Cmi Case Study

Case Analysis Overview

Cumberland Metal Industries (CMI) is one of the largest metal manufacturers in the world. Thecompany evolved from selling metal as a finished product to one that used it as a raw material,increasing sales from $250,000 in 1963 to over $18,500,000 in 1979. Currently, CMI relies heavilyon SlipSeal, which is used as a high-temperature sealant in automobiles. Although CMI dominatesthe market for this product, corporate sales figures decreased over the last year. As a result, the management at CMI realized the importance of diversifying its product-line so that the company does not rely as heavily on Slip Seal or the automobile industry. With this in mind, CMI management was very interested in a new product that could be used as a cushion pad in pile driving. The cushion pads, consisting of curled metal, were superior in performance to the asbestos pads currently used throughout the industry. The curled metal pads lasted longer then asbestos pads and were easier to change. Furthermore, the growing concern over the health risks associated asbestos gave CMI's pads an added advantage. Government regulations prohibiting the use of asbestos or making them costly to handle, could push pile drivers towards CMI's cushion pads. The prospects prompted Robert Manicucci, the vice president of Engineered Products Division at CMI, to declare: Curled metal cushion pads seem to have more potential than any other product we've ever introduced. A successful market introduction could as much as double the sales of this company, as well as compensate for the decline of some existing lines. It almost looks too good to be true.

Problem

Thomas Simpson, the manager of the Mechanical Products Group at CMI, was excited about thisnew product as well. The pads offered CMI an opportunity to diversify its product line and increaseits sales volume. Furthermore, initial testing demonstrated the significant performance advantages of the metal pads over asbestos pads.Despite...