Question:
The Appleridge Company is a large manufacturer of capital goods. (The demand for capital goods typically swings up and down a great deal between good and bad economic times.) Business has been good lately and is expected to remain so in the foreseeable future. The firm is currently relatively labor intensive in its processes. The chief engineer, Mike Quickwrench, has suggested a major project to modernize and automate the plant. At the output level planned for next year, the project will reduce total cost by 10%. Mike has presented the idea to the management team in a totally positive light. The other executives are caught up in Mike’s enthusiasm and are ready to proceed. You’re Appleridge’s CFO, and feel that all sides of an issue should be discussed before it is approved. What concerns do you have? How would you present them in a way that keeps you from appearing to be overly negative?