Apex manufacturing a formidable company that employed 4000 was the worlds foremost company in small, specialized gasoline motors. In 1980 Apex held 52 percent of the motors produced.
Some time after 1980 two Asian firms and one German company entered the industry creating more competition for Apex. To make things even more difficult a new governmental noise abatement standard forced Apex to redesign the motors exhaust systems. The competitors saw these new standards and had designed the motors with the new standards into their designs. Toward the end of the 80s Apex’s control of the industry had dropped from their 52 percent mark to 43 percent. The company was starting to take a smaller piece of the pie as the competitors grew strength.
The CEO later was quoted in the Wall Street Journal saying that the company was just in a cycle and that it would bounce back up to owning 50 percent of the market. Unfortunately the cycle never really ended and the company had to make some serious decisions. The company had basically decided to shutdown two of the five plants, affecting 900 employees. Second they would have a 20 percent reduction in the level of employment. All departments were to make cuts, even though specific targets for different groups were not determined.
Some of the management concerns that were brought up because of these decisions were:
1. Apex has not had layoffs in the past 20 years.
2. Losing highly talented people that the organization would hate to lose.
3. For across-the-board cut in employment would raise questions to parts of the company that are already dangerously lean.
4. Senior managers are not bearing enough of the brunt of the difficulties of the company they led.
5. The reaction of employees to the memo that is going to be sent out regarding cut backs
I believe the company could have avoided such a spiral downfall by having a good research and development group. This article makes the company look like they got blindsided by the government’s new standards and the sudden increase in competition. This company should have been better prepared for competition and possible changes in standards.
Now that the company is experiencing hard times I’m not sure if I would shutdown two locations. I would instead reduce the company size across all levels keeping the talented individuals and work on making competitive products. I also believe that management should have taken more responsibility than they were. Most of the mangers seemed to keep their generous pay, which in fact should have taken a cut in pay to help reduce costs. These were just a few suggestions on how I think the company should have handled their situation.