Case Study - Williams Machine Tool Company
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For 75 years, the Williams Machine Tool Company had provided quality products to its clients, becoming the third largest U.S.-based machine tool company by 1980. The company was highly profitable and had an extremely low employee turnover rate. Pay and benefits were excellent. Between 1970 and 1980, the company's profits soared to record levels. The company's success was due to one product line of standard manufacturing machine tools. Williams 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 Williams for major modifications to the machine tools. By 1980, Williams Company was extremely complacent, expecting this phenomenal success with one product line to continue for 20 to 25 more years. The recession of 1979-1983 forced management to realign their thinking. Cutbacks in production had decreased the demand for the standard machine tools. More and more customers were asking for either major modifications to the standard machine tools 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 work force, especially engineering, were strongly resisting a change. The employees, many of them with over 20 years of employment at Williams 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 1985, the recession had been over for at least two years yet Williams 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 1986, the company was sold to Crock Engineering. Crock had an experienced machine tool division of its own and understood the machine tool business. Williams Company was allowed to operate as a separate entity from 1985 to 1986. By 1986, red ink had appeared on the Williams Company balance sheet. Crock replaced all of the Williams senior managers with its own personnel. Crock then announced to all employees that Williams 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 twelve months alone. Crock made it clear that employees who would not support this new direction would be replaced. Case Study - Williams Machine Tool Company Page 2 of 2 The new senior management at Williams 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 apparent by 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 Williams from 1986 to 1991. From 1986 to 1991, the Williams Division of Crock Engineering experienced losses in 24 consecutive quarters. The quarter ending March 31, 1992, 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 1992, the Williams Division was sold. More than 80% of the employees lost their jobs when the company was relocated over 1,500 miles away
QUESTIONS
1. Could project management have been used for those projects involving modifications to the standard machine tool line?
2. How should you handle experienced employees who live in the past and refuse to accept project management?
3. Who should be blamed for the failure of Williams Company to react quickly to changes in the marketplace?
4. Is project management the real reason why the company was sold and employees lost their jobs?
5. Should Crock Engineering have held on to the Williams Company? If so, how?
6. Could there have been a hidden agenda behind the sale of Williams Company? (i.e., such as poor prognosis for the future of the machine tool industry)