CASE

Columbia Industries, Inc.

Columbia Industries, Inc. (CI) was established in 1948 in Vancouver, British

Columbia. It quickly grew to be the largest manufacturer of code-approved products
to the construction industry for the purpose of connecting, adapting, reducing, and
repairing pipes used in sewer and drain waste applications. CI product line included:
couplings, flex-seal couplings, large diameter repair couplings, inflatable plugs, and
a broad array of specialty couplings. In. 1994, it opened a branch in Toronto and
subsequently expanded internationally by opening another branch in Los Angeles,
California, in 1997. The company employs over 9 50 people (5 50 people in Vancouver)
and has annual sales of approximately $176 million ($102 million in Vancouver). The
majority of its customers in served through a large network of specialized distributors,
supply houses, and mass merchandisers.
On September 16, 1999·, there would be a final meeting between the Plant
Manager, the Industrial Engineer, and the Plant Engineer of the Vancouver
operations. The meeting was expected to generate a sfinal recommendation to the
company's general manager about the acquisition of seven new lift trucks. Lift trucks
were used to move finished pallets of couplings, ceramic pipes, rubber hoses, and
other production materials to and from the warehouse (see Exhibit 1).
The need to purchase new lift trucks had first come to their attention when the
head mechanic, who was also the plant union leader, formally submitted the com-
plaints of the lift truck drivers concerning the safety and performance of the Hyster
lift trucks. They were concerned about the stability of the lift truck when it had a full ·.
load and the mast was fully extended to reach the 260-inch top shelf in the warehouse.
A driver had recently experienced a near accident when lifting a roll of ceramic pipes
to the top shelf in which the back of the truck lifted momentarily off the ground.
In addition, the excessive maintenance costs of the Hyster high must lift trucks had
come to the attention of the Plant Engineer.
Secondly, the Vancouver operation had experienced a rapid increase in sales and
demands in the last few years. They were unable to address their customer's needs in
a timely fashion due to limited lift trucks and plant capacity, which cost them several
valuable customers.

.·

Copyright© 2000 Thunderbird, The Ameriam Graduate School of International Management. All rights reserved. This
case was prepared by Professor John Zerio with the research assistance of Shannon Bird for the purpose of classroom
discussion only, and not to indicate either effective or ineffective management. Company name has been disguised.

462
 Case 1 Columbia Industries, Inc. 463

Background
Mr. Jacques Debre, the Plant Manager, had been with the company for eighteen
years. He had started his career there as an industrial engineer after graduating from
college and had been promoted several times since then. For the past seven years he
had been the Plant Manager at the Vancouver headquarters. Mr. Stuart West was
the Industrial Engineer who was responsible for the efficient allocation of equipment
and machinery, including lift trucks. He was responsible for the financial cost analy-
sis concerning equipment justification and capaCity planning. He had been with the
company the past five years. Prior to his employment at Columbia Industries, Inc., he
had extensive experience as an industrial engineer in other industries, and his opinion
was held in high regard.
ish The Plant Engineer, Ms. Sandra Ogrosky, had been with the company for the
.cts last six years. She was responsible for maintaining the plant equipment and machinery
md and was very conc~rned with its reliability and minimal downtime for repairs. Two
ed: of her key functions were performance monitoring and productivity modeling and
md analysis. Therefore, the poor performance of the fork lifts had come to her attention.
md Due to rapid growth in recent years, it was even more critical to increase reliability
les, and minimize downtime. ·
·er)
"'he
>rs, The Task
ant It came to the attention of the Plant Manager that seven new warehouse lift trucks
ver were needed due to the high maintenance expense, high lift truck downtime, safety
the concerns, and the rapid expansion of the company. Clients, such as large homebuild-
cks ers, made up the majority of CI's business, and for several years the significant popula-
md tion expansion had put increased demand on the homebuilders and indirectly on CI.
One of the Hyster lift trucks was several years old and had broken down twice
the in the last three months. Consequently, the company had to delay two large orders,
·m- which cost them one of their major clients. Both of the breakdowns had been due to
iter problems with the transmission of the lift truck.
full It had taken ten days to get one replacement transmission part rushed to them,
1se. and the other faulty part in the transmission had taken nearly a week. In the last three
pes months the lift truck had cost them over $4,000.
nd. Furthermore, CI had to rebuild the transmission in another of the Hyster lift
1ad trucks six months ago, costing them close to $2,000. Since then, they had not had any
other problems with that particular lift truck.
md Besides reliability and quick service, CI also had the requirements of maneuver-
:>in ability in order for the lift truck operators to safely maneuver through the narrow
!raJ aisles and tight corners. And as mentioned previously, the lift truck drivers had com-
plained to the labor union about safety problems surrounding the stability of the truck
when the mast was fully extended and carried a full load of large diameter pipes.
Mr. West was given the task of finding seven lift trucks that would best meet the
needs of the company. However, company policy required that the initial step be to
approach the purchasing department with the task of narrowing the scope of possi-
bilities down to fiv~ brands of lift trucks. The purchasing agent examined the qualifi-
cations of low down time, safety, good service, and maneuverability. He then studied
the various offerings and narrowed the decision down to five brands. At this point he
464 Case 1 Columbia Industries, Inc.

contacted the various companies and requested that each company send a salesman to
meet with Mr. West and give him a quote.

The Presentations
The quotations were formally requested on June 1, 1999. The Yale quotation arrived
first on June 6, 1999 (see E~hibit 2). The Yale distributorship sold a wide array of
products from storage equipment to safety equipment and had just included lift trucks
in their product line three months ago. Columbia Industries, Inc., frequently bought
products from this company and had been very satisfied with the distributor's service.
The salesman met with Mr. West and explained the features of the lift trucks. He
then promised to send a demonstrator lift truck to CI. A week later the lift truck ar-
rived. The lift truck operators liked the performance of the truck, but were uncertain
concerning the function of several of the Fault Monitor Indicator Lights. It took them
about one hour to ascertain how to operate the truck due to the difference in the Yale
truck and the Hyster trucks they were used to working with; however, eventually they
became confident in their ability to operate the machine and. were impressed by its
capabilities. The Yale salesman called Mr. West once a week from then on to see if
ompany had made a decision yet.
l'he Ko~atsu proposal arrived the same day as the Yale proposal (see Exhibit 3).
ever, a few days prior to the arrival, the Komatsu salesperson had spent consider-
time presenting the Komatsu lift truck features and advantages to Mr. West. He
then asked which other companies Mr. West was considering, and proceeded to list
the faults of his competitors and their products. When Mr. West requested adem-
onstrator truck, the Komatsu salesperson ·appeared hesitant and replied that he would
"see about it." Mter the proposal arrived, cr did not hear from the salesperson again.
The third quotation arrived on June 7 from Caterpillar, Inc (see Exhibit 4). The
salesman gave a thorough presentation to Mr. West and asked him to explain what
features the company was looking for in a lift truck. He then sent the demonstration
truck to the plant three days later. He arrived with the truck and met the lift truck ~iv­
ers. He quickly showed them how to operate the truck and answered their questions
concerning the performance of the truck. At this point the lift truck mechanic arrived
to examine the features of the truck. He and the Caterpillar salesman candidly began
~ discussing the mechanics of the lift truck. The mechanic was surprised about the depth
of knowledge the salesman had of the lift truck until he discovered the salesman used
to be a lift truck mechanic-several years ago. The Caterpillar salesman then met with
Mr. West, Mr. Debre, and Ms. Ogrosky and explained in detail how the characteristics
of the Caterpillar lift truck would benefit them and how it met all of their criteria. He
reminded them that Caterpillar parts were easily available and that the service facility
was only a few miles away. From that meeting on, he called Mr. West every two weeks
and sent him recent articles about the Caterpillar lift trucks.
The fourth quotation received was from Hysteron June 9 (see Exhibit 5). Prior
to this, the Hyster salesman met with Mr. West. Mr. Debre, and Ms. Ogrosky. He
gave a very impressive presentation about the Hyster brand and the lift truck features.
Ms. Sparrow then asked him about the features of the Hyster transmission and ex-
plained the problems the plant had With them. The salesman said he might be able to
"get a· deal" for the plant due to the previous problems they'd had with the Hyster lift
trucks. The Hyster salesperson called every week from that point on.
 Case 1 Columbia Industries, Inc. 465

an to The last quotation was from Toyota (see Exhibit 6). The salesman had been out
of town so he and Mr. West were not able to meet until June 21. The salesman was
very knowledgeable about lift trucks and his company. Originally, Mr. West had been
very interested in this brand because he had read about the reliability and performance
features of this lift truck. However, when Mr. West requested that a demonstration
lift truck be sent to the plant, the salesman had seemed unsure and told Mr. West he
-rived
would have to "check on it." A week later a demonstration Toyota lift truck arrived.
·ay of
The salesman was unable to get the lift truck Mr. West had requested, but sent one
rucks
that was close to the required specifications. The lift truck operators were impressed
Jught
with the performance and easy handling of the truck, but the lift truck operators were
rvice.
unable to test lifting the pipes to the maximum height needed because the lift on this
s. He
model only expanded 112 mches, instead of the required 260 inches. The salesman
ck ar-
called a few days later to see what Mr. West had thought of the lift truck, and then
ertain
called him every two weeks to check on the progress of the decision.
_them
On August 20, Mr. West and Ms. Ogrosky planned a meeting with the lift truck
e YaJe
operators and the mechanic for CI to get their opinions about the performance of the
ythey
various trucks. Following is a summary of their discussion:
by its
. see if • The lift truck operators were impressed with the performance of the Yale
lift truck. It had a tight turning radius and was very responsive. However,
,bit 3). they were still a little uncertain about all the features the truck offered and
tsider- exactly how to use them. The operators were particularly pleased with
:st. He the stability and safety of the truck when they tested it with the mast fully
to list extended and with a full load. The mechanic seemed confident about his
L dem- abi)ities to make repairs to the tru~k should it eventually need any.
woUld
• Komatsu did not send a demonstration truck.
again.
~).The • The Caterpillar lift truck was very maneuverable and had advanced features.
n what The operators were excited about trying out the various features and en-
tration hancements and seemed confident about their abilities to operate the lift
:k driv- truck. The Caterpillar lift truck was tested with the mast fully extended with
estions a full load and performed very well under these conditions. The mechanic
arrived was impressed with the truck and was confident that he could address any
r began problems that might arise.
e depth
• The lift truck operators were pleased with the maneuverability of the Hyster
an used
trucks and were confident about their abilities to operate them. However,
~et with
they were still concerned about the stabillty and safety of the trucks when
teristics
there was a full load with the mast fully extended. Due to his prior experience
!ria. He
repairing the Hyster trucks, the mechanic was confident about his abilities to
~ facility
make repairs to it. He was impressed with the new transmission Hyster now
o weeks
used and believed that it would be much more reliable than the previous one.
:). Prior • The Toyota lift truck handled like the Hyster lift truck and the lift truck
sky. He· operators were very satisfied with its maneuverability and features. Due to
~eatures. the fact that Toyota sent a different model to CI, the drivers were unable
and ex- to test the stability of the truck when the mast was fully extended with a full
~able to load. However, the mechanic felt that the lift truck would hold up under
yster lift those conditions.
466 Case 1 Columbia Industries, Inc.

· Mr. West and Ms. Ogrosky met on September 3rd to decide which lift truck EXt
to recommend to Mr. Debre. They created a chart to better compare the lift truck
characteristics and to facilitate their decision-making process (see Exhibit 7). It was Jun
crucial to back their decision up with hard data and, they knew that Mr. Debre might
be hesitant to purchase a new lift truck from a brand with which they had no previous Co:
experience. Ifhe was not convinced the decision was a correct one, they would have to P.C
re-evaluate all of the options. Vat
Att·
De:
EXHIBIT 1 LIFT TRUCK AND WAREHOUSE
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 Case 1 Colum~ia Industries, Inc. 467

1ck EXHIBIT 2 I
1ck
,vas June 6, 1999
ght
ous Columbia Industries, Inc.
:! to P.O. Box 120
Vancouver, British Columbia
Attention: Mr. Stuart West
Dear Mr. West:
Thank you for the opportunity to extend our bus.iness partnership with you. We are sure you will be
excited about the special services and prices that we can offer you, due to the quantity of products we
send to you and your proximity to our location.
We are giving you the quote for the Yale GC050ZG and the trade-in price for your Hyster lift truck.
Our Yale truck is only $18,990 and we can offer you $2,110 for your trade-in. Let me remind you that
we are able to get any parts you may need overnight to you and that we are available for any questions
or problems you encounter.
Due to our close business relationship with your company, we will also extend your warranty free of
charge from 12 months or 2,500 hours to 18 months or 3,750 hours.
Let me know if you have any questions. I am looking forward to talking further about this
opportunity.
Signed
Yale Salesman

EXHIBIT 3

June 6, 1999

Columbia Industries, Inc.

P.O. Box 120
Vancouver, British Columbia
Attention: Mr. Stuart West
Dear Mr. West:
I enjoyed our discussion the other day and am sure that Komatsu will be the best choice for you. We
surpass all of our competitors and also offer a more competitive price. I recommend the Komatsu
FG255HT-12 for the uses we discussed. This model is only $18,400, which includes a one-year, or
2,250-hour warranty.
We are not able to send you a demonstration truck because our lift trucks are in such high demand, but
I am sure this model would meet all your criteria and would surpass all the offerings our competitors
could offer you.
I am looking forward to talking to you soon.
Signed
Komatsu Salesperson
 468 Case 1 Columbia Industries, Inc.

EXHIBIT 4 I EXH

June 7, 1999 Jum

Columbia Industries, Inc. Cob

P.O. Box 120 P.O
Vancouver, British Columbia Van
Attention: Mr. Stuart West Atte
Dear Mr. West: De a
After analyzing all of your requirements for a warehouse forklift, I am sure the Caterpillar FGC25K-
HO will fulfill all of your criteria. This forklift has consistently ranked as one of the top two forklifts in Tha
its class for performance and durability. You should receive a recent article that I copied for you in the the •
next week, which gives a detailed comparison of the warehouse forklifts in this class. that
Unfortunately, we will not be able to give you a trade-in on your Hyster lift trucks, but I have enclosed Asy
the names and numbers of several companies in your area that should be able to help give you a fair man
price for your Hyster lift trucks. timf
Our Caterpillar lift truck sells for $19,550 with a 12-month or 3,000-hour warranty. The warranty can
be extended if CI has this requirement. The
We
I am looking· forward to talking with you soon. you
Signed
Caterpillar Salesperson We
prm
our
EXHIBIT 5
Sigr
June 9, 1999 Toy

Columbia Industries, Inc.

P.O. Box 120
Vancouver, British Columbia
Attention: Mr. Stuart West
Dear Mr. West:
I enjoyed talking to you the other day and have come up with a good solution to your problems. First,
I am sure that the Hyster H50 XM will give you all the capabilities that you need. It is similar to the
models you have now, but the transmission has been replaced with a more durable one.
The price for the new Hyster forklift is $18,220. As you will see (from the demonstration model), it is
one of the least expensive forklifts of this class on the market. We can add to this value by extending
the warranty period to 36 months or 5000 hours at no charge to you.
Furthermore, we are also able to give you a very competitive trade-in price on your other Hyster truck.
We will offer you a trade-in of$2,000.
I am glad I have the chance to work with you and am sure you will see the competitive offer we were
able to extend to you.
Signed
Hyster Salesperson
 Case 1 Columbia Industries, Inc. 469

EXHIBIT 6 I
June 23, 1999

Columbia Industries, Inc.

P.O. Box 120
Vancouver, British Columbia
Attention: Mr. Stuart West

Dear Mr. West:

25K-
fts in Thank you for taking the time out of your busy schedule to spend such a lengthy tiine discussing all of
n the the criteria you have for a new warehouse lift truck. I have given it considerable thought and am certain
that the Toyota 5 F~ 25 will fulfill all of your needs.
losed As you know, Toyota has obtained an incredible image as the industry leader in service and perfor-
a fair mance. We will ensure your complete satisfaction with our products and will have a quick response
time should you ever experience any problems with your lift truck.
yean
The Toyota 5 FG 25 is $19,220. In addition, we have included a 20-month or 4,500-hour warranty.
We are unable to give you a trade-in on your Hyster lift truck, but I am sure the Hyster dealer near
you might be able to help you with it.

We are sending you a similar model to the Toyota 5 FG 25 due to its availability. I am sure it will
provide the performance you are looking for. I am looking forward to getting feedback from you about
our lift truck and will talk to you in the next few weeks. ·

Signed
Toyota Salesman

First,
:o the

), it is
1ding

truck.

were
470 Case 1 Columbia Industries, Inc.

EXHIBIT 7
I
Caterpillar Yale Toyota Komatsu Hyster
Description FGC25K-HO GCOSOZG 5FG25 FG255HT-12 HSOXNI
Capacity 5000 lbs. 5000 lbs. 5000 lbs. 5000 lbs 5000 lbs.
0/A Width 41.5" 42" 45.5" 41.7" 45.5"
Turning Radius 79" 78.7" 78.1" 77.6" 87.4"
Lowered Height 85" 84" 84.5" 85" 85.5"
Total Lift 262" 265" 265" 265.5" 263"
Lifting Speed:
Empty 112 fhp 133 fhp 122 fhp 120 thp 118 fhp
Loaded 104 fhp 117 fhp 108 thp 106 fl:tp ' 104 fhp
Travel Speed 10.5 mph 10.9 mph 11 mph 10.3 mph 11.0 mph
Engine Mitsubishi 4G64 General Motors 52 NetHP Komatsu Mazda 2.0 L
Transmission Powershift Powershift Powershift Toraflow Powershift
Steering Power Power Power Power Power
Delivery TBA TBA TBA TBA TBA
Subtotal $20,900 $19,390 $21,100 $18,400 $18,220
Minus Trade-In $2,110 $2,000
Freight $100 $100 $100
!
Total $20,900 $17,380 $21,200 $18,400 $16,320