Alden Products Inc.

European Manufacturing
Group 3
Akshat Sharma
Prabhdeep Singh
Mitesh Mohapatra
Mayank Jain
Jatin Gupta
Alden Products Inc.

Alden Products Inc, headquartered in Peoria

Premium Priced Personal Care Products (skin creams, lotions, soaps, deos)
Estimated Sales (1988) - $ 2 B
50 countries and 1500 products(more than half outside USA, mainly Europe)
Product Differentiation Strategy Innovation, High Quality, Unique Features
High Gross margins to finance R&D, Advertisement, channel support
Competitors P&G, Unilever, Gillette
Expected Sales growth of 7%
Alden-Europe
75% sales on continent, rest in UK
Sales French > Italy > Spain and Germany
2 Plants
Buxbridge, England for UK sales
Uniplant, Holland for Alden Europes EC subsidiaries
Uniplant
Large square shape of 40,000 sq. m. floor space
10 times inventory turnover, even higher finished goods turnover
12 high speed filling lines
Two 8 hour shifts, 5 days a week
Period between shifts for equipment maintenance and cleaning
300 m units per year, slightly under 90% utilization
420 employees (260 permanent production personnel, students as temporary workers)
Reasons behind consolidation of European
production into a single facility
Alden Europes Sales growing at 40% per year
Goal of free trade within Common Market countries
Consolidating production - load smoothening
Cost of centralized manufacturing facility less than adding capacity to existing
plants by $500,000
Less reliance on outside suppliers and more control on total costs
Savings of $1.8 m or 20% annual costs through economies of scale, fewer workers,
centralized purchasing of raw materials and containers
Higher quality and faster introduction of new products
Nijmegen, Holland access to raw materials, proximity to markets, labor costs, tax
rates, stability
Performance of Uniplant

Weathered a series of crises Explosion in petrochemical prices, basic

hourly wage, protracted series of European recessions
Not a single loss making year from 1970 to 1988
Average cost per unit up by 50% whereas Hollands cost of living up by 70%
Multiple suppliers acted as insulation to inflation
Avoided short production runs and discounts on low volume products
Complaints late deliveries, poor responsiveness to marketing inquiries
Allowed contract filling for subsidiaries like Italy
Overall we can say that performance of Uniplant was quite good despite
of higher wage rates than Buxbridge and exchange rate fluctuations
Recommendations to Mr. Genet
Capacity should be expanded at Uniplant
Reasons
Uniplants reluctance towards 3 shift schedule
Minimum Investment of Dfl. 500,000 per hectare compared to Dfl. 4,000,000
Cost of 40 million unit expansion New Plant ( Dfl. 30 m), Uniplant (Dfl. 10 m)
Less increase in employees for expansion, access to students, access to petrochemicals
and containers
Uncertainty about wage rates and exchange rates might affect French plant
Against Contract Filling
Deteriorated perceived quality of products and services
Increased cost of inspecting and coordinating
Giving part of production - gives away economies of scale
Giving 100% production irreversible, difficult to rebuild capabilities
Proprietary formulations and ingredients