Fraser River Plastics Ltd.
The Canadian plastics processing industry:
- In 1993 there were over 1,400 firms in Canada.
- Most of them located in Ontario and Quebec.
- Majority had sales of less than $2 million
- Meeting Canadian demands
Free Trade agreement between Canada, the US and Mexico result in significant downward presuree on world prices
In the fall of 1984, two Vancouver, British Columbia, businessman, Herber Rudd and Oliver Farthingham, visited Portland, Oregon, on a tour sponsored by the Vancouver Board of Trade.
They visited Damian Plastics Inc.
Cause of drawing attention:
They felt that there was a ready market in Canada, Because:
- They would have a competitive edge over comparable but more expensive plastic products and they could be used instead of their metal counterparts.
Tentative licensing agreement for technical assistance from Damian and access to all mould designs.
Raising the fund
First facing problem was to raise the$160,000 equity needed to build a plant and get into operation.
On December, 1984 the company was incorporated under the name of Fraser River Plastics Ltd.
Its three major Share holders were:
- Farthingham ( 20 percent) à President
- Wickham-Jones ( 18 percent ) à Vice President
- Rudd ( 13 percent ) à secretary-treasurer
Site allocation and facility set up
- Tenders were called on the building’s construction in Feb 1985.
- Manufacturing equipment was ordered.
- Three officers hired on a part-time basis to run the company.
- Gunther Heinzman was hired as general manager of Fraser River.
In August 1985, production began.at Chilliwack.
Consequences of Production:
There was a ready and substantial demand for the products.
- The price, although high, was accepted.
- Through 1986, the company’s operations expanded dramatically.
- To cut transportation costs, Fraser River purchased an empty plant in Calgary, orderd equipment, and hired a general manager to take charge there.
Franser River’s Response:
Reorganization of Marketing
Need for greater continuity, consistency and detail in the top supervision of overall operation.
Lucas Feed was hired for the position of marketing vice president.
He claimed that
There was no stiff competition from new entrants.
- The company needs more structure and policies in the administration.
- At Calgary, there was a need the price list, so no one in the marketplace-including our customers-knew what the prices of the products were from one day to the next.
- There was no collectio policy for the company and there was a high turnover in sales personnel.
He give the solution:
- He restructured the sales organization.
- He set up the company’s first sales forecast and budgets for each territory and established a reporting system so that salespeople knew how they and their region were doing on a monthly basis.
- He even instituted an advertising budget.
Acquisition of new plant
Throughout 1989, the company continued to grow. Demand was strong and prices were reasonable.
In this year two acquisitions took place:
Beaver Plastics: Reasons for acquisition:
Simcoe Plastics: Reasons for acquisition:
Results in: The most operational change involved in production of plastic coated wall coverings hoped to take up the apparent slack in Simcoe’s manufacturing.
Problems in recovering compensate
Corporate Headquarters Organization Chart
Fraser River Corporate Structure
At Calgary plant, it had experienced no stiff competition from new entrants.
At the beginning structure and policies in its administration was not well organized. ( Dispersed nature of responsibilities among the company’s executives should be focused in the hands of a single chief executive.).
At Calgary plant, the sales manager had no fixed sales price and price list. (Customers/ salespeople do not know about..)
There was no fixed collection policy and there was a high turnover in sales personnel.
There was a ready market in British Columbia for Plastic products of new design with reasonable price.
The plastic product would meet Canadian demand, western market demand as well as seek the opportunity to crate market in lesser developed countries(LDCs) in Asia.
Would have opportunity to form joint venture limited partnership with other company to invest in LDCs.
Injection Moulding Manufacturing
Extrusion Moulding Plastics(pipe)à Beaver Plastics
International Joint venture
Calendering Manufacturing(Rain coat, Shower curtain) à Simcoe Plastics
Day by day progress of some plants of Fraser river was becoming sluggish and British Columbia market for extruded pipe was saturated and extremely competitive.
In the middle of the growth of the business, the firm was engaged in acquisition of new plants without making the proper planning for the overall structure of management.
Controlling and reporting was not centrally controlled, thus causing missing the offset and other benefits.
Cross functional and cross departmental decision was not well established.
While engaged in acquisition, inefficiency occurred due to the inexperienced managerial role and waste factor.
EXECUTIVE LOOKS TO FUTURE
Oliver Farthingam: Chairman of the board
Eleanor Wickham-Jones: President