Carrier Corporation, Montluel, France: The Aquasnap Design Project

16 Pages Posted: 21 Oct 2008 Last revised: 10 Nov 2021

See all articles by Kamalini Ramdas

Kamalini Ramdas

London Business School - Department of Management Science and Operations

Emily Jean Gibbons

Independent

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Abstract

This case focuses on product design as a source of competitive advantage. In the late 1990s, Carrier France faced extremely high labor and overhead costs relative to smaller Italian competitors in one segment. The only way Carrier could compete was by designing a product with low labor costs. While one design alternative would lower assembly costs and space requirements, market acceptance was unpredictable. Relative to another more conservative design alternative, a delayed launch was likely. The case contains rich qualitative and quantitative information on the costs and benefits of the two Aquasnap design concepts in consideration, and focuses on which alternative to introduce.

Excerpt

UVA-OM-0972

CARRIER CORPORATION, MONTLUEL, FRANCE:

THE AQUASNAP DESIGN PROJECT

In February 1997, Carrier Corporation's manufacturing facility in Montluel, France celebrated the long awaited launch of Carrier's Global Chiller. The Montluel facility, which was owned by Carrier ETO, produced chillers—air conditioning systems for commercial applications—for the European, Middle Eastern, and African markets. The Global Chiller was Carrier's first attempt to create a chiller that would be identical for all markets, with the exception of variations in voltage.

The Global Chiller had been in development for over four years, with what one engineer had described as a “creeping” launch date, when Ted Amyuni arrived as president of Carrier France. After reviewing the situation, he asked that the Global Chiller be launched within three months. Montluel had met this challenge.

In the months following the February 1997 launch, several design changes were initiated for Phase II of the Global Chiller, with a view to enhancing quality and reducing cost. At the same time, engineers at Montluel turned their attention to the next new product introduction.

The market for chillers was segmented by space-cooling capacity. Chillers with higher cooling capacity required more power, measured in kilowatts (kW). The Global Chiller served the high-cooling capacity end of the market, where Carrier had a strong market position. Carrier was now working on developing a new product for smaller commercial applications, which would serve the under 300kW range of the market. For every dollar spent on commercial air-conditioning, sixty cents were spent on models in this range, where Carrier's market share was as low as 7–8 percent in some countries in the ETO market. Thierry Jomard, the lead engineer for the new product, realized that customers in this market were extremely price sensitive. Yet with the high labor rates in France, Carrier Montluel could never match the cost of its smaller Italian competitors.

The only way to compete was to change the rules of the game: develop a new product with significantly lower labor content. Montluel had come up with a smaller, easier to assemble, and easier to install product concept with a radically different interior. Fittingly, the concept was named Aquasnap. But was this concept feasible? And would the investment really pay off? Jomard had spent much of the summer of 1997 pondering these questions. He was scheduled to meet Ted Amyuni on July 30th, with a decision on the Aquasnap concept.

. . .

Keywords: change, management of, product design, product development

Suggested Citation

Ramdas, Kamalini and Gibbons, Emily Jean, Carrier Corporation, Montluel, France: The Aquasnap Design Project. Darden Case No. UVA-OM-0972, Available at SSRN: https://ssrn.com/abstract=911429 or http://dx.doi.org/10.2139/ssrn.911429

Kamalini Ramdas (Contact Author)

London Business School - Department of Management Science and Operations ( email )

Sussex Place
Regent's Park
London, London NW1 4SA
United Kingdom

Emily Jean Gibbons

Independent

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