Cumberland Metal Industries Case Study

Cumberland Metal Industries Case Study

Introduction

Cumberland Metal Industries was one of the largest manufacturers of curled metal products in the US by 1980. The company originally produced components for highly technical application and processes. However, early on, there was a shift in their production philosophy, as they started to develop products that used the metal as a raw material (instead of selling it as a finished product).

By the mid 1970’s, the company had acquired a dominant position in the EGR valves’ market and had become extremely reliant on that product and related industry. It’s in this context that the curled metal pads appeared, as a promising new application of that technology, offering a way for the company to diversify their product portfolio.

The challenge for the company’s management was to understand how this new and unexplored market would work, how to market and price their product.

Analysis

The fact that this represented an unexplored market posed some interesting challenges to the company. While they were able to gather some data, there were some inconsistencies, namely on both product tests done by the Colerick Foundation Company and Fazio Construction.

Additionally, most of the information available was related to a specific range of the product, the 11.5’’ cushion pads, and that caused some issues trying to understand the optimal strategy to bring those products to the market. Assessing the market size was also an issue. The estimates, as we’ll see, weren’t conclusive.

There were a few elements of this analysis, however, that were clear. Namely, the fact that it was an unexplored market would open up incredible growth potential for the product and for the company. Still, it was important to have a clear strategy in shaping the market. Previously, the pads being used were even unbranded and “manufactured and cut by small, anonymous job shops”. Also, if you add that to the fact that there were no clearly defined...