Saturday, February 18, 2017

Manufacturing Twilight Zone



Imagine If You Will
You are CEO of an automobile manufacturing company with several plants in low labor cost Mexico.
Political pressure is being applied to encourage, if not force you to close those plants and open new ones in the high labor cost United States.
A 35 % tariff and other disincentives make the move financially mandatory if your company is to survive, if it survives.
Now you have to choose from a menu of difficult choices:
a. Not move and add the35% to your selling price and lose market share. Nah!
b. Move and pay the significant wage and benefit labor cost increases then pass that cost on to the consumer and/or the investors. Maybe?
c. Return to the pre-globalization model and negotiate with labor. Build a new factory with all the human needs accounted for. See b
d. Build a inexpensive windowless, toilet-less, cafeteria-less factory with no parking lot. Install an automation system and reduce labor to a few dozen operators and a few low payed robot polishers.
Fire the HR directorate. Yes that's the ticket!

Paul Hunter


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