Individual vs. Group Decision Making
Case Study #2: American Tool and Die (Due Week 6)
As the sun rose on a crisp fall morning, Kelly Mueller’s Learjet touched down onto a small airstrip outside Tupelo, Mississippi, and taxied toward the hangar, where a festive crowd gathered to await the arrival of Toyota’s CEO. This morning, the governor of Mississippi, along with local politicians and business leaders from the automobile industry, would celebrate the construction of a new Toyota plant on a 1,700-acre site in Blue Springs. The new plant would produce 150,000 Highlander sport utility vehicles each year. The energy and enthusiasm of the crowd was palpable. The new plant would give hope to a local community that had been hit hard by the recession.
The purpose of Mueller’s visit was to assess new business opportunities for the company she ran for her father, Vince Brofft, CEO of American Tool & Die (AT&D). Mueller joined the company in 1998 after working for 15 years as an engineer at two U.S. automakers. Then, after seven successful years as chief operations officer at AT&D, this scrappy dynamo convinced her father she was ready to be president. Energetic and tireless, Mueller took over the helm of AT&D, an auto parts manufacturer that sold braking and ignition systems directly to the top three U.S. automakers. Mueller was a mover and while she did her homework she liked to make decisions quickly and by herself. Having worked in large organizations before she often had to make decisions with others and while she could do this the thought that she would get to do things on her own in the small business was intoxicating. With 195 employees, AT&D was located in Farmington Hills, Michigan, among dozens of other automobile parts suppliers in the Upper Midwest. AT&D, established in 1912 by Mueller’s great uncle, had a long history in Farmington Hills. Mueller had often talked with employees who would recount stories about their fathers or grandfathers working in the same Farmington Hills plant—the last of the original manufacturing operations in town.
Mueller was in Mississippi to research moving AT&D’s plant close to a foreign automaker. The foreign automakers, particularly Honda and Toyota, had been quickly grabbing market share away from the big three automakers, who had severely cut production as the economy worsened. As inventory started stacking up on dealer lots, U.S. automakers curtailed production in order to cope with the sudden drop in demand. Next, they put the squeeze on parts suppliers to lower prices. That’s when AT&D leaders started feeling the crunch and watching their financial picture turn grim.
Mueller faced an unprecedented challenge to survive this economic downturn and save her family’s company. She pleaded with her father to think creatively and shake up the status quo at AT&D to avoid bankruptcy. Her plan was to forge into new markets and court foreign automakers. This plan would require closing the plant in Michigan and opening one near the new Toyota facilities in Mississippi. Her father adamantly resisted this plan even though he knew she was right. “Dad,” a recent text message explained, “we have opportunities here in Mississippi. There’s no future in Michigan. We can’t sit around waiting for the big three to come back! It’s adapted or dies!”
Back at the Farmington Hills plant, Brofft pondered his daughter’s “adapt or die” theory and considered an alternative to moving the plant to Mississippi—a move that would cause 195 employees to lose their livelihood in a small, close-knit community. Brofft agonized over choices that could dismantle a company that his family had built. He was sickened by the prospect of laying off employees who were like family. He didn’t want to move but the thought of leaving Michigan was paralyzing the decision process. He always made decisions in the past by consulting with his plant manager and good friend Joe Carney. Now he had to let his daughter in on the process and he just wasn’t sure he could open his mind to her ideas. As an alternative to moving the plant, Brofft considered ways to stay in Michigan. The only feasible option was to drastically cut payroll costs. To do so, he needed support from the local union.
Brofft called a meeting with the plant manager and union leaders to explain AT&D’s dire financial situation. He urged them to make concessions in the employee compensation agreement and explained that these plans would save the company from certain bankruptcy. Assuming he could win their support, Brofft proposed three strategies to the local union reps to keep the company financially afloat: (1) reduce worker wages by 10 percent for one year; (2) mandate a two-week, unpaid furlough at the end of December; and (3) downsize the number of employees by 30 percent. Exasperated, the local union leaders could barely restrain their anger. They were adamantly opposed to all three ideas. Yet probing beyond the fray, Brofft sensed the fear that lurked under the union reps’ gruff exterior. He sensed their vulnerability, but could not break through the reactionary bark that protected it. If union leaders would not cooperate, the plant would have to move and everyone in Farmington Hills would suffer.
In the meantime, Mueller held several successful presentations with local Toyota executives while in Mississippi. “I’ve made progress, Dad,” she said in a voice mail. “I can tell it’s going to be a long and drawn-out process, but they are very impressed with our product and historical strength. They’ve agreed to another meeting next month.”
Sources: Karen E. Klein, “Survival Advice for Auto Parts Suppliers,” BusinessWeek (June 16, 2009), http://www .businessweek.com/pri.t/magazine/content/09_62/s0902015954839.htm (accessed November 12, 2009); Amy Barrett, “Auto-Parts Suppliers Brace for Downturn,” BusinessWeek (February 13, 2009); http://www.businessweek.com/smallbiz/content/jun2009/sb20090616_816915.htm (accessed November 12, 2009); and Toyota, http://www.toyota .com (accessed November 12, 2009
