Sands Corporation

Written Managerial Communication

Submitted By :-
Sonu Gupta
26/12/2020
 Letter of Transmittal

August 1961
President,
Sands Corporation.
Dear President,
This report consists key decisive factors to select final location of New Défense
plant for acquired US Military Contract. Each factor was analysed thoroughly
from 360-degree angle and implications of all proposals were analysed to bring
best possible outcomes and future course of action. Each option was
thoroughly checked considering all factors involved in it and then final decision
was taken evaluating all possible outcomes and trade-offs associated with final
course of action.
I hope it will help you better understanding and deciding final call.
Sincerely,
Vice President,
Manufacturing,
Sands Corporation.
 Executive Summary

Sands Corporation has to setup a new plant to meet the demand of new
defence contract (April 1962) and upcoming future needs. Two sites one at
Kimberley nearby its main plant and other one at Hampton have been chosen
for final consideration. Kimberley site possesses risk of disruption of operations
due to strikes from union but has advantage in cost from Hampton which can
be used to compensate demands of Union. Hampton site has scarcity of labour
and no industrial base earlier but has advantage of no union hence no strike.
Kimberley site suits all better options involving long term benefits and
commencing plant as earlier as possible due to strong industrial base and
surplus skilled manpower availability. An eye of main plant can also be
considered a plus point for Kimberley site.
Situation Analysis –
Sands corporation grabbed opportunity to expand its current manufacturing
business of parts of aircrafts, automotive and agricultural equipment industry
and brand its venture by being engaged with US Govt.
Sands Corporation has acquired a competitive bidding deal in August 1961 to
deliver specific Military aircrafts parts of larger size than currently
manufactured ones from very next year April 10, 1962. If not delivered on time
will get penalty of 1000$ onwards each day and no future contracts due to
ruined reputation of corporation.
Current Structure -
 Main plant since 1941 in Clairmont with executive offices -
 1750 employees associated with National union (Sole
collective bargaining Representative of the main plant
employees since 1942)
 Equipped primarily for deep drawing, Punch Pressing,
forging and assembly operations
 Challenges – A strike for higher wages in March 1961 which
forced plant to remain closed for three weeks and later
settled under a new year contract which was not
completely satisfied from Union’s end
 Other two branch plants since 1943 in small towns
 with 3500employees combined 60miles apart and 200miles
from main plant (Not associated with National Union)
 Equipped primarily for automatic screw machines
operations
 Benefits –
 Greater dependability of Workers
 Closer relationships
 Less absenteeism, lower turnover and
Greater pride and higher productivity
 Savings in land cost, taxes, wages and other
costs
 No strikes

Apparent need of additional plant and Equipment –

  Government specification for larger size military aircraft parts
than manufactured by company owned machine tools
 Demand more than near capacity to produce current orders
 Absence of middle level management for a second or third
shift
 Existing facility would take more than 4months to reach
desired contract capacity
After evaluation a new defence plant with 75,000 sqft with 300skilled, 150
semi-skilled and 150 unskilled employees must be started within next 2weeks.
Approximately 2million$ worth special purpose machinery and equipment will
be arranged through Défense Department Utilized funds by Air Force.
Proposed New Sites –
 Kimberly Street Site
 Hampton Site
Kimberley street is near to main plant while Hampton is in small farming town
180 miles away from main plant. Resale value of plant is high in Kimberly street
because of highly industrialized locality as compared to Hampton which has no
industries. Along with Cheaper utilities cost, surplus labour is also available in
Kimberley, but the labour force of new plant would become part of the
workers union in main plant which went on strike for three weeks last march
to demand for increase in wages.
There is no risk associated of workers union and strikes in Hampton as sands
Corporation will be the sole manufacturer, but availability of the labour is a
problem in Hampton as most of the labour force is engaged in farming or in
industries in nearby large cities which are 20-40 miles apart. Survey of 7OO
workers carried out by the company revealed that unskilled labour is available
in required numbers but skilled (35 [5%] +105 [15°] = 140 available) and
semiskilled labour (70[10%] available) was inadequate.

Problem Statement
Deciding whether new Sands Corporation Défense Plant must be set up in
Kimberly Street or Hampton by taking various factors in account.
Options
1. New Defence Plant at Kimberly Street Site
2. New Defence Plant at Hampton Site
Criteria for Evaluation
 Time Crunch – Facilitation of machinery and manufacturing has to be
started as soon as possible to maintain relations with US Govt for
future contracts, higher revenues, new opportunities and to avoid
penalty.
 Capital and Overhead Expenditures – Higher expenditures lead to
lower profitability and should not be compensated with time
boundations.
 Labour, Industrial services and Transportation – Ease of doing
business, lower costs and availability of required manpower will result
in higher productivity with high profit margins and reduced span of
time.
 Management and Employee Relationship – Closer relationships
between management and employees by addressing all conflicts always
contribute to higher productivity.
Evaluation of Options
Option #1 – Propose site at Kimberly Street
1) Time Crunch – Kimberly site is situated in industrial area near main plant
which will lead in faster operations due to engagement of higher
authorities and experienced Labour.
2) Capital and Overhead Expenditures – Estimated overall expenditures
will incur around 2836410$(Exhibit) due to low rates of Industrial
services and shared work by main plant executives.
3) Labour, Industrial services and Transportation – Ample amount of
industrial services and resources, best means of transportation and high
availability of labour was observed.
4) Management and Employee Relationship – Higher chances that
employees will get involved with Union which can result in further
disruptions in operations.
 Option 2 # Propose site at Hampton
1) Time Crunch – To establish first industrial plant in Hampton will take
more time as it has not inherited industrial culture yet.
2) Capital and Overhead Expenditures – Estimated overall expenditures
will incur around 3244980$(Exhibit) due to higher rates of Industrial
services.
3) Labour, Industrial services and Transportation – Satisfactory mean of
transportation, electricity, water and gas is available. However available
skilled and semiskilled labour is not meeting to requirement which will
lead to conduct training session to meet the demand.
4) Management and Employee Relationship – Majority of labour is
engaged in either farming or employed in nearby large cities due to no
industrial concern in Hampton. Providing labour employment can make
them obliged to corporation and less trade offs for consistency and
better productivity.
Recommendation
Kimberley site should be opted for construction of new plant site due to
following reasons
 Will be able to start manufacturing earlier than Hampton site due to
already established industrial culture and nurturing under main
plant.
 Approximately 400000$(Exhibit) less expenses from Hampton site
which can be used to compensate demand of higher wages of union
workers and better resale value.
 Abundance of labour and even less hiring of executives due to
shared work by main plant executives compare to Hampton. It will
result in tremendously reduced time and resource allocation for
hiring process and trainings.

Action Plan
Kimberley site must be selected after considering all above recommendations
and various factors mentioned in report. Construction needs to be started
within next 2 weeks so labour and executive hiring should be in process by
next week itself. Company Executives need to be aligned mainly administrative
personnel of accounting, production control and engineers to do their shared
part of work for faster commencing of plant and to facilitate machinery for
earlier manufacturing of parts.

Exhibit
 Expenses

Utilities Anuual Kimberly Total Hampton Total

Requirement Cost/Unit Cost for Cost/Unit Cost for
Kimberl Hampton
y
Electricity 4000000kw-hours 0.101Kw-hr 404000 0.21 840000
Gas 5000000ft3 0.46/1000ft3 23000 0.71 35500
Water 24000000Gallons 0.11/1000gallons 2640 0.25 6000
Total 429640 881500
Labour
Skilled 300*250workdays 2.25*8hrs 1350000 2.15*8hrs 1290000
Semi-Skilled 150*250workdays 1.85*8hrs 555000 1.83*8hrs 549000
Unskilled 150*250workdays 1.5*8hrs 450000 1.47*8hrs 441000
2355000 2280000
Land 50000 20000
Property Tax 3.34$/100$ 1770 2.4$/100$ 480
Additional 0 63000
Admin Cost
Total 2836410 3244980
Expenditures

* Addition 5% increment in wages has been considered in case of Hampton as

labour will be arranged from nearby towns.
* Average working hours in a day – 8hrs

Total Words excluding Cover page, Exhibit, Letter of Transmittal, Executive

Summary - 1071