CJ Industries and
In October 2007, CJ Industries (CJI) had just been awarded a 5-year contract with
Great Lakes Pleasure Boats amounting to U.S. $10 million per year, commencing in July
2008. CJI would be providing a number of key engine components for Great Lakes’ luxury
line of pleasure boats. The award marked an important milestone for CJI, in that it was
the culmination of several years of hard work and dedicated service, supplying Great
Lakes parts for their boats on an as-needed basis. The contract had significant longterm
follow-on potential as well, if they could continue to show Great Lakes they had
the capabilities to be one of their valued, alliance ...view middle of the document...
The new demand for bilge
pumps starting in July would be 50 pumps per month, and potentially more, depending
on Great Lakes’ demand, and the ability of CJI to perform on the contract.
There were a number of issues that Nik Grams, the purchasing manager who put the
contract together with Great Lakes, needed to work out with both Heavey and the production
manager at CJI, in order for this contract to be met with as few problems as
possible. The issue with Heavey Pumps was whether or not they could guarantee delivery
of 50 pumps per month to one of the CJI warehouses. This had been the one item that
had “slipped through the cracks” on the contract with Great Lakes, and it now loomed as
something that could conceivably put the contract in jeopardy. There were potentially
additional equipment, labor, and other production costs for Heavey associated with the
extra demand for bilge pumps, not to mention extra delivery costs as well. Heavey had
been a reliable supplier for CJI for a number of years, but nothing else had ever been
purchased from them. In addition, because the demand for these pumps was rather low
and the deliveries were sporadic, no performance records had ever been kept for them.
Mr. Grams had also not known specifically about the quality history of the Heavey bilge
pump, although he could not remember ever getting one returned by Great Lakes for
any reason. Up until now, the pump issue did not seem like anything to worry about.
Another possibility for CJI would be to make these pumps in-house. Nik Grams knew
that CJI had the capability to make this pump, but it would require an initial capital