Assignment M3- Team Business Case and Proposal
A Matter of Degrees: Intense Heat at Two Rivers Custom Fire and Rescue
Morgan had woken up early this Saturday. She hoped to get a few things accomplished at work and make it home to spend some time with her family in the afternoon. The past month since she had taken over the position of Operations Director for her company had been grueling. Work-life balance had gone by the wayside in the last two weeks as she was trying to keep the current contract on schedule without the proper number of resources to staff the effort. She was tired, but knew she wasn’t the only one: her employees were showing the stress of the extra work as well, and she was worried they would start resigning under the pressure. She’d be lying if she’d said she hadn’t considered resigning herself, but she knew that if the company didn’t perform on this contract, the consequences could be dire, and might even involve bankruptcy. ORDER YOUR PAPER NOW
Two months ago, Two Rivers Custom Fire and Rescue had been buzzing about the award they expected any day on a large contract to replace the entire fleet of Fire and Rescue vehicles for the city of Los Angeles. Successful delivery on this contract would be a big deal to the company as it would likely help sustain production for years to come. Up to now, its customer base has primarily been in North America, but the company founder and CEO believes that he has positioned the organization to go global in the next decade, and he has put the C-suite to work on executing that goal. Key to this longer-term success is a big win. It would allow the company some breathing room to make a few needed capital improvements and personnel additions that would not only keep it competitive, but allow it to expand beyond its bread and butter markets to finally achieve a global reach. That big win came in the form of this LA contract. Two Rivers is on the cusp, and everyone in management knows it. Will Two Rivers stay primarily domestic, or can the company expand? Morgan’s boss is already making plans for an expansion. He has his eye on a few key South American markets and has been on several trips laying the groundwork down there for the better part of the last year.
Morgan headed to the office as the sun was coming up, already feeling exhausted and nervous. She and her boss David had had a long meeting yesterday afternoon, and the gravity of that conversation was weighing her down. She knows that this is, in both David’s and the CEO’s eyes, a make or break contract for the company. She went to see David yesterday afternoon to tell him she felt she needed to hire on several more FTE’s to maintain any hope of an on-time delivery. The company’s operations staff have told her that the data shows in a straightforward way that the project is understaffed, but she didn’t need hard data to convince her, she can see the strain in the eyes of her staff at every project meeting. But David is a gut-feel guy who knows what he can get out of his employees. He is adamant that it will work and didn’t mince words yesterday…he expects Morgan to be on-time and on-budget.
Morgan had the opportunity to build a relationship with her hiring manager and new boss through her extensive networking early on in her career. At one point in time having a mentor/mentee relationship with him. However, their relationship was quite different now that she reports directly to him. It didn’t take Morgan long to realize how driven David was to meet the bottom-line. In fact, it seemed to Morgan that David measured his team’s value through their ability to meet their program’s outlined budget.
David’s primary goal focused on meeting the program’s budget concerned Morgan. She had reviewed the charts that the data analysts provided her and it seemed clear to her that she couldn’t both meet the customer’s requirements in delivering a quality product on schedule and stay within the budget outlined in the original bid to the customer. The numbers just weren’t adding up. It was looking like she would have to almost double the mechanic headcount that the budget allowed to have a shot at delivering the product on time. She hadn’t been expecting that level of pushback from David, and it had left with her confidence in her own decision-making ability–and her perceptions about the working relationship she’d thought she’d had with her boss–somewhat shaken. She now had to decide if she should disregard the budget and hire the staff she feels are required to meet the customer’s schedule demands, or trust her boss and his gut feeling.
Background on Company, Industry, Competitors
Two Rivers is in the business of manufacturing fire trucks and rescue vehicles. Their vehicles assist in fighting fires. Transporting firefighters and essential equipment, such as pumps, ladders and safety gear, to the scene of fires. The global fire trucks market size was valued at $4.30 billion in 2015, and the annual growth from 2012 to 2017 has averaged around two percent. Growing demand for fire safety among developed countries and the need for advance firefighting apparatus is expected to augment the market growth, and Two Rivers has been eyeing these new markets for some time.
Two Rivers Custom Fire and Rescue has been in business for over 30 years. It is a manufacturer of high quality fire equipment—with an emphasis on custom products—that has served communities across the much of North America. From its headquarters in St. Louis, Missouri, Two Rivers Custom Fire and Rescue has been and continues to be at the forefront of developing technologies and apparatus that make fighting fires safer. The firm employs a team of designers, machinists, and engineers so that it can design and build to spec. The company has an annual revenue of $20 million and employs a staff of 150, give or take. (As a contrast, the largest firetruck manufacturer in the world, Pierce Manufacturing, has an annual revenue of USD 1 billion and approximately 2100 employees.)
To this point in its history, Two Rivers’ customer base has primarily been in North America, but the company founder and CEO believes that he has positioned the organization to go global in the next decade, and has put the C-suite to work on executing that goal. The LA contract is, in his mind, the final piece of the puzzle. Though this is a business that is still run by its founder, it has very much lost whatever small family business feel it has. The CEO is driven to make sure that this company, his legacy, will live on and prosper after he retires (which he hopes to do sooner rather than later). He got his start working fire and rescue for the government, and then quit and went on to earn a bachelor’s degree in mechanical engineering, and, after starting his company, an MBA. He is smart and driven and has no tolerance for those he deems unintelligent.
Competing successfully in an industry with over 75 major manufacturers has left him with what some might say is an inflated ego, and an unnatural (and maybe even dangerous) instinct for trusting his gut over the experts when it comes to major business decisions. His dominant style is exacerbated by the small army of sycophants with which he’s surrounded himself, including Morgan’s boss, David. The leading manufacturers in the industry offer all types of fire apparatus, and are Two Rivers’ primary competitors. There are other manufacturers who offer only one type of firefighting truck (wildland/brush truck segment for example). And still others, such as tanker manufacturers, offer firefighting apparatus as part of their broader range of products. ORDER YOUR PAPER NOW
Competitors: Two Rivers has lost bids to just about everyone on this list over the years, and winning the LA contract was a major win for the company…but as Morgan was coming to understand, they’d won because they’d underbid.
Marion Fire & Emergency Products – https://www.marionbody.com/fire_emergency. “You could say we do things the hard way. While we know of a number of less time-consuming methods used to build fire and emergency vehicles, the results compromise the vehicle and short-cut customers. Going that extra mile in every single step of the process, in even the smallest detail, is what makes Marion the highest-quality fire and emergency vehicle on the market. And the best investment for your department.”
SVI Trucks (Ft. Collins, CO) – http://www.svitrucks.com/. “SVI Trucks is a family-owned, Colorado-based company that specializes in building custom emergency vehicles and has for over 50 years. Our strength is in our people and our dedication to crafting the most dependable trucks available anywhere.”
Pierce Manufacturing (Appleton, WI) – http://www.piercemfg.com/. “At Pierce Manufacturing, we build trucks that live up to your demands. It’s not some nine-to-five-go-home-and-forget-about-it kind of thing. Too much rides on what you do. To our team, there is no room for anything less than the absolute best.”
Rosenbauer International (WY) – https://www.rosenbauer.com. “Rosenbauer is the world’s leading manufacturer of systems for firefighting and disaster protection. The company develops and produces vehicles, fire extinguishing systems, equipment and telematics solutions for professional, industrial, plant and volunteer fire services, and systems for preventive firefighting. All of the main sets of standards are covered by products manufactured in Europe, the US and Asia. The Group has an active service and sales network in over 100 countries.”
KME Fire Apparatus (PA) – http://www.kmefire.com/. “KME is a true sole source manufacturer of high quality, custom fire apparatus serving communities across the USA. Choose from a wide range of apparatus that includes ARFF, Aerial, Industrial, Pumper, Rescue, Tanker, and Wildland Products built on custom or commercial chassis. KME offers a nationwide network of full-service Dealers ready to assist with designing and servicing your next KME purchase. Customer focused solutions-driven.”
To make matters worse, she knew that things were going to have to come to a head sooner rather than later with Jerry. And conflict with him was something she’d over the years trained herself to assiduously avoid, but that wasn’t going to work any longer. Before Morgan received her big promotion, she worked as an Operations Manager, managing the mechanics on the shop floor. She shared a title with her co-worker Jerry, who worked over the mechanics of a different section of the firetruck build. Jerry had also applied for the Operations Director position. To say that Morgan and Jerry were opposites would have been an understatement. Anyone on the shop floor could attest to that.
On one hand you have Morgan, the epitome of a go-getter. At the age of 32 she had already received her bachelor’s and master’s in Mechanical Engineering from USC, and was hired into Two Rivers Custom Fire and Rescue on a rotation program where she was able spend 12-18 months in different functional areas including manufacturing, production control, and supply management. During her rotation program she took the opportunity to make her name known to high-level executives in each department by taking on difficult projects and joining company networking groups. Within her first five years at the company, she received a promotion to an Operations Manager position. Morgan has an extremely outgoing personality and seems to get along with everybody. She prides herself on creating strong relationships with others and is a true believer that a team is greater than the sum of its parts.
On the other hand, you have Jerry, the definition of “old-school”. After serving 10 years in the Navy, he decided his next career path was to become a mechanic for Two Rivers Custom Fire and Rescue. He prides himself on the quality of his work and his ability to act quickly and effectively to problems that arise on the shop floor. After five years as a mechanic, he was promoted to a lead mechanic. Ten years later he took a promotion as an Operations Manager.
In the past, as Operation Managers on separate sections of a build, Jerry and Morgan would work with each other on a regular basis. Despite working together, it was rare to find a subject that they agreed about. Their difference in backgrounds and personalities often lead to a difference in approaches on how to fix the issues that would arise on production line. Which, in turn, lead into constant conflict between the two managers. Over time, they began to avoid working together due to their drastic differences in background and personality.
So, inevitably it seemed, when Morgan received the Director position over Jerry, the animosity between the two amplified almost immediately. However, Morgan, now Jerry’s boss, relied on Jerry to continue to perform is his manager role for her to be successful in her new position.
As she parked her car and walked toward the midtown headquarters building, she mulled over how she might mend that relationship to try and make it a productive one? Maybe if she could salvage this working relationship it would go some way toward getting the project work for the LA contract back on track. Was getting the most out of Jerry perhaps the solution to the personnel shortage she was sure she was seeing?
Perhaps, but Morgan wasn’t convinced. And now her attention turned to the conversation she’d had yesterday with her boss David, the firm’s Chief Operations Officer. Morgan had considered herself lucky to have had an opportunity to build a relationship with her hiring manager and new boss, David, through her extensive networking early on in her career. At one point in time having a mentor/mentee relationship with David. However, their relationship was quite different now that she reports directly to him. It didn’t take Morgan long to realize how driven David was to meet the bottom-line. David measured his team’s value through their ability to meet their program’s outlined budget. ORDER YOUR PAPER NOW
It was clear that David’s primary goal was focused on meeting the program’s budget, and that concerned Morgan. She had reviewed the charts that the data analysts provided her and knew full well that she couldn’t both meet the customer’s requirements in delivering a quality product on schedule and stay within the budget outlined in the original bid to the customer. The numbers just didn’t add up. She knew that she would have to almost double the mechanic headcount that the budget allowed to have a shot at delivering the product on time (See Exhibit 1 for Staffing Chart). The hiring decision was ultimately hers, but that didn’t mean that David’s words from yesterday weren’t echoing in her head as she tried to decide whether to disregard the budget and hire the staff she felt she would be required to meet the customer’s schedule demands. She was worried that this decision might affect her relationship with David…even worse, she felt, in the back of her mind, that her job was on the line, too.
Morgan checked her watch as she approached the front door. Eight thirty-five AM. That left her twenty-five minutes to catch her breath and prepare for her call with Stacy, the LAFD Commissioner who awarded Two Rivers Custom Fire and Rescue the contract. As an extremely high-valued customer, Stacy expects regular status reports from Morgan on her team’s progress on her firetruck builds. Stacy has the taxpayer’s best interest at heart and is adamant that this new fleet be delivered on time or early so that the fire department, and ultimately the city, can reap the benefits of the city’s investment in the new fleet of trucks. Compromise isn’t something that Stacey is known for. She drives a hard bargain, as evidenced by the amazingly favorable terms of this contract that Morgan was now struggling to fulfill. And, to make the relationship even more complicated, Stacy has a lot of political pull and influence on other city council commissioners (a.k.a. potential customers) and a favorable recommendation from her to other future customers could be extremely beneficial for the future demand of Two Rivers Custom Fire and Rescue’s products. Knowing what Morgan knows about her budget restrictions, it’s getting to the point where she needs to decide how to broach the subject of the potential risk of a late delivery. Morgan sat down at her desk and it suddenly occurred to her that perhaps in the long run it would end up being worth taking a net loss on the LA contract if it meant making the delivery on time as promised. But then again, the potential gain of future customer acquisitions through improved company reputation (via Stacey’s word-of-mouth spreading of goodwill) was hard to measurably quantify.
As Morgan finished her cup of coffee and reached for the phone to call Stacey her thoughts suddenly drifted to her home, which she’d left this morning before anyone else was awake. The past two months has been difficult for her, as someone whose core values start and end with her family. Her husband and two kids at home have always been her priority, but that was slipping away. Morgan knew that when she took on this new position, she’d likely need to put in 60 plus hour work weeks for at least the next 6-12 months. But on top of that, she’s also been bringing a lot of her work home, both literally and emotionally, due the added stress involved in her high-stake position at the company. Work life balance was slipping out the window.
Morgan had come to understand that this is a make or break contract. The operations staff have told her that the data shows in a straightforward way that the project is understaffed. But what if her boss is right that when he says he knows what they can get out of the staff. He is adamant that it will work. Is righting the ship with Jerry the solution? Morgan knows that the decision to hire more staff is hers, but if she blows a hole in the budget it could mean her job…on the other hand, if she delivers on the contract late it could mean her job, and it could also perhaps irrevocably hurt the company she loves.
As Morgan started to dial she sighed and silently hoped that today Stacey might be in one of her more reasonable moods, and that she’d be able to make it home for the afternoon hike she and her husband had planned with the kids. ORDER YOUR PAPER NOW