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 employcd 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 projecled 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

staff compos.d mainly ol young. untested coliege graduates_ The nujoriry of the
original employees who werc still thcre were jn nunagerial positions. creyson
never lrad any layolils. In addition. creyson had exceltent career developmenr pro

grams for almost all

ployees.
Between 1967 rnd 1971 thc Departmenl of Defense procurernenr fbr new
weapons systems wrs on rhe declinc. Greyson relied heavjly on their two major
production progmms, Hercules and Condor II. both ofwhich gave great promjsc
ibrconrinucd procuremenr. Greyson also had some rhnly smallcr R&D conrracts
.ts well rs rwo smaller prodrction conirrcts for hand weapons.
Becausc R&D money was becoming lcarce. creyson.s management decided
1() phase our mrny ofthe R&D activities rnd rcplace them with lucrutive produc_
contracts. Greyson beUcved that thcy could compele with anyone in rcgard
to low cost production- Undcrlhis philosophy. rhe R&D community was reduced
to minimum ieveis necessary ro support in-house activities. The dirccror of engi
necring lroze atl hiringexcept 1b.job-shoppers with speciattalents. All nonessen,
lial engineerins personnel were rransfered to prcduclion units.

lio

In 1972. Greyson entered inlo comperjtjon wjth Camcron Aerospace

Corporalion lor devclopment, qualificalion. and rcsrjng ot thc Navy,s ncw
Neptune nrislile. The conrpetiiion was .tn eight-moror shooGo during thc last
1en months of 1973. Camcrcn Corporalion won rhe conlract owing to technical
lnerit. GrcysoD Corporatbn. however.lrrd gaiDed valuable technicai jntbrm ion
in rocket motor delelopmcnt and resting. The loss ol the Neptune proglam madc
it clear to Greyson's management thal xerosplrce technology was changing too
fast for Creyson to maintain apassive position. Even though tuDding wlls limiled.
Greyson incrcascd the technicrl shffand soon fbund sreat succels in winninc re.JJr. h Jrd Jererutrnenl

(onr:ct..

By 1975. Greyson had developed a solid aerospace business base. prctits had
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.
$h,ch\'!:,ninl',r'J.uJ,rro\id,ntj",ityrorron-nn."nr',.',.^ indrc;rio,,,
projecled a continuation o1 the Hercules Progran th.ough 1982.
Cameron Coryomtion, on rhe other hand. had found 1975 a djfficult ye,J. Tbe
N"eplunc Progmm was the oDly major contract rbrt Cameton Corporation main
tained. The cunEn! produclion buy for the Ncprune missile was scheduled for completion in August 1975 with no fbllow on work earlicr rhlln Janun4, 1976. Cameron
Corpoflrtion aDticipated rlrat overhead rates would increase sharyly prior b next buy.
The cost per molor would increasc from 1i55.0(n 10 575.000 tbr.r January procure-

menr,585.000 fora March procurement, and li l25.m1D tur anAugusr pr.ocurement.

In February 1975. thc Nnvy asked Geyson Coeoration if rhey woutd be inlerested in subrni ing a sole-sotrrcc bid lbr Foduction and qurljfication of the
Neplunc missiie. Thc Navy considered Cameron's position as uncerain. and
wanted lo mairtain a qudified vendor should Cameron Corporarior decide to get
oul of the aerospace business.

Cie\'\oti Cotpot u,t

Grcyson submitled
Neptune molor\ ovcr r
tcsting ol the NeptuDe
extend thrcugh Janut$
thirty months could bc

nrcct prodrction requik

In August 1975. on

Corporation announc.,
Neplrne fbllowl). $or
business. Cirmeron Cor

their key employees lir

Greyson hircd thin
1975. Thc key people $
lanliliar wirh Grcyson n
happy about brioging I
placed in slots thrl coul
ple. Mrnagenrent then.
the Neptune Program.

Hercules rnd Condo.

!
Il

these drirty five p.op;.

which was being

ab(!

Greyson did not belie\e

curcment. othcr comfc

an open biddnrg situxrn
Because ofthe incr

(r trcPart lbrcontrrct

the directo$ ofengineJ

oflicc ihe ruthority

1(]

wirhout representati(nr j
fidencc in thc program
other programs nd ) e.r

In Dcccnbcr 1915.
beinr cunailed sharyt\ .

qurUfication prcgrdm b,
bin-! nade lbr a comtr
in r {wenty-month peri(i
availablc.

Afte.lenglhy conir
tli y ti\,

aDd retain lhe

grams. The N-eplune pr(

Pot contntct negolirli,l

lonslead p.ocuremenl

O\
.

CORPORATION

The majority of ihe

positions. Greyson

c.r developmenr pro

r.ocurement for ncw
\ on their lwo najor
h gave greal promise
raller R&D conLracts
lrxnagement decided
ilh lucrative produc
ruh anyone in regard
rmLrnity w:rs reduced

Ihe dntcbr of engirlents. All nonc!ren,

it'

Itrnreron Aerospace

oi rhc Nxvy's new

i'otf during

rhe last

:.hnical information

\ \$

changing to()

xnding was limited,

G,!)lt 1Coq)otuti.rt

27'l

Greysolr subnitted a bid of lj30 nlilIn forq alification and testing ofrhilry
Neptune nxtors ovcr n tlrirty-month period beginniog in January 1976. CurreDt
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
thity monihs could bc divcrted toward requalificalioo of r new vendor and ltill
meet production requirenents for 1979.
In August I 975. on delivery of thc hd Nep(une rocke! to the Nr!y. Cameroo

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
business. Camelolr Corpomtion inviled Creyson Coryo.rrn to inteNiew all of
thcir key employees lbr po\sible $ork on the Neplune Requalification PtoEam.
Grcyson hired thirty-five ofCameron s kcy pcople to begin work in Oclobcr
1975. The key people would bc assigned Io ongoing Grcyson prcgrrms to becone
linriUar with Greyson melhods. Greyson s lowerlevel managemenl wxs vcrt unhappy abour bringnrg in lhcse thifiy-tive employc.s fbr fear that they would bc
placed in slots that could halc resulted in promolion! for sone ofGteyson s peo
ple. Mxnagerrem lhen decreed that rhese lhirly-five peoplc would work solely on
thc Nepluoe Progr.rm. and other lacancics would be I'rlled. as requircd. lion rhe
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
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
curement. Other conrpetilors co ld have 'grabbed these key pcoplc rnd tbrced

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,

prcgran
ollice the authority to make decisions for departmcnts md di\isions that were
the dircctors olengnrcering and program mrnagement gave thc Ncptune

Herculcs Program.

rrls.

A11

indication!

st.
J diticult

year. The

Coryoralion majr-

rx'l

1976. Cameron
to next bLry.

rh prior

without rcpresenlatioD ilt lhe prog n olllce. Top managernent had conrplctc conlldence in the prosram oftice personnel because ol fieir pasl peribrmnnces or
other programs and years of expericDcc.
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
qualilicrrnrD progrrm bclorc July 1976. To make matters wolle, considcrrti(m w:is
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

rJtiu deciG

to ger

C neron employees by assigning rhcnr 1o in-house program\. The Neptune program oflice lvirs still n]rintaioed for prpamlions to sup
pon conrrcl negoliarions. re\chedulins of rclivities lbr a shoner progrrm. rnd
longJead p.ocurement.
and relain lhe thirly-five

272

CREYSON CORPORATION

In N,Iay 1976. contract negotiations began btween the Navy and Greyson. At
the beginniig of contract ncgoriirtions. the Nal'y strtcd thc three key elenents for
Degotiations

tu nding was limiled to lhe I 975 qrote fbr a thirly-motor/lhirly

program.
month
2- The amount of money available for the lasl six months of 1976 was lim
I

Maximum

ilcd to S3.7 nrillion.

3. The contract would b! colt plus incentive lee (CPIF).

After three rveeks oi negoriarions lhere nppeared

stalemate. The Navy contended that the production man hours in the proposal were at thc wrong level on
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
learned dudng the l97i shoot off with Cancrrn Corporalion during the initial
slages of the Neptune Program.
Sincc the negolialion teams could nol aEte. toplevel Danagement of the
Navy and Greyson Corporat;on mel to imn oul lhe differences. An agree ent was

iinally reached on a flgure of 528.5 million. This was $1.5 million below
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
budgets by the progrnm office. Almost all ofthe departnrent managers were furious. Not only were the budgets bebw tlrDir original eslimates. bul the thiny-five

Cameron employees were earning salaries abole thc depanmcnt mern salny.
thus rcducing rolll mm-hou.s even lirther. Almost all depdment managers as
serred rhat cost overuns would bc rhc responsibility ofthe program office and not
drc nrdividual departments.
By Novcnbcr 1976, Gretson was iD trouble. The Nepitllre Progran was on
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
joinr dcp.r menl rcsponsibililies. Poor comnnmicalion belween program oflice
and depal1mcnl mrnagers provided addilional discouragenrenl. Dcpartment man
agers rcfused to have their employccs work on Sunday.
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

Cre\son Coryoratio

employees, but overhead rat(

last year that ihere would be

the indications positive eDo
Although Greyson !r.r\

slrike if creyson career emf

former Cameron ernployeer

By February i977. the .

The higher overhead

on the \e
Because the activilie
have to be mrde in
c|easing total costs li

$l nillion
2.

3. Inventory cosls \\ ere

ing were approlchin

5l million.

The vice president and gcnil

to lhe success and sur\i\.tl
heads were ordred to

lale

l. Perform oveftime $(
2. Delay program a.ti\
tionalfunding.

3. Review cunent

mate

life. thus lorvetnrg tn

4. Begjn laying off ncrn

5. Purchase additionxl
schedule requneme.

On March l. 1977. Gret ron

all in-house progrrms. AI rh
of whom werc seasoned

\.

union and went out oD \!rik,

CORPORATION

n\-molor^hirty,

rl

1976 was lim-

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
strike if Creyson career enployees were nor given seniority over the rhidy five
fbrmer Caneron employec! in the case ofhyoffs.
B) FcbruJry 1u77. ll( Lo\r U rJn q.r\, rc:r'

The higher overherd rates threatened to incrase total program co!t1 by

$l nrillion

on the r\-cplune Program.

\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 inc.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.

Thc

million bclow

\cr. fell lhat, by

uI the lhirly five

The vice president and general nrmager considercd thc Ncpture Progr:In crilicrl
1() the success rnd survival of crcyson Corporation. Thc dircctors ancl division
hcads were ordcred to lake charge of the program. The lollowing options were

L Perlbm ovenime work to get brck on schedule.

2. Dclay program activiries in hopes rlrur dre Navy

c.rn come up

\rirh addi

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.

Ji still possible.
ridered fi.rt the

r! Io l.ty off 500

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