The Simpson Case

Introduction

Frank Simpson, president and controlling stockholder of the micro-electronics company,

now in its tenth year, is faced with the problem of gearing his plant to meet both increased
production demands brought on by the expanding electronics industry and also increased
competition from other producers of his line of products. The plant doubled its employees during
the past year, but production per worker decreased nearly 20 percent and costs rose to nearly the
break-even point.
The company employed mostly unskilled labor who were trained by the company. All
employees were on day work rather than incentive work and they were not represented by a
union. The company was founded by Mr. Simpson and a few investor friends for the production
of a narrow line of electronic parts that were sold to other manufacturers. The company grew
slowly and had a workforce of only 105 workers at the beginning of last year. Its reputation for
quality was excellent; this reputation was the primary reason for a flood of orders from new
clients in the spring of last year, requiring the firm to double its labor force. Simpson remarked,
"if you want to stay in business, you can't tell your customers you are too busy to sell them
anything."
The micro-electronics company was located in a manufacturing town of 15,000 persons
in rural New York, about 60 miles from any large town. Enough untrained persons were
available locally for hiring for the expansion. Almost all of his present supervisory personnel had
been with the company since it was founded. They were all skilled people, but Mr. Simpson felt
that none of them had the overall training or insight into the company problems to take charge
as general manager. After much thought, Mr. Simpson decided to hire from outside the
company. Simpson called a meeting of all of his top management and thoroughly explained his
choice. He emphasized the value of collaboration. Although they were unhappy, the more top
management agreed to work directly with the new management. About four months after his
meeting with his supervisors, Simpson found a suitable general manager, Damien rider. Rider,
aged thirty-six, was a progressive mechanical engineer who had been a general supervisor in a
large Philadelphia electronics plant. One of his first jobs as general manager was to find a
qualified person to develop the industrial engineering function. Errol green, an industrial
engineer twenty –six years old, was hired from the industrial engineering department of a large
equipment company in Seattle, WA. Errol green had an MS/MBA degree from St. John’s
university, a very good academic record, and two years’ experience with an engineering firm
based in Boston.
Errol Green and Damien Rider both felt that the company was in bad condition in
relation to machine utilization and employee utilization. On the basis of their first impressions of
the production facilities they estimated that production management and industrial engineering
changes ought to be able to increase productivity at least 25 percent.
History
The micro-electronics corporation was located in an industrial community of 15,000
individuals in rural New York, roughly 60 miles from large town. There were enough unskilled
people available in the area to hire for the expansion. Most of the laborers used by the company
were untrained and had received training from it. All of the workers did day work rather than
incentive work, and there was no company for them to belong to. Mr. Simpson and a few
investor friends for the production of a narrow line of electronic parts that were sold to other
manufacturers. The company only employed 105 people at the start of the previous year due to
its modest growth. Its reputation for quality was excellent; this reputation was the primary reason
for a flood of orders from new clients in the spring of last year, requiring the firm to double its
labor force. Now the company, is faced with the problem of gearing his plant to meet both
increased production demands brought on by the expanding electronics industry and also
increased competition from other producers of his line of products. The plant doubled its
employees during the past year, but production per worker decreased nearly 20 percent and costs
rose to nearly the break-even point.