Industrial Grinders N.V. Manufactures

To Whom It May Concern,

I am sending this email in regards to the company’s problem of having a large quantity of steel rings on hand and the substantial inventory of special steel for their manufacture.  I also understand that there is a new plastic ring entering into the market that would replace the steel rings that Industrial Grinders N.V. manufactures to its customers.

Given that I have the correct information of the special steel inventory has a cost of $26,400 which would produce approximately 34,500 rings, at which the steel rings would sell for $320.40 per hundred.  Compared to the cost to obtain the new equipment and tools for production of the new plastic rings at $1,800 that would also sell for the same price of the steel rings at $320.40 per hundred but with a manufactured cost of $66.60 for plastic and $263.85 per hundred for steel rings.  I have come to this conclusion that I believe Mr. Boetzalaer should consider.

        Since we believe that the new plastic rings would not be produced by any company other than Henri Poulenc for some time, which means that I.G. would only lose no more than 10% of the market.  I suggest that Mr. Boetzalaer and the I.G. family should continue to produce the steel rings for current customers that has orders, and not worry about sales falling.  That way you will be able to use up most of you current inventory of the special steel.  I would also start the production of the plastic rings for customers only in the markets where the competitors are selling them.  I would also reach out to each customer that’s purchasing the steel rings and let them know your attentions of production the plastic rings in the coming months which they would be the first to get the products at a discounted price for the first 3 months to ensure our partnership will stay in great standing for years to come.