Johnson Lumber: Bet on the Upside or Avoid the Downside?

Abstract

James Baker is general manager of a large lumber mill in rural Virginia, Johnson Lumber. While on a business trip with the owner (the founder's grandson) and the owner's son, he receives the news that the company's planing mill has caught fire and is burning down. Baker, the owner, and the owner's son must decide what to do in the wake of losing the planing mill. Choices include rebuilding, seeking partnerships with other mills to use their facilities to fulfill existing business, or possibly closing shop and simply taking current profits. If they rebuild, Johnson Lumber will have to shut down for a year, risking the loss of customers and putting several people from the struggling community around the mill out of a job. If Johnson Lumber closes entirely, it will put its workers in an even worse position. But would it be feasible to use other mills' facilities? What if the other mills turned them down? On top of everything, the owner and his son have differences in their attitudes about and goals for the business. Baker must consider the options carefully and balance the pressure to please both the current and future owners of Johnson Lumber with what would be best for the business and the local community whose families it helped support. Excerpt UVA-ENT-0196 Rev. Feb. 18, 2020 Johnson Lumber: Bet on the Upside or Avoid the Downside? Friday, March 9, 2006 The ringer on James Baker's phone seemed overly loud. Perhaps that was because it was 4:00 a.m., and he was in a hotel room on a business trip. It was never good news when the phone rang at that hour. This case was no exception. It was Janet McAleer, the security guard at Johnson Lumber's planing mill facility in Ladysmith, Virginia. “The mill has smoke in it,” she said. A fire in a lumber mill, which was by definition filled with fuel, was to be taken seriously. . . .