Curled Metal Inc. - Engineered Products Division Case

Curled Metal Inc.— Engineered Products Division case

        Curled Metal Inc. faces an important decision on the price of its new product, curled metal cushion pad, which is used in the process for driving piles. After growing from $750K in sales in 1991 to $55m by 2007 due to its major product, Slip-Seal, Curled Metal Inc. is eager to diversity away from its heavy reliance on Slip-Seal. I recommend that the curled metal cushion pad price is set at $999/pad and $4,999/set of 6, while the company targets multi-national construction firms as a primary customer and independent pile driving contractors as secondary customer. Following is detailed analysis supporting my recommendation of how this price is set based on current market situation.

        Company: Curled Metal Inc’s goal for coming year is to diversify product line to expand outside of automotive industry and provide additional source of revenue. The company has experienced high growth in the past, known for high quality and innovative products, maintained dominant market share in its main product, Slip Seal, and finished the development of new cushion pad product superior to traditional conventional pads. On the other hand, Curled Metal Inc is highly dependent on automotive industry which is the main buyer of Slip Seal and is just around facing the saturated market with limited growth opportunities considering the flat growth due to 2008 recession. The company also has a limited experience in construction industry.

        Competition: Current competitors of the curled metal cushion pads are conventional pads, such as Micarta slabs, produced by small job shops, priced at $6 to $9 for 11 1/2 -inch pads. It has low price point and is easy to be produced. However, these conventional pads have serious defect pertaining to resiliency on high temperature when being used in driving piles. So, the pads need to be frequently substituted, which result in time lose and might put workers in hazard situation. The potential future competitors would be other companies having similar technology that Curled Metal Inc has. But at this point, we cannot see any potential threat on competition.

        Customer: Since Curled Metal Inc. doesn’t have experience in construction industry, no precise statistics from which a potential U.S. market size for cushion pads is provided. However, we can assume based on Sanwal’s guestimation, in U.S. there are about 300 million feet of piles driven annually.  But, basically anyone involved in pile-driving construction activities around the globe are potential customers of Curled Metal Inc., from multi-national engineering and construction contractors to independent pile-driving contractors. They have similar needs to use functional cushion pads that are easy to utilize and install. They value safety, efficiency, cost savings, and machinery preservation.