mill faces many problems with their safety regimen as well as the overall structure of the employees. The mill cannot operate productively internal employee disputes.
The president stated that she will not invest 50 million in Jackson unless the new general manager makes some much needed improvement. The president soon needs to make the decision on whether to upgrade the Jackson Mill, or to start a new mill and lay off a large number of workers Diagnosis:Northwest Canadian Forest Products Limited has many problems they are facing with their Jackson mill. The problem is that there are poor labor-management relations. Workers have gone on strike multiple times leaving the company with physical and financial damage.
There is no way a company will succeed unless there is some type of control within this branch. The managers are not taking their jobs seriously or even acting within reason. It has been noted that the overall safety of the employees is at risk due to past inspections.This company has no structure what so ever and has no goal oriented drive. Apparently almost every employee has some complaint directed at someone else. Not one employee seems to be willing to compromise toward a particular goal.
Managers and Supervisors are not worried about the overall quality of the product being made; they are more concerned with the speed of production. The intense requirements put on the laborers are causing problems which lead to unfair treatment. Most of the laborers were not properly trained with the equipment because that was not the manager’s main concern.
Management was trying to be productive with speeding up production, but in return got angry employees working in unsafe areas. It is understood that there is no trust in the labor management relation, making it almost impossible for improvement. The overall problem should have been taken care of by the president when it first started many years ago. The products limited company does not understand the importance of goal oriented production. Each employee has a different goal in mind and in return none are getting reached.The president wants a quality product with efficient production; while the managers want mass production in a short amount of time.
The laborer’s are getting over worked because they try and produce a quality product, but is impossible with the push they receive. In return the president is angry at the managers for the poor quality, while the managers are angry with laborers. It is a big circle of arguments that does not get solved.
Solutions: 1)The first solution to the sawmills problem would be to get structure in the company.The president needs to go down to Jackson and take control of this situation. She needs to have managers and supervisors that take the blame for loss of productivity instead of blaming the labors. The president needs to be confident in these employees because they are the backbone of her operation. Before the 50 million dollars can be invested the situation needs to be handled.
The president needs to make sure that her employees know safety is important to her. Some labors never felt safe and they thought the only goal was to make money.When safety checks are conducted then employees can be properly trained to do their intended job. If time is spent now to reinforce their skills with production money will be saved because there will be less down time. The company has been losing money for years now, so doing the correct procedures now will benefit them. The employees overall need to have a safe, friendly working environment or the saw mill will go back to how it originally operated.
Each set of workers needs to be assigned a supervisor, then that supervisor reports to the manager.The general manger has the ultimate authority when it comes to decisions in the plant. The president puts full trust in the GM to run the day to day operations in this company.
The 50 million dollars invested should not just go straight towards equipment. Some of that needs to be budgeted for employee training, safety upgrades, management seminars, productivity seminars, and employee surveys. Each one of these upgrades will contribute to the relations problem stated by the president.
These problems will not just vanish; many companies elect these options as a form of improvement.If each of these options can be taken into account the company will have a better chance of success. These employees were thrown into a work environment they were not suited for. Each individual mill needs to have individual goals. The manager at the Jackson mill cannot expect to put out the same production as another mill in British Columbia.
Every situation is different and each mill needs to set a limit. 2)The second solution to the problem would be to have the president invest in another mill in Alberta, Canada.The mill in Jackson, BC has so many problems and loss of productivity there needs to be some kind of change. Investing the 50 million would be too much of a risk because they have not turned profit in many years. If they downsize the mill, the GM can start from the ground up and gain some control of the situation. The president needs to realize each additional employee in her Jackson mill is contributing to the downfall of that individual mill.
With the 50 million plus investment in Alberta, Northwest Canadian Forest Products Limited can now serve the demand of the customers in that market.This solution is still risky; however the company knows what kind of demand to expect because they are already in the area with another mill. They can predict how much business they will be getting due to the other mill. If one mill has to many production orders, the other mill can help out so the internal workers stay on track. This would be beneficial because employees would not be pushed to meet a quota of certain products.
The president can learn from the Jackson mill that pushing employees to the limit has a negative effect.These mills are known for producing high quality lumber and it would be a mistake to test clients to see if they can tell the differences. The big investment in the new mill would save the quality of the product. Conclusion: The Preferred solution would be to get the Jackson mill in order before starting to make any investment. Jackson does need some upgrades, but the president believed that most of the problems were due to poor labor management. The Jackson mill has the same equipment as the other mills and those mills are not having any difficulties with productivity.The 50 million would be a waste on new equipment because that is not the main source of the problem.
By downsizing the Jackson mill the GM can really get an idea of what plan he needs to put into action. The negative side of this action would be laying off workers, however if it is needed then there is no choice. If the Jackson mill is still underwater with better management then the president can make the right decision.
Investing a large sum of money anywhere is a huge risk, she just needs to way out her options.If Jackson management is inline and production is up then the 50 million dollar investment would be beneficial. The company needs to look at the history of the Jackson mill. They upgraded the mill in 1986 and since then is has been the poorest in productivity and quality. This upgrade in the past confirms that the poor quality and productivity is in fact not the equipment. Overall downsizing is the best option and investing in another plant with high demand for product.
Given the information from the case is hard to make a definite decision because there are no financial numbers given to us.