The day after a February 2013 board meeting, Donald C. Jr. (Van), the fourth-generation CEO and president of Plymouth Tube Company, met his daughter Stacy, the finance administrator and the only fifth-generation member in the business, at the office. They were trying to figure out the best way to gain board and family shareholder feedback for a substantial expansion of their Hopkinsville, Kentucky, plant for the aerospace market. A $17 million Phase I expansion was nearing completion. At the meeting, management had proposed a Phase II investment of $63 million. The opportunity had been under consideration for over a year, and the project would take three years to complete, so management wanted to reach a decision soon.

Plymouth had the strong competitive advantages of innovation and quality in the aerospace market segment. Van, age 64, felt that Plymouth could dominate this market by acting soon. If we dont do this, eventually a competitor will, he said. Stacy was eager to support the strategic vision of her father and agreed, but inside she felt it might to better to look into other market segments as well, as she felt there were other interesting opportunities available for Plymouth.

This was the largest outlay Plymouth had ever considered making in absolute dollars, though in the 1980s and 1990s Vans father had made significant investments that were comparable for their time. Van felt it would be a great investment in the future of the family and would maintain the vitality of the company in the long term. If Van followed the same career path as his father, he had eight more years (until age 72) to manage the business and oversee this opportunity, assuming his vigor and interest continued. Van had not yet formalized a personal succession plan.

Management was overwhelmingly in favor of the project, though some managers preferred a less aggressive initial investment of $48 million, which would grow once income was generated. The sales team was eager to start. Van thought the endeavor aligned well with Plymouths corporate mission. While he assessed the risk of failure as low, he identified a few possible, but unlikely, downsides.

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The expansion could result in lower-quality products; it might cause Plymouth to become too dependent on the aerospace industry; or it could detract attention and resources away from the rest of the companys plants, products, and markets. Van thought that his 88-year-old father, Gramps, who was at his last board meeting as a member and chairman, seemed mildly in favor of the project.

A non-family board member observed of the February board meeting, Even though the board tremendously valued Vans insightfulness of what Plymouths customers wanted going forward, the independent directors pushed back at the sales forecasts, and challenged the strategic direction. We knew that 2011 had been a great year for Plymouth, but 2012 had been less so, and 2013, barely begun, might continue on that trajectory. Some felt that it was time to consider more focus in other directions such as the medical, energy, or water industries.

One board member said to the presenters, Tell us why this is the way to go now. The head of sales answered, We asked our aerospace customers and this is what they said they wanted from us. A board member countered, Of course customers want this, wont they always say that, when it is not their risk? Another board member added, This is a huge investment that could be putting all our eggs in one basket and leave little capital left for the other locations serving other industries. Van had not expected such reluctance from the board; the numbers looked good, customer demand seemed strong, and Hopkinsville was well positioned to own the opportunity. The board members concluded the meeting by asking Van, Can you get feedback from the family shareholders on this?

Plymouth Tube Company

Plymouth Tube was a specialty manufacturer of globally marketed precision tubing for the aerospace, desalination, medical, mining, energy, and water industries. Comprising thirteen plants in seven U.S. states (Illinois, Indiana, Kentucky, Louisiana, Maryland, Missouri, and Wisconsin) and 770 employees, Plymouth Tube was family-owned under fourth-generation (G4) leadership by Van. He had been with the business since 1975, and took over as CEO from his father in 1996. Sales in 2012 were about $240 million, with net income at about 6 percent. Long-term debt was $14.5 million and there was some concern about how this expansion would be financed.

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The board met quarterly, and as of the February 2013 meeting was composed of eight people - five non-family and three family members. Non-family board members were first added to the board in 1993. Each of the three family board members attended the February meeting: Gramps; Van; and Amy, Grampss oldest daughter, who had an MBA and twenty years of experience at Plymouth developing and systematizing the HR function. In 2009 she moved with her husband to California and switched careers to become a personal trainer. Amy got along very well with Stacy, her niece, and they shared a philosophy that Plymouth should look at ways it could start giving back in the communities where they were located.

Business and Family History

In 1919 Vans great-grandfather Herbert founded Service Steel, a tubing distributor. In 1924 Vans grandfather, Donald (Don 1), founded Plymouth Tube, a corporation for resizing surplus steel warehouse inventory. In 1929 Herbert died unexpectedly, leaving Don 1, then 31 with a wife and two preschoolers, in charge of both businesses. After World War II, Don 1 expanded Plymouth by purchasing a government-owned war-effort steel tube manufacturing plant. Don 1s two children, Gramps and Dave, both joined the business. In 1952, when Gramps was only 27 with two toddlers and another child on the way, Don 1 died of a terminal brain tumor. After some tough years Gramps bought out the shares of his brother Dave and became the owner of Plymouth.

From the early 1990s to 2003, Plymouth financed growth with steep debt, and this made management, board members, and family owners very uncomfortable. In 2005 the board decided on aself-imposedadebtceilingandby2011,Plymouthhadreduceditsdebtsignificantly. But,bylate 2012, due to the large investment in Phase I and weak business conditions, debt had risen again.

As of 2013, there were twenty family members involved, fourteen of whom were Plymouth shareholders and six of whom were spouses. There was one G3 shareholder (Gramps); four G4 shareholders (siblings Van, Amy, Barbara, and Linda, ages 57 to 64); and nine G5 shareholders (nine grandchildren, five boys and four girls, ages 19 to 36). Of Grampss daughters, one was a retired teacher, one (Amy) was a personal exercise trainer, and one a tutor.

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Family Involvement

All four of Grampss children began active involvement as shareholders in the 1980s, when they were in their twenties and thirties. They attended seminars, conferences, and programs covering family business related topics; joined family business groups; and met with attorneys about estate planning. All G4 members had spent time on the board. Vans three sisters all expressed their thoughts that Plymouth should be a socially responsible company and consider ways of giving back in the communities that it served.

In 1974 Gramps held 100 percent of Plymouths ownership. As of 2013, he held about 6.5 percent of the shares; his four children held about 45 percent; and the nine grandchildren owned or were the beneficiariesof48.5percent. In2008thegrandchildrenattendedthefirst-evergatheringofonlyG5 shareholders. Stacy and her first cousin Julia initiated the effort to educate the cousins about the responsibilities of ownership and the privilegesof wealth attained as family shareholders. Stacy authored and disseminated a Plymouth Tube Company handbook that contained details of the business and information on the role of shareholders, taxes, wealth, and social responsibilities.

Stacy recalled, When driving away from the family meeting in fall 2007, I asked my dad if there was a reference guide for all of the terms related to the business and industry that I didnt understand, and assumed others of my generation didnt either. He said such a document didnt exist, but I could propose to create one. So I submitted a plan to Dad and Aunt Amy to create a guide for family members to become better informed shareholders, and it was accepted.

In addition, twice a year, family members who did not serve on the board gathered at the same location as the directors. After the regular Friday board meeting, non-board shareholders of all ages and their spouses met with the independent non-family board members for a 90-minute closed session about the business. This was done so that the family could discuss the business and hear perspectives different than those of management. Family members provided a list of about twelve discussion topics from which the independent board members could choose three. Family members could also propose specific topics before the meeting.

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Stacys Roles

Stacy, 30, first considered the part Plymouth might play in her life at age 12, when her father Van became its president. She wondered how his promotion would affect her, and asked him if employees would point to herwhen she visited and say, Oh my gosh, is that the presidents daughter? All of the G5s were encouraged to first be your own person and to seek employment elsewhere before considering a role at Plymouth. After graduating from Occidental College in Los Angeles with a degree in psychology in 2006, Stacy worked for five years in California in a variety of industries, includingtutoring,filmproduction,andlaw. HertimeinthewestoverlappedwithherAuntAmyandthey met often and spoke about Plymouth and its direction as a company.

She returned to Illinois, joining Plymouth in 2011 in support services, and was promoted in 2012 to her post in finance administration. After she wrote the shareholder handbook, family members often asked her to take on projects, which she enthusiastically accepted. Within the past year Stacy started to speak more often with her father Van about the overall strategic direction of the company. In addition to this, she became the de-facto leader amongst the entire G5 generation and her cousins made suggestions to her all the time regarding the direction of the company. These ranged from getting involved in industries such as car racing and even space exploration. These were exciting conversations, and energized her to think about her own future role within Plymouth.

Moving Forward

The day after the February board meeting, Van directed management to tailor the presentation it had made to the board for family shareholders, and to be ready to present it at the May family meeting. Van was starting to feel apprehensive about the May meeting already, would the board push back on the cost of the expansion and the focus on aerospace? He thought of all of the success the family had built in the aerospace industryandothermarkets. StacyreflectedonherfuturerolewithinPlymouthandtheenthusiasmshe felt from her G5 cousins when talking about new ideas and directions for the company. Like many of her generation, she also wondered how Plymouth could become a more socially responsible company. Both Van and Stacy realized it was time for some important decisions.

1) Entrepreneur (5 points)

Assess the key family members as Entrepreneurs, noting the psychological motivations of entrepreneurial behaviour, and the common themes, attitudes, and ways of thinking of successful entrepreneurs as applicable to them. (Maximum of 400 words)

2) Financing (5 points)

The family has successfully gotten through some tough financial times, but will need to consider some financing for the expansion and to continue growing. Describe and make recommendations to them on how they should look for more financing, and of the various issues they should consider. (Maximum of 400 words)

3) Growth (5 points)

Please list and describe the main stages of growth and provide recommendations to the family on how they should manage the implications of further growth. (Maximum of 400 words)

4) Social Entrepreneurship (5 points)

Stacy is interested in how Plymouth can give back, discuss this in the context of social entrepreneurship and provide recommendations to the family on how they might proceed in the future. (Maximum of 400 words)

5) Family / Succession (5 points)

As Van and Stacy reflect on their futures, discuss the various issues related to family enterprising, and provide recommendations to them on succession planning as Van will eventually reduce his role in the company. (Maximum of 400 words)