Huxley Maquiladora

Topics: Wage, Salary, Subsidiary Pages: 15 (3274 words) Published: July 23, 2011

Problem Statement:

Steve Phillips, head of the Huxley Maquila project team, had to make a

suggestion about moving production to Mexico. After six months of investigation, a final report outlining the results was prepared and was given to Steve. His job now was to give some recommendation to board of directors about whether to establish the manufacturing plant in Mexico and if so, where and how.

• Increase in knowledge intensity of defence product, resulted in higher development costs. In other words, these rising costs are results of advanced technological complexity of almost all types of military system, and to the rapid pace of technological innovation. • Higher costs of research and development (R&D) for each generation of weapons caused absolute costs to rise. Now even largest multidivisional firms are incapable of funding R&D itself. • There is a high turnover rate among the workers, even after training. This is because, to master the skills, workers need high patience and physical strength and they have to work with metals all the time which makes this job very unattractive.

Moreover, there are very unsafe working conditions and to some extent, sexual harassment.


Decision must be made quickly in order to reduce the costs (such as

wages, raw materials etc.) and to increase the revenues for the next year.

• • • It will affect the company’s future revenue and costs. It will increase the company’s reputation. It might help in eliminating some of its competitors as Huxley will capture more market share. (both in US and Mexico)


The ultimate goal of the company is to create feasibility studies for

operating in Mexico, location and site selection and appraisal of various entry needs. In other words, they want to reduce their costs and want to increase their revenues. Besides launching and managing a plant in a foreign country will give Huxley managers a totally new experience.

Company Background:

Huxley Manufacturing Co., located in San Antonio, Texas, basically

operates in chemicals, aluminum and packaging and aerospace businesses. They have three defence-related businesses employing around 1800 people and recording $472 million in revenue. The city in which they were operating has a very strong Mexican influence, which gives them the advantage of operating in Mexico, if they are interested. Huxley takes pride in its cutting edge engineering technologies in raw

material processing and part assembling. It had demonstrated superiority in the use of aluminum hybrids, ceramics and composite metals to increase the performance of military equipment so that they can last longer. It is extremely competitive to meet the standards of military equipment because of their size, durability and weight, all of which are critical characteristics of military application. There were just two to three companies that could qualify to meet these standards and they posed direct threat to Huxley.

S.W.O.T Analysis:
 Strengths:  It was part of the materials technology division of a holding company based in US.  Only two or three Huxley’s competitors were capable of designing, processing and assembling to military standards which reduces the risk.

 Technological development in composite materials, hybrid electric power systems, integrated vehicle survivability and other features positioned Huxley GTU among its competitors.  Huxley’s headquarters is already located in Texas, a city which has a strong Mexican influence.  Hence, when setting up a plant in Mexico, the management will not have any problem in getting acquainted with their cultural values and customs.  Weaknesses:  High capital investment required in production of SCC.  High labour costs in US.  Unattractive job as it requires high patience and physical strength.  Hence, high turnover rate, even after training.  Opportunities:  Setting...
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