Case 2: Bridgeton Industries

Description Bridgeton Industries Automotive Component & Fabrication plant (ACF) is a firm dedicated to manufacture automobile components focusing in the domestic car industry in the United States. In the early stages, ACF was heavily reliant on the growth of the US automobile manufacturing company that at the time dominated the market share. The US automobile market began to shrink in relation to the mid- 70’s oil crunch, and the way ACF responded to the situation was to build two plants with fuel-efficient diesel engines, hoping a continuous market growth, but with no sales improvements. On the other hand, ACF due to its position in the market, only felt the effects in 1985 and began to take action. Problems and Issues A combination of foreign car introduction and an increase in gasoline led to a decreased domestic market share. However Bridgeton ACF plant reacted late to these events as it was considered a critical plant within the industry and ACF only began to feel the decline in the market share during 1985. In 1987 ACF sought the advice of a strategic consulting firm to review and classify Bridgeton’s products. There were three classifications (Class I, II and III) for the five products manufactured (Fuel tanks, Manifolds, Front and rear doors, Muffles-exhaust systems, Oil Pans). The Budgeted OH Allocation Rate rose from 437.37 percent in 1988, to 577.35 percent in 1989. Two of these products in the Class III Category were chosen to be outsourced in an attempt to save the ACF plant from closure. Having lost two products to outsourcing, the