Greyson

Corporation

Greyson Co.poration rvas fomed in 1940 by rhrcc scicntists fiom the Univcrsiry
ofCalifi)rnia The In.rjo. purpose ofthe company was research and developmenr
lbr advrrced military weaponry. Following World War It. creyson became a
lcrdc. in the Ueld o1 rcsearch and developnenl. By rhe mid-1950s. creyson em-
ploycd over 200 scicmisls and engineers.
The lrcr r1.,r Cr,).un h:rnd Ed
^nl) R&D conlrrcr. $a. JJrunu-leou,. I r^t
ol all. all of rhe scientists and enginecrs rvere dedicated ro R&D activities. nor
h.t!ing to sharc their loyaltics rviih production prognnrs. Second. a strong func
lional organizali(nr was establishcd. The project rnanagemenl funcrion was rhe re,
sponsibilily ofthe lunctional manager whose dcpdrtmert would perform the ma,
jority oflhe work. Working relarionships bctween departmenls wcre excellent.
By thc late 1950s crcyson was undcr new management_ Almost a1l R&D
programs called fbr cslablishment of qualificaiion and production planning as
$,ell. As a resull, creyson decided to enter into the production of miljr l,
weapons as $,ell. rnd capture some of the wjndfall proiils ofthe production mar,
ket. This required a Drajor reorgmirarion from a functional ro a matrix structure.
Pc$onnel problcDrr occufed, but none thal proved major catasr.ophes.
In 1964 Greyson enrered inro the rerospace market with the acquisition of a
lubcontract for the propulsioD unit olrhe Hercules missile. The contracl was pro-
jecled at $200 million over a five-yeff pcriod. wirh excellenr possibililies tbr ibl
low on lvoft. Berwccn 1964 rnd 1968 Greyson developed a competent technical

269
 270 CREYSON CORPORATION Cie\'\oti Cotpot u,t

staff compos.d mainly ol young. untested coliege graduates_ The nujoriry of the Grcyson submitled
original employees who werc still thcre were jn nunagerial positions. creyson Neptune molor\ ovcr r
never lrad any layolils. In addition. creyson had exceltent career developmenr pro tcsting ol the NeptuDe
grams for almost all c ployees. extend thrcugh Janut$
Between 1967 rnd 1971 thc Departmenl of Defense procurernenr fbr new thirty months could bc
weapons systems wrs on rhe declinc. Greyson relied heavjly on their two major nrcct prodrction requik
production progmms, Hercules and Condor II. both ofwhich gave great promjsc In August 1975. on
ibrconrinucd procuremenr. Greyson also had some rhnly smallcr R&D conrracts Corporation announc.,
.ts well rs rwo smaller prodrction conirrcts for hand weapons.
Neplrne fbllowl). $or
Becausc R&D money was becoming lcarce. creyson.s management decided
business. Cirmeron Cor
1() phase our mrny ofthe R&D activities rnd rcplace them with lucrutive produc_
their key employees lir
lio contracts. Greyson beUcved that thcy could compele with anyone in rcgard
Greyson hircd thin
to low cost production- Undcrlhis philosophy. rhe R&D community was reduced
1975. Thc key people $
to minimum ieveis necessary ro support in-house activities. The dirccror of engi
lanliliar wirh Grcyson n
necring lroze atl hiringexcept 1b.job-shoppers with speciattalents. All nonessen,
happy about brioging I
lial engineerins personnel were rransfered to prcduclion units.
placed in slots thrl coul
In 1972. Greyson entered inlo comperjtjon wjth Camcron Aerospace ple. Mrnagenrent then.
Corporalion lor devclopment, qualificalion. and rcsrjng ot thc Navy,s ncw
the Neptune Program. !
Neptune nrislile. The conrpetiiion was .tn eight-moror shooGo during thc last
Hercules rnd Condo. Il
1en months of 1973. Camcrcn Corporalion won rhe conlract owing to technical
these drirty five p.op;.
lnerit. GrcysoD Corporatbn. however.lrrd gaiDed valuable technicai jntbrm ion
which was being ab(!
in rocket motor delelopmcnt and resting. The loss ol the Neptune proglam madc
Greyson did not belie\e
it clear to Greyson's management thal xerosplrce technology was changing too
curcment. othcr comfc
fast for Creyson to maintain apassive position. Even though tuDding wlls limiled.
an open biddnrg situxrn
Greyson incrcascd the technicrl shffand soon fbund sreat succels in winninc re-
.JJr. h Jrd Jererutrnenl Because ofthe incr
(onr:ct..
(r trcPart lbrcontrrct n
By 1975. Greyson had developed a solid aerospace business base. prctits had
the directo$ ofengineJ
increased by 30 percent. crclson Corporation expanded lronr a conrpanv with
,Z 0 crnplo)(e, irr ro(r4,o Lrlrlo rmplulee, i1 1o75. The Hcrcute. prnsr,rm. oflicc ihe ruthority 1(]

$h,ch\'!:,ninl',r'J.uJ,rro\id,ntj",ityrorron-nn."nr',.',.^ indrc;rio,,, wirhout representati(nr j

projecled a continuation o1 the Hercules Progran th.ough 1982. fidencc in thc program
Cameron Coryomtion, on rhe other hand. had found 1975 a djfficult ye,J. Tbe other programs nd ) e.r
N"eplunc Progmm was the oDly major contract rbrt Cameton Corporation main In Dcccnbcr 1915.
tained. The cunEn! produclion buy for the Ncprune missile was scheduled for com- beinr cunailed sharyt\ .
pletion in August 1975 with no fbllow on work earlicr rhlln Janun4, 1976. Cameron qurUfication prcgrdm b,
Corpoflrtion aDticipated rlrat overhead rates would increase sharyly prior b next buy. bin-! nade lbr a comtr
The cost per molor would increasc from 1i55.0(n 10 575.000 tbr.r January procure- in r {wenty-month peri(i
menr,585.000 fora March procurement, and li l25.m1D tur anAugusr pr.ocurement. availablc.
In February 1975. thc Nnvy asked Geyson Coeoration if rhey woutd be in- Afte.lenglhy conir
lerested in subrni ing a sole-sotrrcc bid lbr Foduction and qurljfication of the aDd retain lhetli y ti\,
Neplunc missiie. Thc Navy considered Cameron's position as uncerain. and grams. The N-eplune pr(
wanted lo mairtain a qudified vendor should Cameron Corporarior decide to get Pot contntct negolirli,l
oul of the aerospace business. lonslead p.ocuremenl
O\ CORPORATION G,!)lt 1Coq)otuti.rt 27'l

. The majority of ihe Greysolr subnitted a bid of lj30 nlilIn forq alification and testing ofrhilry
positions. Greyson Neptune nxtors ovcr n tlrirty-month period beginniog in January 1976. CurreDt
c.r developmenr pro tesling ot' the Nepture missilc nrdicated that lhe lninimum lnotor .rge lite \\'ould
exrcnd tlr.ough January 1979. This me nl thri produclion linds over rhc ncxt
r.ocurement for ncw thity monihs could bc divcrted toward requalificalioo of r new vendor and ltill
\ on their lwo najor meet production requirenents for 1979.
h gave greal promise In August I 975. on delivery of thc hd Nep(une rocke! to the Nr!y. Cameroo
raller R&D conLracts Corporation announced that without rn inncdlate production contrrcl lbt
Neptunc iinlo'v on work it would close its dooN and gel out of the aerospacc
lrxnagement decided business. Camelolr Corpomtion inviled Creyson Coryo.rrn to inteNiew all of
ilh lucrative produc thcir key employees lbr po\sible $ork on the Neplune Requalification PtoEam.
ruh anyone in regard Grcyson hired thirty-five ofCameron s kcy pcople to begin work in Oclobcr
rmLrnity w:rs reduced 1975. The key people would bc assigned Io ongoing Grcyson prcgrrms to becone
Ihe dntcbr of engi- linriUar with Greyson melhods. Greyson s lowerlevel managemenl wxs vcrt un-
rlents. All nonc!ren, happy abour bringnrg in lhcse thifiy-tive employc.s fbr fear that they would bc
it' placed in slots that could halc resulted in promolion! for sone ofGteyson s peo
Itrnreron Aerospace ple. Mxnagerrem lhen decreed that rhese lhirly-five peoplc would work solely on
oi rhc Nxvy's new thc Nepluoe Progr.rm. and other lacancics would be I'rlled. as requircd. lion rhe
i'otf during rhe last Hercules.rnd Condor II progranrs. Greyson estinl led that the cost ofemploling
rhese thirty live people war rpproxi rately $150.000 pcr lnonlh. alnost all of
:.hnical information
which was being absorbed through ovclhcad. Without these drifty filc people.
Grcyson did nol bclicvc th.u rhey would have won thc contnct as sole-source pro
\ \$ changing to()
curement. Other conrpetilors co ld have 'grabbed these key pcoplc rnd tbrced
xnding was limited,
rn open-bidding situation.
Bec.tu1e ofthe increased ovcrhcad rale. Creyson maintained t ninimrn] strlT
to prepare iix conract negolialions and documenl prcparaliorr. To mrnimize cosis,
the dircctors olengnrcering and program mrnagement gave thc Ncptune prcgran
Herculcs Program.
ollice the authority to make decisions for departmcnts md di\isions that were
without rcpresenlatioD ilt lhe prog n olllce. Top managernent had conrplctc con-
rrls. A11 indication!
st. lldence in the prosram oftice personnel because ol fieir pasl peribrmnnces or
J diticult year. The other programs and years of expericDcc.
Coryoralion majr- In Deccnbcr 1975, lhc Depirtment of Deiense announced lhrl spcnding w:rs
being curtailed shaply and that funding lnnit.rlions nrde it impossibte to begin the
rx'l 1976. Cameron qualilicrrnrD progrrm bclorc July 1976. To make matters wolle, considcrrti(m w:is
rh prior to next bLry. being made lbr a compression ofthe requ lification prcgr$n ro lwcnty-five motors
in twcnly lnonfi pcriod. Howc\,er longlearl lunding fbr raw mnterials would bc
nvailable.
Aftcr lcngthy considemti(m. Crcyson decided to mainlain ils presenl position
qu,rliUcation of the C neron employees by assigning rhcnr 1o in-house pro-
and relain lhe thirly-five
gram\. The Neptune program oflice lvirs still n]rintaioed for prpamlions to sup
rJtiu deciG to ger pon conrrcl negoliarions. re\chedulins of rclivities lbr a shoner progrrm. rnd
longJead p.ocurement.
272 CREYSON CORPORATION Cre\son Coryoratio

In N,Iay 1976. contract negotiations began btween the Navy and Greyson. At employees, but overhead rat(
the beginniig of contract ncgoriirtions. the Nal'y strtcd thc three key elenents for last year that ihere would be
Degotiations I the indications positive eDo
Although Greyson !r.r\
I . tu nding was limiled to lhe I 975 qrote fbr a thirly-motor/lhirly
Maximum slrike if creyson career emf
month program. former Cameron ernployeer
2- The amount of money available for the lasl six months of 1976 was lim By February i977. the .
ilcd to S3.7 nrillion.
3. The contract would b! colt plus incentive lee (CPIF). L The higher overhead
$l nillion on the \e

After three rveeks oi negoriarions lhere nppeared r

stalemate. The Navy con-
2. Because the activilie
have to be mrde in
tended that the production man hours in the proposal were at thc wrong level on
c|easing total costs li
rhe leaming curves. lt was further argued lhat Greyson should be a lot 'smarler"
now becausc ol thc lhifly live Crmeron employees and because of experience
3. Inventory cosls \\ ere
ing were approlchin
learned dudng the l97i shoot off with Cancrrn Corporalion during the initial
slages of the Neptune Program.
5l million.
Sincc the negolialion teams could nol aEte. toplevel Danagement of the
The vice president and gcnil
Navy and Greyson Corporat;on mel to imn oul lhe differences. An agree ent was
to lhe success and sur\i\.tl
iinally reached on a flgure of 528.5 million. This was $1.5 million below heads were ordred to lale
Greyson s origiMl cstimatc t(' do the work. Managment. howver. felt that. by
''tightening our befts.'the work could bc,tccomplished rvithin budgel.
The progranr began on July I. 1976. wirh the disrribulion of the department l. Perform oveftime $(
budgets by the progrnm office. Almost all ofthe departnrent managers were furi- 2. Delay program a.ti\
ous. Not only were the budgets bebw tlrDir original eslimates. bul the thiny-five tionalfunding.
Cameron employees were earning salaries abole thc depanmcnt mern salny. 3. Review cunent mate
thus rcducing rolll mm-hou.s even lirther. Almost all depdment managers as life. thus lorvetnrg tn
serred rhat cost overuns would bc rhc responsibility ofthe program office and not 4. Begjn laying off ncrn
drc nrdividual departments. 5. Purchase additionxl
By Novcnbcr 1976, Gretson was iD trouble. The Nepitllre Progran was on schedule requneme.
taryet tbr cosi but 35 percent bchind tbr wo* completion. Departnent managers
relused to t:*e responsibility fbr cerhin lxsks thal were usually considered to be On March l. 1977. Gret ron
joinr dcp.r menl rcsponsibililies. Poor comnnmicalion belween program oflice all in-house progrrms. AI rh
and depal1mcnl mrnagers provided addilional discouragenrenl. Dcpartment man of whom werc seasoned \.
agers rcfused to have their employccs work on Sunday. union and went out oD \!rik,
Even with all this. program manrgemenr tell lhnt catch'up was still possible.
Thc thirty-Uve lormer Cameron emplolces werc performing commendable work
equal ro thcir counterparts on other programs. Manrgemcnt considcred thal lhc
potenlial cost ovenun siturliur wlls not in lhe critical stage. rnd that more tiDe
shorld be permitted before considedlg corporate funding.
In December 1976. the Depanmnt of Dcfense announced that there would
be no funherbuys olthe Hercules missile. This announcement was a severe blow
to Grc)rson s managemenl. Not only lvere they in drngcr ofhavhg to lay olT 500
CORPORATION Gftr'nn Corpo,luiut 273

employees. but overhead rates wonld rise considerably. There wr! an indication
Ialt year that thcre would be no futher buys. but managemenr did no1 consider
the jndications positive enough to require coporate strnegy changes.
Althotrgh Grcyson was not urionized. there was r possibiliry of a nrassive
n\-molor^hirty, strike if Creyson career enployees were nor given seniority over the rhidy five
fbrmer Caneron employec! in the case ofhyoffs.
rl 1976 was lim- B) FcbruJry 1u77. ll( Lo\r U rJn q.r\, rc:r'
,
L The higher overherd rates threatened to incrase total program co!t1 by
$l nrillion on the r\-cplune Program.
Thc \avy con' 2. Bccause the aclivities were behind schednle. the catch-up phases $,ould
have to be made in a higher salary rnd overhead rate qua er. lhus in-
c.easing roral costs furthe.
3. lnventory cosls werc increasing. Itenr! purchrsed durtug hng lead fund-
luring the lnirirl ing were approachins shell-life lnnits. Cost inrp.rct nrishr be as high:rs
$l million.
The vice president and general nrmager considercd thc Ncpture Progr:In crilicrl
1() the success rnd survival of crcyson Corporation. Thc dircctors ancl division
i million bclow
hcads were ordcred to lake charge of the program. The lollowing options were
\cr. fell lhat, by

L Perlbm ovenime work to get brck on schedule.

2. Dclay program activiries in hopes rlrur dre Navy c.rn come up \rirh addi
uI the lhirly five
tional funding.
3. Review cur.cnr marerial spccificarions in o.dcr lo increase materjxt shelf
life. thus lowcdng invenlory and procurernent costs.
4. Begin laying off Doncrirical enployees.
5. Purchase additional tooUng .rnd equipment ( t corporate expensc) !o that
schedule requirements cdn be mer on targcr.

On March l. 1977. creyson gave Derit salary increases to the kcy cmployees on
all in house progr,rms. At rhc sane time. creyson laid ofi 700 cmployees. sone
of whom were seasoned velerans. By Mxrch 15. creyson .mployees fbrnrcd a
union and went out on srike
Ji still possible.

ridered fi.rt the

r! Io l.ty off 500