Marlin Steel traditionally made wire baskets for the deep frying or boiling of food, such as French fries and bagels. The firm used to employ a largely unskilled workforce, and would supply the catering industry on a bulk basis, competing on cost grounds. Prior to the transformation of the organization, the firm would typically charge $6 per basket; relatively low pay for workers made the operation viable on this cost basis.
Two major issues undercut the basis of the firm’s competitiveness. First, the Atkins diet and other fad diets in the US led to a reduced demand for foodstuffs that were high in carbohydrates, leading, in turn, to lower demand in the catering industry. Second, new competitors emerged in China, who were able to offer wire baskets sometimes for less than the cost of the raw materials. The firm was looking at a bleak future.
The situation changed dramatically when the firm secured an order from a major passenger aircraft manufacturer who wished to purchase a very small number of metal baskets suitable for dipping a key component into a tank of coating. The manufacturer wanted the baskets to be of an exact specification, but was, in turn, willing to pay a premium for this. A very much higher price was agreed per basket than what the catering industry would be willing to pay.
Word got out among premium manufacturers of precision goods, most notably in the automotive and aerospace industries, as to the suitability of the baskets for a wide range of uses in the process of production, and the willingness of Marlin to supply a high-quality product according to the exact needs of the client. Marlin branched out into wire forms and precision sheet metal suitable for a very much wider range of industrial usages. However, many of the new customers did not want to go to the lengths of supplying exact specifications themselves, but asked Marlin to do this for them, simply supplying details as to the process and components involved. In turn, this forced Marlin to hire engineers, with some 20% of the workforce now being qualified mechanical engineers. The company soon increased the wages and upgraded the skills base of the remaining workforce. The adoption of robotics enabled very high precision, further enhancing demand and actually allowing the firm to increase its workforce. A low-paying organization composed mostly of unskilled workers had been transformed into a high-paying organization with many skilled workers. Even basic administrative jobs such as dispatch now accrued premium wages: high-paying customers wished to be assured of the most reliable delivery schedules.
Q1. How central was strategic HRM to Marlin’s transformation?
Q2. Would the organization’s new approach to people management be suitable for all organizations? Why or why not?