1. Do you agree with the argument/logic that led API in 1962 to consolidate its European (continental) production into a single facility?
Yes, I agree with the argument given by Allyn and Bower to consolidate its European production into a single facility. The reason being is that firstly, Alden-Europe’s sales were growing at a rate in excess of 40% per year and therefore would be expected to quadruple by 1965. This forecasted sales volume was unable to be produced in the existing facilities as many of them were inefficient and were already operating near capacity and were difficult to expand. Expanding the existing facilities was difficult as it required greater investment in plant and equipment than API’s total existing investment in Europe; locating and training adequate managerial and staff personnel for the expansions was also not easy.
Secondly, Europe was moving toward free trade within the continent which would have eliminated the tariffs and discriminatory practices among member countries. Thus, consolidating continental production into a single facility was advantageous.
Moreover the risk associated with centralized manufacturing such as supply problems resulting from a plant shutdown or transportation/customs restrictions would reduce to a great extent because of the backup provided by the Buxbridge plant.
There were additional benefits of making a consolidated production facility such as it would be easier to balance production in a single, well designed and well managed plant than to do so independently in several smaller country-oriented plants. Other than that the cost of building a centralized manufacturing plant would be at least US$500,000 less than the cost of adding an equivalent amount of capacity to existing facility. The consolidated plant would also help Alden-Europe to reduce its reliance on outside suppliers and gain more control over