Make or break it in the plastics industry: What are all the key issues for this case?
Question:
Make or break it in the plastics industry: What are all the key issues for this case? What is a potential solution for each issue?
History:
The company began operations in Windsor Ontario in 2000 as a try out facility and then in 2002 began producing parts and became a full injection molder. The company has 13 presses ranging from 100T to 3500T. They do work for the automotive and nonautomotive industry. The make-up is 85% automotive and 15% non-automotive. In 2008 the company was almost bankrupt because of the financial crisis. All work was terminated. George Wufski did not get paid for 2 years after the meltdown. George and Zippo lent additional monies through shareholder loans to help the company and Jeff bought the shares of one shareholder who left during the financial difficulties. Ownership is a group of 5 individuals who have many years of experience in the industry. George Wufski owns 53% of the company, and his son Jeff Wufski owns 8%, Zippo Maskue owns 14%, Angelo Bassimo owns 17%, and Ralph Usar owns 8%, he is an American citizen. George is 70 years old. Jeff is 32 years old with a spouse who is a medical doctor. Zippo is 52 years old, with spouse owns the shares and does not like to sign any documents. Angelo is 56 years old, and his spouse owns the shares. They have had medical issues and financial problems. Ralph Usar is 54 years old, and his wife owns the shares. She is a constant problem with the ownership and refuses to sign any legal documents. Wuf Plastics Inc. makes several plastic products for the automotive industry. The previous two years of statements are provided for reference as Exhibit 1. You will also find a trial balance sheet for the current year as Exhibit 2. Exhibit 3 are notes from the financial statements. The company has brought in their accounting firm, PITS LLP Charted Accountants (PITS) to look at their books. The reason is their bank DesFlowers Credit Union, (DCU), is concerned.
Current Environment:
The company is still struggling with the slowdown due to COVID-19, and in addition the industry constraints on material have put significant pressure on the company’s viability. Manufacturers of the resin which is a key ingredient in plastic injection molding have instituted a force majeure, which has made the company buy inventory in advance due to potential shortages. Another factor is chip shortages which effects the company indirectly as parts are not being made for the cars until the companies can secure the necessary chips to produce a full vehicle. These delays cause significant problems in their expected sales versus actual sales.
Summary:
Angie Habs, the principal at PITS has asked you, Newbie Accountant to determine what types of issues Wuz Inc. is having and what are some potential solutions to the company. Exhibit 3 provides some additional information when reviewing the information and Exhibit 4 is expected sales for the balance of the year and increased expenses in some for informational purposes. You will need to include a SWOT analysis, consider critical success factors, as well as do a full analysis of the financial statements including a break-even as part of your assessment process.
Engineering Economy
ISBN: 978-0132554909
15th edition
Authors: William G. Sullivan, Elin M. Wicks, C. Patrick Koelling