The DeBourgh Manufacturing Company was founded in 1909 as a metal-fabricating company in Minnesota by the four Berg brothers. In the 1980s, the company ran into hard times, as did the rest of the metal-fabricating industry. Among the problems that DeBourgh faced were declining sales, deteriorating labor relations, and increasing costs. Labor unions had resisted cost-cutting measures. Losses were piling up in the heavy job-shop fabrication division, which was the largest of the company’s three divisions. A division that made pedestrian steel bridges closed in 1990. The remaining company division, producer of All-American lockers, had to move to a lower-cost environment.
In 1990, with the company’s survival at stake, the firm made a risky decision and moved everything from its high-cost location in Minnesota to a lower-cost area in La Junta, Colorado. Eighty semitrailer trucks were used to move equipment and inventory 1000 miles at a cost of $1.2 million. The company was relocated to a building in La Junta that had stood vacant for three years. Only 10 of the Minnesota workers transferred with the company, which quickly hired and trained 80 more workers in La Junta. By moving to La Junta, the company was able to go nonunion. DeBourgh also faced a financial crisis. A bank that had been loaning the company money for 35 years would no longer do so. In addition, a costly severance package was worked out with Minnesota workers to keep production going during the move.
An internal stock-purchase “earn-out” was arranged between company president Steven C. Berg and his three aunts, who were the other principal owners. The roof of the building that was to be the new home of DeBourgh Manufacturing in La Junta was badly in need of repair. During the first few weeks of production, heavy rains fell on the area and production was all but halted. However, DeBourgh was able to overcome these obstacles. One year later, locker sales achieved record-high sales levels each month. The company is now more profitable than ever, with sales topping $6 million. Much credit has been given to the positive spirit of teamwork fostered among its approximately 80 employees. Emphasis shifted to employee involvement in decision making, quality, teamwork, employee participation in compensation action, and shared profits. In addition, DeBourgh became a more socially responsible company by doing more for the town in which it is located and by using paints that are more environmentally friendly.

1. After its move in 1990 to La Junta, Colorado, and its new initiatives, the DeBourgh Manufacturing Company began an upward climb of record sales. Suppose the figures shown here are the DeBourgh monthly sales figures from January 2005 through December 2013 (in $1000s). Are any trends evident in the data? Does DeBourgh have a seasonal component to its sales? Shown after the sales figures is Minitab output from a decomposition analysis of the sales figures using 12-month seasonality. Next an Excel graph displays the data with a trend line. Examine the data, the output, and any additional analysis you feel is helpful, and write a short report on DeBourgh sales. Include a discussion of the general direction of sales and any seasonal tendencies that might be occurring.

2. Suppose DeBourgh accountants computed a per-unit cost of lockers for each year since 2000, as reported here. Use techniques in this chapter to analyze the data. Forecast the per-unit labor costs through the year 2013. Use smoothing techniques, moving averages, trend analysis, and any others that seem appropriate. Calculate the error of the forecasts and determine which forecasting method seems to do the best job of minimizing error. Study the data and explain the behavior of the per-unit labor cost since 2000. Think about the company history and objectives since2000.

  • CreatedFebruary 19, 2015
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