Wriston Manufacturing Corporation

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Wriston Manufacturing Corporation
By Christy Smith, Marty Hiemstra, Albert Sommerfeld, Mike Peterson, Dawn Buckman

Executive Summary

Wriston Manufacturing Corporation - Heavy Equipment Division (HED) is a large manufacturer of axles and brakes for the automotive industry. Wriston operates nine plants, eight located in the US and one located in Essex, Canada. Over the last several years, the Detroit plant finances and productivity have become an issue. As a result, an analysis of the plant is being reviewed to assess the feasibility of keeping the plant open and for how long, and upon determining if the plant continues to operate, which components it will continue to produce.


The Detroit plant is the oldest of the
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This may cost the company customers and money. In addition, moving the product lines would require training dollars to train staff to manufacture the Detroit plant parts, as well as the need to purchase machines, equipment and supplies as the Detroit equipment is outdated and inefficient.

Alternative 2 – Keep the Plant Open (5-10 years) and Invest in Tools and Maintenance

This alternative provides the worst NPV and would be a last resort solution. The company would continue to have a negative ROA. (Exhibit 2)

Alternative 2A – Keep the Plant Open (5-10 years) and Invest in Tools and Maintenance, with tighter inventory control

Given the financial projections for this option, even with the tighter inventory control, this alternative still results in a negative NPV (Exhibit 3).

Alternative 3 – Close the Plant, Invest in New Plant
While this alternative returns a negative NPV, on the basis of a 10% hurdle rate, given the discussion of Alternative 1 with regards to the other plants abilities to take on the parts from Detroit and the need to continue Group 3 parts, this alternative needs to be considered. Analyzing the financials for this alternative indicates that this alternative will yield an IRR of 6.9%. (Exhibit 4). So while it does not meet the hurdle rate for new product investment, it will continue to provide a measure of

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