Northeast Lumber Case

Darren Hall (General Manager of Northeast Lumber) started his 8 a.m. daily production meeting like most days. His meeting routine was to have each of his mill superintendents report on what was occurring in his/her respective area of the mill. Only this day was a bit different than any Darren had ever experienced. Wes, the wood yard Superintendent, had just left the meeting. This was not unusual in that frequently one or two Superintendents might leave the meeting for a few minutes to respond via radio to ongoing problems out in the mill. Wes returned with a puzzled look on his face and interrupted the meeting with this statement: "Darren, the consultant we hired to work with our wood yard employees is on the phone. He wants to talk with you …show more content…
Currently, the local mill is owned by one of the largest paper and lumber products companies in the world. For the most part, union relations have been stable at the local mill. However, in recent years, the parent company had been demanding continuous cost reductions and productivity improvements across the entire company. These efforts had hit the local mill hard, resulting in many layoffs. In the last two years, the parent company has spent over $100 million on new technologies for making "fluff pulp". Such pulp is used for baby diapers, disposable wipes, absorbent materials, cleaning supplies, etc. While these are growing markets, the basic product is a difficult to differentiate commodity. This means the local mill must always be looking for ways to cut costs, improve productivity and improve the quality of its products. The mill always has to be concerned about the selling price of its pulp and paper. If other companies beat them on price, they can lose business fairly quickly. To be profitable the local mill must run at about a 95% utilization rate. It basically never shuts down except for brief required maintenance periods. With the productivity enhancements, the local mill was "down-sized" from 1200 employees to about 900 over the last three years prior to the current wood yard reengineering …show more content…
Independent loggers cut pine trees in forests in the region and haul the wood into the mill wood yard. At the local mill, "short logs" have always been brought in for use in the pulp and paper process. Short logs are basically a pine tree that has had all limbs removed and then the tree is cut into shorter logs averaging about four to five feet in length. The logger loads the short logs onto the truck using specially designed steel racks to hold the logs in place as they are hauled. However, Darren Hall (the General Manager) and his engineers came up with a plan to take a lot of costs (potentially) out of the process of making pulp and