Nickel Belt Paving Case Study
Frank Lawson parked his pick-up truck on his driveway late one night after a hard day at his company, Nickel Belt Paving. Walking up to his front door, and pulling out the day's mail, he found the usual collection of advertisements, magazines, and personal letters. One letter, in particular, was from his good friend and cousin Don in Calgary.
Frank and Don had gone through grade school together and started a small paving company in their home town of Hamilton, Ontario. Although they had a successful business, over the years they had spent many hours together in heated debates about how a business should be run. Frank had little patience for Don's liaises-faire attitude when it came to running a business, while Don argued that Frank's fear of losing control, and his tendency to overwork himself, would eventually burn him out before he turned 40. Frank always stood by the motto, "If you want something done right, you need to it yourself." Although Don respected Frank's view, in May 2000, after 15 years in business together, they mutually agreed to go their separate ways.
In the early 1980's, Don moved out west and started his own paving company. He had always dreamed of retiring and buying a cattle ranch. After 20 successful years in business, he sold his company and did just that - he bought a ranch and now lives the life he always dreamed of. In 2000, Frank moved to Sudbury, Ontario and set up his own paving company, Nickel Belt Paving.
Nickel Belt Paving
Today, Nickel Belt Paving is a small, but a very successful business. For over twenty years, Frank has managed to build a reputation in the community and many would argue he was Nickel Belt Paving.
Frank, now in his early 60's, is the sole owner of the business. Unlike Don, Frank is the first to arrive at work, usually around 6:00 a.m., and is always the last to leave. He will often arrive home at 9:00 or 10:00 o'clock at night. Frank doesn't look like your average business owner; in fact, you might mistake him for one of the crew. He shows up to work in his coveralls, boots, and helmet, and works in the blazing sun with his team - shoveling, grading, and rolling. He is a very "hands-on" boss.
Frank's wife Martha runs the office. She handles the accounting, payroll, and marketing functions of the company. She is responsible for making decisions on things Frank doesn't care too much about. Computers, couriers, and office supplies are all her choice. If asked, Frank would not know the difference between a fax machine and a photocopier. Over the years, Martha has become quite familiar with the technical side of paving, but she knows when it comes to this side of the business, her input is not required. She is, however, always quite willing to share her opinions on people, employees, and the overall welfare of the business.
Frank's oldest son, Peter, 35, who began working with Frank when he was 18, is Frank's right-hand-man. Peter shares his father's ambition, and lately Frank has been looking to Peter more and more for information, advice, and leadership. Although Peter is happy in his current role, he looks forward to having his opportunity to take charge.
Frank's youngest son, Mitchell, 27, went to university and studied landscape architecture. He works in Nickel Belt's office as an estimator and company representative. He is the one who helps generate new business, submits bids, and oversees large projects. Frank often seeks Mitchell's advice when it comes to buying materials and pricing jobs. In the wintertime, when the snow arrives and the paving season is over, Mitchell joins Peter and Frank in snow plowing. This is a major part of Nickel Belt's business.
Frank has two other sons, John, 33, and Joe, 30, who are not involved in the company at all. They never really showed an interest. After working on the crew for a few summers in high school, they both decided it was not the career for them.
Elisabeth, 24, is Frank's youngest child and only daughter. Elisabeth works with Mitchell and Martha in the office and handles reception and other administrative duties. She answers the phone, receives packages, and helps her mother schedule different jobs for the crews. While Elisabeth enjoys her job, she is formally trained as a teacher and is waiting to get full-time work.
Nickel Belt employs twenty other people who make up three different work crews. Next in line to Peter, is Rick, who has been Frank's loyal employee since he and Don owned their company together in Hamilton. While Rick helps manage the crews, he always knows where his responsibility ends. Over the years Rick has learned to respect the fact that Frank is in charge; Rick simply follows orders. The other nineteen workers drive trucks, lay pavement, operate heavy machinery, and landscape. For the most part, they are all long-term employees. Turnover is not a big issue for Nickel Belt. Those who are fired, or who leave on their own accord, usually do so because they cannot work up to Frank's expectations. Those who stay are treated very fairly and are rewarded for their hard work and loyalty.
The Breakdown
As Frank walked into his house, he thought to himself, "What a long day it's been." In the middle of the workday, another loader[1] broke down. This would make three in less than a month.
Martha asked him, "What's the matter, Frank?"
He replied, "Another loader broke down today... and with two already in the shop for repairs! These XTR loaders are giving me a real headache." He grabbed a drink out of the refrigerator, sat down, and began shuffling through the mail.
"This will seriously delay our project. Unless we get a loader back from the shop tomorrow, we're going to have to rent one. I was going over the numbers with Mitchell, and he agreed if we have to rent for a long time, it's going to destroy any profit we hoped to make on this job".
Frank took a sip of his drink wiped his forehead and continued, "And what makes it worse is that Sellers guy won't get back to me. I've left him message after message - at his office, on his cell phone - and no reply. I've told him how important this is and if we don't get a loader back soon, we're going to be in big trouble."
Jim Sellers was the sales representative for the local XTR dealership. He sold Frank the three loaders that are now in for repair. At the time of the sale, he had done a good job of presenting the features and benefits of the new machines, and promised if anything ever went wrong, he would be there to deal with it. Even though the XTR machines were priced a little higher than most other brands at the time, this didn't matter much to Frank because he liked having machines that were widely regarded as being the best. He also enjoyed dealing with Jim. At one time, Frank had been a little irritated at Jim when he learned that some of his competitors, who purchased similar machines, received a somewhat better deal than he did.
Frank generally had good experience with the local XTR dealer. Until recently, they always provided good service. Two months ago, Frank noticed they were expanding into new product lines. At that time, Frank was somewhat surprised when he received a brochure highlighting new products designed for the agricultural market and an invitation to a demonstration at the Canada Outdoor Farm Show. Frank thought this was strange since he had nothing to do with farming, or agriculture in general.
Martha sat down beside Frank and said, "Well then, you probably don't want to see this," as she handed him a brochure for XTR's newest model. Stapled to it was Jim's business card with a hand-written message reading, Isn't she a beauty?
Frank did not hold brochures in very high regard. He did not think you could learn anything from a brochure. Rather, he liked to hear what people who actually used different products had to say about them. Frank and Don would often exchange thoughts on these types of matters. Don had owned XTR's and was very happy with them. Furthermore, when visiting Don one winter, Frank was able to try one. Frank also enjoyed attending machinery trade shows in the off-season. Once a year, he and Martha would fly to Las Vegas where North America's largest construction trade show and auction was held. This was a good way for Frank to evaluate new equipment while giving Martha a vacation at the same time. Sometimes he would actually make a purchase while he was there. At the most recent convention, Frank noticed the new XTR loader was chosen as the Mid-sized Machine of the Year.
Martha continued, "Jim dropped this off to Elisabeth today. He then went back and spoke with Rick. I have no idea what it was about. He left before I came back from the post office."
"You mean he was in the office today? And he didn't try to get in touch with me?" Frank began to show a little bit of frustration. "And he left this?" gesturing towards the brochure. "The nerve of that guy."
Martha replied, "Well, you did tell him you were interested in buying a new machine."
"But that was over a month ago. Since then, we've had two of his lemons in for repairs. And then today...." Frank huffed, "I'm going to bed. I'll deal with this in the morning."
Frank was considering buying a new machine because he had a lot of projects scheduled over the next few months that would place considerable demands on his current equipment. His initial reaction was to purchase the new XTR model because it had increased its horsepower and fuel efficiency, but he was also seriously considering TigerCat equipment, a brand he used extensively in his early days. There were other machines on the market, such as the Japanese imports Sumitomo, Matsui, and Komatsu, but Frank didn't know much about these brands and generally preferred to buy North American-made equipment.
The Next Da
The next day, Frank arrived at the shop, early as usual, and took a look at the day's schedule, knowing full well he would fall way behind by losing another loader. Frustrated, he took out the phonebook and began searching for machinery rental companies. About a half-hour later, Rick arrived.
"Morning, Frank. How's it going?" Rick asked.
"Was Jim Sellers here to see you yesterday?"
"Yeah," Rick replied. "He came to tell me two of your loaders would be ready tomorrow."
"He told you this?" Frank asked.
"Yes," answered Rick.
"Did he say what was taking so long?" Frank asked.
Rick replied, "Yeah, he said they were installing some new gadget. I think it allows you to locate and track your machines from a computer or something like that. It's some new fancy service they offer - in case your machines are stolen or if you want to find out where they're currently working."
"I know where my machines are. They're with me most of the day. And I know where they are right now, and they're not doing much good," Frank exclaimed!
XTR had recently established a new program to retrofit all older machines with new GPS microchips allowing them to be tracked by satellite. It was a way for managers to locate machines during the course of a workday, or recover them in case of theft.
"I've been trying to reach that guy for three days now and he hasn't returned my calls, but he comes in and talks to you? Unbelievable. What else did he say?"
Rick replied, "He said he would stop by next week with one of their new XTR's. He wanted me and Peter to check it out."
"Oh," said Frank. "I see."
When Elisabeth arrived at the office, Frank asked her to phone Brookfield Rentals and have a loader delivered to their work site as soon as possible. He also told her if Jim Sellers phoned or stopped by, to have him get in touch right away.
By this time, Frank was running late. He needed to get to the job site and coordinate the crew so they could get other things done before the rental arrived. If Frank disliked anything worse than broken machinery, it was watching workers standing around and doing nothing while on the clock. As Frank walked out back of the shop, he was startled from behind by Chuck Hustead, a sales representative for TigerCat equipment and a good friend of Mitchell.
"Morning, Frank! How's it going?"
"It's okay Chuck," Frank said as he continued walking towards his truck, arms full of plans, tools, and keys. "What can I do for you?" he asked.
"I was talking with Mitchell the other day and he mentioned you had some breakdowns with your XTR's. Not good! Those things are garbage. I don't know why you chose them in the first place. Anyway, I wanted to show you this brochure on our new TigerCat Claw, the newest model in our line of loaders."
"Thanks Chuck, leave it with Elisabeth and I'll have a look at it later," Frank replied as he started loading up his truck.
"Take it with you Frank. You can read it on one of your breaks"
"Right," said Frank as he took the brochure and hopped into his oversized white pickup truck.
"And when you get back to the office, be sure to log onto our Web site. https://www.tigercat.com. Okay? It has a neat flash plug-in that takes you through all the different configurations. Point and click and you can build your own machine. It's really cool.
Frank just looked at Chuck. After thinking to himself for a brief second he said, "I better go. I'm late for work. Talk with you later Chuck."
As Frank started the ignition on his truck, Chuck began to say something else, but the loud rumble of the diesel engine drowned him out.
"Sorry," said Frank over the noise of the engine. "Gotta go." He then drove off to the job site.
On his way to the site, Frank thought how much he liked TigerCat equipment. He had owned some of their earlier models before he bought the XTR's. He never had an issue with them, they were nice looking, and he knew several other construction companies who used them. He made a note on a scrap of paper to call Bob Daniels, a good friend and owner of a local construction company, to see what he thought about the new TigerCat Claw.
Frank regarded Bob as an expert in construction, and he often consulted with him on issues relating to business, equipment, and construction in general. Over the years they had done a lot of business together and developed a solid personal and business relationship.
On-Site Delivery
Frank arrived at the job site to find Peter directing the crew and keeping everyone busy. Frank was pleased. When Peter asked Frank where he had been, Frank replied, "Tied up."
About an hour later, a loader arrived on-site. Frank noticed the delivery truck was not from Brookfield, but rather from Sudbury Heavy Equipment, a new dealership located in town that sold Robinson machines. Robinson was a European line of construction equipment, newly reintroduced in Canada.
Out of the delivery truck stepped a young man, no older than Elisabeth.
"Mr. Lawson," he said.
"Yes," replied both Peter and Frank at the same time. They looked at each other and smiled
"Frank Lawson?" asked the young man again.
"That's me. You're not from Brookfield," Frank responded.
"No sir. My name is Dave Crawford, from Sudbury Heavy Equipment. I was in your office talking with your daughter Elisabeth the other day and she mentioned you were having some trouble with your loaders. I know you've been working really hard to get this project done, so I thought I would let you borrow one of our new Robinson models. I though it would give you a chance to see how it worked, and also help out your unfortunate situation. I hope this is okay."
"Well, thank you very much Dave. I appreciate the gesture."
"No problem, Mr. Lawson. You can have it until the end of the week if you would like. When you are finished, give me a call and I'll personally come out and pick it up."
"That's great. I'm looking forward to giving it a whirl," said Frank.
"Elisabeth said you might be anxious to try it out. She hinted you enjoy working with equipment hands-on. I think that's very admirable. Apparently, your appreciation of hard work really pays off. I've heard a lot of great things about you and Nickel Belt Paving. You actually did my grandmother's driveway many years ago. She remembers you well."
"We'll, we always try to do a good job," said Frank. "Thanks for the loaner. I'll take good care of it.
"No doubt," said Dave. "I'll be in touch with you in a few days. Is there a good time to call?
Frank replied in a somewhat joking voice, "Well, you might be asleep. I usually don't get done work until late. Probably not till 9:30."
"I'll call you at 9:30 in two days," responded Dave in an enthusiastic tone.
"Alright," said Frank in a pleased voice.
Later That Night
When Frank arrived home that night, he phoned Elisabeth and asked her how she knew Dave Crawford. If she was dating someone, he wanted to know about it. Even at 24, she was still his little girl.
Elisabeth told Frank, "He dropped by the office a couple of days ago looking for you and I told him you were out working. I said you're always working." She smiled, and then continued, "He then told me he was talking with Bob Daniels and Bob told him you had some breakdowns with your XTR's. He then asked if he could leave his card and follow up in a few days."
"Okay," said Frank.
"This morning, before I had a chance to phone the rental company, he called. I guess he was driving around last night and noticed another loader being taken away on a flatbed. He wanted to know if there was another problem, and if you received any of your other machines back from the repair shop. I told him you had another breakdown and needed to rent one this morning. That's when he offered to bring one of his loaders to the work site, free of charge. I checked with Mitchell, and he said you probably wouldn't be interested because you were going to buy a TigerCat, but when I asked Mom she said to give it a try. I hope that was okay".
"Yes dear. That was perfect."
Later that night, Frank called Bob Daniels to get his opinion on the new Robinson machine. Bob mentioned to Frank that he was looking at the Robinson line himself, but had some doubts because it was so new to the North American market and had yet to be thoroughly tested and proven. He also commented that he felt the XTR, TigerCat, and Robinson machines were all about the same in both price and quality.
Two Days Later
Two days passed, and Frank still hadn't heard from Jim Sellers, not even to follow-up on the brochure he dropped off. Elisabeth mentioned Chuck sent several emails to the office with links to a Web site.
Frank spent much of the evening working with the new Robinson machine himself to get a true feel for it. He liked the way it handled and the way it looked; however, he was a little confused by all of the electronic equipment in the cabin. He also wondered how expensive it might be to repair because it was an import.
Later that night at 9:30, Frank's phone rang. It was Dave Crawford. Frank told him how much he appreciated the nice thing he had done.
Dave replied, "I'm glad I could be of some help, Mr. Lawson. It was my pleasure. May I ask what you thought of the machine?"
Frank replied that it had performed very well. He was impressed.
Dave said, "Well, that's great. If you are ever interested in Robinson machinery, please feel free to give me a call. I'll be happy to meet with you at any time."
Frank replied, "Well, I might just do that. But what happens when the Robinson machine breaks down? Will I have the same trouble I'm having now?"
Dave told Frank that Robinson machines had an excellent service policy. If a machine broke down, Sudbury Heavy Equipment would bring a loaner to the site on the same day for as long as it was needed.
Dave said, "I know how important it is for you to limit your downtime. We recognize machine repairs are a fact of life, but we promise to stand by our products. Our goal is to help you be efficient, not just sell you a machine. Our guarantee is one way we can do this."
Frank like what he heard.
On his drive home, Frank though what a nice thing Dave had done. He was slightly concerned that he had little experience with Robinson equipment. He would have to ask Peter and Rick what they thought.
The next morning, Frank arrived at the office very early. He began looking through all of the different brochures he received from Jim and Chuck. He then went out back and looked at the Robinson loader, still on loan. A little later, Jim Sellers showed up.
"Hey Frankie! Sorry about your machines. We'll get them back to you ASAP. I promise. We've been having a little trouble installing all these new GPS tracking devices, but the parts just came in and they'll be installed in your machines later today. I thought you might want to get this all done in one shot, you know, so you wouldn't have to bring them back later for the retrofit. And listen, I know I haven't been the best at getting back to you, but getting all these new devices installed in all my customers machines has kept me running. And now I have all these new farmer customers. By the way, have you decided what you want to do with that new XTR model?"
"I certainly have Jim," Frank replied.
[1] A loader is a piece of construction equipment, similar to a tractor, with a large shovel on the front. It is used to move heavy materials from one location to another. The average loader costs $100,000.
Questions:
1. Nickel Belt Paving Case Study
Please Provide a Summary of Important Facts
This question may be answered in point form, but each point must be in complete sentences.
2. For this question, you will be asked to examine the type of problem-solving that is illustrated in the Nickel Belt Paving case.
Questions:
A. Is the type of purchasing in the case the Purchasing of New Equipment or A Modified Rebuy? Explain your answer.
B. Is the case an example of consumer buying, organizational (business) buying, or both? Explain your answer.