--- url: 'https://www.fmjlaw.com/manufacturing-war-story-a-giants-demise/' title: 'Manufacturing War Story: A Giant’s Demise' author: name: Georgie Stocks url: 'https://www.fmjlaw.com/author/gstocks/' date: '2020-10-02T19:04:11+00:00' modified: '2021-08-10T16:04:44+00:00' type: post categories: - Article - Case Study - Thought Leadership image: 'https://www.fmjlaw.com/wp-content/uploads/2020/10/AdobeStock_254888185.jpeg' published: true --- # Manufacturing War Story: A Giant’s Demise *The below piece was written by [Jim Seifert](https://www.fmjlaw.com/professional/james-j-seifert/), head of our [Manufacturing ](https://www.fmjlaw.com/practice-area/manufacturing/)practice group. * If you have been following our [LinkedIn](https://www.linkedin.com/company/fafinski-mark-&-johnson-p-a-/) page this week, you know that in anticipation of today (Manufacturing Day 2020) I have been providing manufacturing lessons that I have learned in 36+ years of witnessing and counseling successful manufacturers. All four of the important lessons (provided below) were all learned in one particular story of an American giant that went from Fortune 500 to Chapter 11 in the matter of a decade. ## The Story An American manufacturer of construction cranes was founded in 1882 and was a critical source of engineering equipment for some of the greatest civil engineering feats in the 19th and 20th century including the Panama Canal, Mount Rushmore, and the St. Louis Arch, and was an essential builder of innovative cranes for shipbuilding during the first and second World War. It was a world-class company in every sense of the word from technical, materials, and engineering leadership to quality manufacturing and custom fabrication. In 1981, the company was a Fortune 500 company making $3.29 per share. At the end of 1982, it was still a Fortune 500 company due to its sales, but it had -$3.56 per share in earnings. By April 1990 the company declared bankruptcy. The story of this once glorious 100-year-old manufacturing firm holds these lessons that still apply today. ## What Happened? - The last great CEO of the company died and was replaced by someone not affiliated with the company. - In a matter of 12 months, the company’s principal crane market contracted by 85%. - The company had a well-known board and yet they were passive as a group. - Labor relations with the new management reached an all-time low. - Using public subsidies, the company relocated its crane business to a low-cost labor environment and lost essential institutional expertise. - Of the five operating divisions, there were no cost or operational synergies and no centralized supply chain. - The order to cash process was completely broken. - Banks and other sources of financing placed new restrictions and increased the cost of borrowing. - Perhaps most bizarrely, the company purchased a hardware franchising operation, a business it was completely unfamiliar with. ## The Lessons - **Culture is far more important than strategy.** Although the market for cranes took a dramatic drop, given the manufacturing expertise of the workforce, new markets could have been established but there was no cultural foundation to move the workforce in a different direction.   - **Detailed financial, pricing, and margin systems are critical **to identifying a failing product line.   - At least in the public company context, **a strong board is necessary** and must be, in practice, the boss of the CEO.  - **Innovation is the lifeblood of renewal.** One of the reasons the company failed is that crawler cranes were replaced by center pivot cranes and the company never understood the advantages of center pivot cranes-very much like how traditional car companies ignored electric cars.   ## Conclusion While this is a sad story of an American giant at the end of its life, the lessons it provides can apply to any manufacturer in any industry. Since it is MFG Day, I thought this story and its lessons would be helpful reminders as to how important it is for manufacturers to continue to evolve, plan, and build a trustworthy and cohesive team. MFG Day empowers manufacturers to come together to address their collective challenges so they can help their communities and future generations thrive, and I hope to continue to help manufacturers address the challenges through stories like this and the lessons I have learned throughout my career. ***If you have questions about the above, our ***[***Manufacturing***](https://www.fmjlaw.com/practice-area/manufacturing/)*** practice group is here to help. Please contact ***[***Jim Seifert***](https://www.fmjlaw.com/professional/james-j-seifert/)*** (Head of the Practice Group), at ***[***james.seifert@fmjlaw.com***](mailto:james.seifert@fmjlaw.com)***, ***[***Bob Fafinski***](https://www.fmjlaw.com/professional/robert-r-fafinski-jr/)*** (Shareholder) at ***[***robert.fafinski@fmjlaw.com***](mailto:robert.fafinski@fmjlaw.com)***, or ***[***Heidi Carpenter***](https://www.fmjlaw.com/professional/heidi-a-carpenter/)*** (Shareholder) at ***[***heidi.carpenter@fmjlaw.com***](mailto:heidi.carpenter@fmjlaw.com)***.*** [](https://www.addtoany.com/add_to/facebook?linkurl=https%3A%2F%2Fwww.fmjlaw.com%2Fmanufacturing-war-story-a-giants-demise%2F&linkname=Manufacturing%20War%20Story%3A%20A%20Giant%E2%80%99s%20Demise)[](https://www.addtoany.com/add_to/twitter?linkurl=https%3A%2F%2Fwww.fmjlaw.com%2Fmanufacturing-war-story-a-giants-demise%2F&linkname=Manufacturing%20War%20Story%3A%20A%20Giant%E2%80%99s%20Demise)[](https://www.addtoany.com/add_to/email?linkurl=https%3A%2F%2Fwww.fmjlaw.com%2Fmanufacturing-war-story-a-giants-demise%2F&linkname=Manufacturing%20War%20Story%3A%20A%20Giant%E2%80%99s%20Demise)[](https://www.addtoany.com/add_to/linkedin?linkurl=https%3A%2F%2Fwww.fmjlaw.com%2Fmanufacturing-war-story-a-giants-demise%2F&linkname=Manufacturing%20War%20Story%3A%20A%20Giant%E2%80%99s%20Demise)