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1) What went wrong at B&W? How management errors in judgment cause all the problems?

1) What went wrong at B&W? How management errors in judgment cause all the problems?

Understanding Business
Understanding Business
12th Edition
ISBN:9781259929434
Author:William Nickels
Publisher:William Nickels
Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment
Section: Chapter Questions
Problem 1CE
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EVERYTHING WENT WRONG WHEN THE VENERABLE BOILERMAKERS TURNED TO BUILDING PRESURE VESSELS FOR ATOMIC REACTORS. THE WHOLE ELECTRIC-POWER INDUSTRY FELT THE CONSEQUENCES. The long-awaited transition of the US electric-power industry into the nuclear age has been slowed by a number of factors, including technological difficulties and public resistance. But a specific and unexpected cause for delay has been one company's crucial failure to deliver a single vital component of nuclear power plants. The failure, basically, was a management failure and on a scale that would be cause for concern even in a fly-by-night newcomer to the nuclear industry. The company, however, was no newcomer. It was proud old Babcock & Willcox Co..., a pioneer of the steam generating business whose boilers were used in one of the first central power plants ever built (in Philadelphia in 1881). Babcock & Wilcox had an impressive $648 million in sales in 1968, making it 157th on FORTUNE's list or 500 largest industrials, and it has been engaged in nuclear work in a major way for fifteen years, producing, among other things, atomic power systems for US Navy submarines. Moreover, the corporation is one of only five that are engaged in building nuclear power plants in the U.S. With consumption of electricity growing by nearly 10 percent a year, the utilities are counting heavily on the new nuclear stations to avoid brownouts and power failures in the years ahead. Poor performance at Babcock & Wilcox is thus one of those problems that could send ripples through the whole economy that contain All of B & W's troubles involve a single product nuclear pressure vessels. These are the huge steel pots - some are more than seventy feet long and weigh more than 700 tons atomic reactions. They must meet rigid specifications set by the Atomic Energy Commission, and B & W built a $25 million plant at Mount Vernon, Indiana just to fabricate them. Cockily sure that the Mount Vernon plant would operate as planned. B & W sold its entire projected output of pressure vessels for years ahead. But nothing seemed to go right at Mount Vernon. Plagued by labour shortages and malfunctioning machines, the plant produced just three pressure vessels in its first three years of operation. Late 1968, after the production snarl reached horrendous proportions, a vice-president responsible for the Mount Vernon operation committed suicide in a bizarre fashion. Question 1) What went wrong at B&W? How management errors in judgment cause all the problems?
Transcribed Image Text:EVERYTHING WENT WRONG WHEN THE VENERABLE BOILERMAKERS TURNED TO BUILDING PRESURE VESSELS FOR ATOMIC REACTORS. THE WHOLE ELECTRIC-POWER INDUSTRY FELT THE CONSEQUENCES. The long-awaited transition of the US electric-power industry into the nuclear age has been slowed by a number of factors, including technological difficulties and public resistance. But a specific and unexpected cause for delay has been one company's crucial failure to deliver a single vital component of nuclear power plants. The failure, basically, was a management failure and on a scale that would be cause for concern even in a fly-by-night newcomer to the nuclear industry. The company, however, was no newcomer. It was proud old Babcock & Willcox Co..., a pioneer of the steam generating business whose boilers were used in one of the first central power plants ever built (in Philadelphia in 1881). Babcock & Wilcox had an impressive $648 million in sales in 1968, making it 157th on FORTUNE's list or 500 largest industrials, and it has been engaged in nuclear work in a major way for fifteen years, producing, among other things, atomic power systems for US Navy submarines. Moreover, the corporation is one of only five that are engaged in building nuclear power plants in the U.S. With consumption of electricity growing by nearly 10 percent a year, the utilities are counting heavily on the new nuclear stations to avoid brownouts and power failures in the years ahead. Poor performance at Babcock & Wilcox is thus one of those problems that could send ripples through the whole economy that contain All of B & W's troubles involve a single product nuclear pressure vessels. These are the huge steel pots - some are more than seventy feet long and weigh more than 700 tons atomic reactions. They must meet rigid specifications set by the Atomic Energy Commission, and B & W built a $25 million plant at Mount Vernon, Indiana just to fabricate them. Cockily sure that the Mount Vernon plant would operate as planned. B & W sold its entire projected output of pressure vessels for years ahead. But nothing seemed to go right at Mount Vernon. Plagued by labour shortages and malfunctioning machines, the plant produced just three pressure vessels in its first three years of operation. Late 1968, after the production snarl reached horrendous proportions, a vice-president responsible for the Mount Vernon operation committed suicide in a bizarre fashion. Question 1) What went wrong at B&W? How management errors in judgment cause all the problems?
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