Directorate of distance education

CASE STUDY
Zwick Electrical: Developing a Global Logistics Strategy
“Did the consultants come up with anything?” asked Wilton Zwick.
His brother, Carlton, nodded affirmatively. “There are several 
possible alternatives. In terms of alliances it looks like they have identified 
two potential partners. Here, take a look for yourself.” Wilton quickly 
scanned the report’s front page. “Hmm, Asea Brown Boveri and Siemens?”
Carlton and Wilton Zwick are, respectively, president and vice 
president of Zwick Electrical Incorporated (ZEI), a privately held company. 
Carlton joined (ZEI), a privately held company. Carlton joined ZEI in 1973 
after earning a marketing degree. After receiving an engineering degree in 
1975 Wilton spent four years with an electrical – products division of a 
major firm in Pittsburgh. He then joined ZEI in late 1979.
ZEI began operations in 1952 when Gunter Zwick, Carlton and 
Wilton’s father, opened for business in Clevenland, Ohio. In the early years 
ZEI’s product line was limited to electric motors and parts. The company 
gradually expanded its product line to include power transformers, high-
voltage switchgear, and metering devices. By the mid-1960s ZEI had added 
production facilities in Cincinnati, Ohio, and Louisville, Kentucky.
In 1968 gaps in ZEI’s product line prompted the elder Zwick 
to purchase EL Transmission and Power (ELTP), a Memphis-based 
power transmission equipment company. Although ELTP’s Memphis 
headquarters was closed, ZEI retained the Memphis distribution center 
and engineering department. ELTP’s manufacturing plants in Chattanooga 
(Tennessee), Springfield (Missouri), and Shreveport (Louisiana) 
continued operations under ZEI.During the 1970s no further acquisitions 
were made. The plants in Cincinnati and Chattanooga were significantly 
expanded to handle ZEI’s increasing business. Minor renovations were 
made in the Cleveland and Springfield facilities.
Although business took a sharp downturn in the early 1980s, ZEI 
management remained optimistic about the future. At Wilton’s urging, 
the engineering staffs were increased and plans were made to build a 

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modern facility in the Southeast. In 1984 ZEI opened a new plant and 
distribution center in Greenville, South Carolina. This plant specializes in 
power transformers and high voltage switchgear. 
In 1987 Gunther retired from ZEI. At that time he appointed 
Carlton as president and Wilton as executive vice president. In reality 
Carlton is in charge of everything except product design. Wilton oversees 
product design and consequently works closely with the engineering and 
production departments.
Following the downturn of the early 1980s ZEI enjoyed modest 
growth until 1988. At that time it became apparent that the American 
power business, plagued by overcapacity, had stagnated. It became obvious 
that ZEI’s Cleveland, Louisville, and Shreveport plants were seriously 
outdated. A decision8 was made in 1990 to renovate Shreveport and close 
production facilities in Cleveland and Louisville.
This decision was particularly difficult for Carlton to accept. 
Carlton believed that ZEI could not expect loyalty from its workers unless 
it demonstrated concern for their welfare in difficult times. Wilton, 
although sympathetic to the plight of the workers, had been watching 
European and Japanese firms erode America’s market share in the power 
business. He felt that SEI must remain competitive. If that meant closing 
noncompetitive facilities, so be it.
At this time the Zwick brothers also decided that ZEI needed to 
aggressively pursue international markets. SEI had sporadically exported 
in the past – but only if a foreign customer initiated the contact. Electing 
for a more proactive posture, SEI entered into an agreement with an export 
management company, Overseas Venture Management (OVM).
OVM acts primarily as a manufacturer’s representative for ZEI in 
Western Europe. OVM receives a commission on each sale of ZEI product 
plus a fixed rate for representing ZEI at European trade fairs. In 1989, the 
first year of the agreement, OVM sales represented less than one-half of 
1 percent of total ZEI sales. That figure improved to slightly more than 1 
percent in 1990.
The Zwick brothers were generally pleased with OVM’s perfor-
mance. Although OVM sales in 1991 and 1992 represented less than 3 

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percent of total ZEI sales, trade fair appearances had generated consider-
able interest in ZEI’s line of power semiconductors (electronic switch-
ing devices for high-voltage transmission). In fact, power semiconduc-
tors represented 70 percent of ZEI’s European sales in 1991 and 1992. In