Atlantic Corp Case Study Atlantic Corporation One of America’s largest forest products/paper firms with sales of $6.5Billion in 1983 and a net income of $105 million. The case study revolves around Atlantic Corporation’s intention to add linerboard capacity. In order to achieve this goal, they started looking at viable solutions, including purchasing and acquiring mill and box plants instead of through construction and fabrication of new plants and equipment. This included the possible acquisition of Royal Paper’s “crown jewels”, that is, the Monticello mill and the corrugated box plants. Is the acquisition of Royal’s linerboard mill and box plants a sound strategic move? One of the solutions was to offer a purchase of Royal Paper’s …show more content…
Linerboard producers and Wall Street analysts expect the years following 1983 to have very good effects on the sales of linerboard due to strong demand, limited supply and negligible new capcity. The projected sales increase in linerboard is 7% as industrial production and real GNP increase with forecasted economic expansion; however the current linerboard industry will only increase by 1-2% leading to a projected price hike of 16% created by the difference between supply and demand. Linerboard makers are expected to operate at historically high levels of production as operating rates were forecasted to increase from 84% in 1982 to 99% in 1986. Profitability of the linerboard industry Despite the rise in operating rate in the linerboard industry, the prices are predicted to rise dramatically. This is because there are a limited amount of linerboard mills which cannot entirely cover the increase in demand. The high level of fixed costs and operating leverage combined with soaring prices ensure high profits for the linerboard industry. Synergy The acquisition of the Monticello mill will cover for Atlantic’s internal linerboard shortfall as the company is the only firm in the paper industry to be a net buyer of linerboard, at 150,000 tonnes of linerboard a year, from its
Standard & Poor lists Pall in the, “Industrial Machinery”, industry. Industrial Machinery companies have been taking advantage of the economic recovery and have been growing with year end improvements following the 2007 to 2009 economic recession. The growth, though, has been slowed down due to increasing concerns about global economic health and rising commodity prices. However, the low growth environment may prove advantageous for this industry in the next 12 to 18 months as consumer confidence increases and there are improvements in orders.This is indicated by the fact that the Purchasing Managers’ Index (PMI) (from the Institute for Supply Management), which shows the economic health of the manufacturing
Even though there were multiple problems, the huge expense of the expansion would be offset by profits resulting from the plan to modernize the plant. More specifically, the investment in the aluminum siding division was being prepped to be huge profit item for the plant.
What is more, through this investment the company reduces the potential risk. They don’t need to purchase raw material from the Shenandoah Mill, owned by a competitor. And have a stable supply of raw materials。
In 2014, SeaDrill’s limited 4 largest customers represented 56% of revenue, a 7% rise compared with 2012. According to the 2014 annual report of Seadrill Limited, 5 largest customers of the company account for approximately 63% of future contracted revenues (backlog). Due to the adverse economic conditions and SeaDrill’s limited customer base, SeaDrill’s clients are in position to negotiate better deals, which may include rights to terminate, repudiate or suspend their drilling contracts. For instance, Rosneft recently terminated the contract with NADL for the West Navigator, prior to commencement, and the remaining contracts between NADL and Rosneft are at significant risk of termination. In addition, SeaDrill was recently unable to conclude execution of contract extensions for the drilling units West Taurus and West Eminence in Brazil after the approval of such extensions by
I would support and recommend Perez to make investments to increase capacity and expand horizontally. The greatest competitive advantage of Celulosa Arauco is cost. I believe that Celulosa Arauco can take advantage of its low cost effectiveness and become a low cost leader in pulp. If Celulosa Arauco is consistently able to price their pulp lower, it will be increasingly difficult for vertically integrated companies to produce their own pulp in-house. In a commodity market it is critical to keep costs low by maintaining high production efficiencies. I would also recommend Perez to invest further in Research and Development, Forest Management and Genetics to improve the overall quality and life of plantations. Generating electricity from surpluses at the pulp mills will help it to reduce costs further. Concentrating a large amount of revenues from a single source (pulp) carries a lot of risk. Hence, I would recommend Perez to diversify into as many by-products as possible. The panels, timber and wood products market can create a buffer to maintain their margins when the pulp prices are volatile. Celulosa Arauco has an established distribution network including ports that plays an important role to reduce transportation costs. Integrating vertically into paper manufacturing will require different sets of skills and resources. Unlike pulp, paper is
For nearly 20 years, our team at Canadian Engineering Wood Products (CEWP) has acted as a powerhouse distributor for truss companies around the world. Over the years, we’ve become more than a distributor for our clients; we’ve become their partners. With our help, our customers can exploit business opportunities, that didn’t exist before their partnership with CEWP, including cost reductions, on-demand inventory management, and increased profits.
After getting his start in corrugated manufacturing as supervisor with International Paper, Gerald Mayfield went on to hold production manager positions with Raymark Container, the Smurfit-Stone Container Corporation, Temple Inland, and Norampac. During his tenure with Norampac, he reduced non-quality levels from 27,000 to 10,000 parts-per-million and reduced labor costs by 12 percent. He also oversaw a 22 percent boost in productivity in the company’s converting department. When he parted ways with Norampac in 2014, Gerald Mayfield was directing operations at three plants in New York and Connecticut as a regional production manager.
Synopsis and Objectives The owner of a midsize folding carton printer is considering the replacement of an old machine for cutting sheets of paper from rolls (a sheeter) with a new one. This standard capital budgeting analysis, which requires identification of both the relevant cash flows and the relevant discount rate, is enhanced by an alternative that is not explicitly stated but can be readily identified and analyzed—to outsource all sheeting and close down the sheeting operation. This alternative, which turns out to be financially optimal based on quantifiable case facts, forces students to consider strategic and other nonquantifiable
The market place shows no specific company dominating the market share and as a result Pure Line Transportation LLC has an opportunity to enter and fill the constant need for freight broker services as the economy continues to improve.
This haevily disguised case is set in the “nature “woodstoves business in 1986. It is not based on The Vermont Castings Company. The issue is product line strategy based on product line profitability.
Nucor’s financial statements indicate the fall of Gross profit margin in 2001. Even the sales are increasing (change is 11.7%), revenues are declining significantly (change is 7.6%) comparing to prior year. Worldwide excess of steel capacity have dropped composite sales price per ton for Nucor to $340. It was a big price-cutting because price per ton has been standing around $430 for the last five years. Therefore, Nucor’s projected EBIT for the year 2001 would be about 60% less than in 2000.
Ocean Carriers Inc. is a shipping company specializing in the operation of capsizes bulk dry carriers. In January 2001, the vice president of finance for Ocean Carriers was evaluating a contract proposal. In the proposed contract, Ocean Carriers would lease one ship to a client for a three year time frame. The customer would begin utilizing the ship in 2003. In 2001, Ocean Carriers did not have a ship that would meet the needs of this customer, and thus was considering purchasing a new capsize carrier to be leased to the customer. The vice president of finance for Ocean Carriers was also interested in looking at the corporate policy of scrapping a vessel after 15 years, even though such vessels have a product life of 25
Since this situation appeared to be a little unusual, William Kenton, manager of the Northern Division, discussed the wide discrepancy of bids with Byrch’s commercial vice president. He told the vice president, “We sell in a very competitive market, where higher cost cannot be passed on. How can we be expected to show a decent profit and return on investment if we have to buy our supplies at more than 10% over the going market.
Bodie Industrial Supply, Inc is a full service distributor of top line, brand name, new and used certified machine tools, maintenance parts and related equipments for the construction, utility and farming markets. The demand for equipment is relatively cyclical, with Bodies having a slight increase in sales to farming markets in the summer. Bodie’s has seen a huge sales growth increase in 2003-2004 of 72% and 29% in 2004-2005. This is mostly due to an increase in net sales and keeping a constant level of costs of goods sold.
In order to develop a future strategic decision plan we have assessed Crown’s business with a SWOT analysis, keeping in mind all issues Avery has to consider. That implies an evaluation of the different strengths, weaknesses, opportunities and threats of Crown Cork’s business. The analysis is as follows: • Strengths: Crown’s return on equity and total return to shareholders was ranked much higher than its competitors’, creating high value to its customers; Crown has a tremendous skills in die forming and metal fabrication, and they can move to adapt to the customer’s needs faster than anyone else in the industry; Crown’s research teams also worked closely with customers on specific customer