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Bridgeton Industry, Automotive Component & Fabrication Essay

1.Industry and its relevant characteristics. As the original plant of Bridgeton Industry, Automotive Component & Fabrication (ACF) supplies the most components to the U.S automotive industry. The plant has a long history that was established in 1840s and the site developed by several industrial uses. ACF could be the leader of the whole industry because the Big- Three automobile manufacturers are the ACF main customer, which bought the whole production of ACF.

2.Competitive environment Although there are some competition mainly from local suppliers and other Bridgeton plants in domestic, ACF was still considered to be advantaged as the automotive market and US automotive industry dominated. But it was not that optimistic when the competition from global and domestic loss of market share happened.

3.Products and production processes. During the 1987 model year, products were analysed and classified to different classes based on their quality, customer service, technical capacity and competitive cost position by a strategic consulting firm and it concluded that: Class I-fuel tanks; Class II-Manifolds, front and rear doors; Class III- Muffler-exhaust systems and oil pants. For producing fuel tanks, firstly six stamping lines from coated sheet metal are used to place those, and they automatically seam welded followed by placing together.

Manifolds: a highly automated production process is used to produce stainless steel exhaust manifolds. And the parts are robotically welded after being loaded. The highly advanced system is disadvantaged in cost. Front and rear doors: those are the doors for vans. Four press lines with six presser per line in maximum are used to produce. Muffler-exhaust systems: sheet metal that is bet to shape is used to form those and robotically welded afterwards. Oil pans: it means small steel stampings are produced on two lines with one press each contained.

4. Description of the old cost system. The overhead was allocated using a predetermined rate of percentage of direct labour cost and it used a single overhead pool.

5. Possible problems with the old cost system. Overhead was allocated using a predetermined rate of percentage of direct labour cost would be subject to some fluctuation. Sometimes it could not reflect the true cost as not every model year has the same percentage overhead of direct labour cost, so end of period adjustment is needed. As ACF’s production is various, using a single overhead pool could not reflect all the cost driven by different cost drivers.

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