Planning: Organizing Reports (Analytical Reports) [LO-2] Three years ago, your company (a furniture maker) modernized its Staffordshire (the United Kingdom) plant in anticipation of increasing demand for a new range. The depressed housing mar- ket has meant that an increase in demand for furniture has been slow to materialize. As a result, the company has excess capac- ity in both its Staffordshire and Essex (the United Kingdom) plants. On the basis of your research, you recommended that the company close the Essex plant. G.J. Ballard, the company President, has asked you to prepare a justification report to sup- port your recommendation. You have gathered the following facts by interviewing the respective plant managers:

Operational Statistics

Staffordshire plant: This plant has newer equipment, has higher productivity, employs 100 non-union production staff and pro- duces 15.5 million of sales in a year. The average hourly wage is 16.

Essex pant: This plant employs 90 unionized production staff and produces 10 million of sales in furniture each year; The average hourly wage is 18. Financial Implications

Savings by closing the Essex plant: (1) Increase productivity by 15 percent; (2) reduce labor cost by 19% (total labor savings would be 1.2 Million per year; see assumptions); (3) annual council business tax decreases by 300,000 (Staffordshire business rates are lower)

Sale of the Essex site: purchased in 1955 for 70,000; current valuation is 1.75 million. Net profit after costs paid greater than 1.4 million.

Sale of plant and equipment: Fully depreciated; any proceeds a windfall

Costs of closing Essex plant: One-time deductible charge of 400,000 (relocation costs 150,000 and severance payments totaling 250,000)

Assumptions:

Transfer 10 workers from Essex to Staffordshire Hire 35 new workers in Staffordshire Lay off 80 workers in Essex The Staffordshire plant requires 145 workers to produce the combined volume of the two plants.

QUESTIONS: 1. Write a plan for this report paying attention to the organization so that it satisfies the needs of your audience. 2. Re-write your plan assuming the president has approved

the concept and wishes you to write the report for man- agement teams of each plant.

3. Write an outline of the potential risks of writing a poor report in this case. 4. Summarize the points in both reports that you could fairly emphasize if asked to write a report for the press in Essex.