IRHR1001 – Exam Case Study – Southern Discomfort
Re-produced from: Samson, D & Daft, R. (2009) Management (3rd ed). Cengage Learning, Australia. Jim Malesckowski remembers the call of two weeks ago as if he’d just put down the telephone receiver. “I just read your analysis and I want you to get down to Mexico right away’, jack Ripon, his boss and chief executive officer, had blurted out. ‘You know we can’t make the plant work anymore – the costs are just too high. So go down there, check out what our operational costs would be if we move, and report back to me in a week’. At that moment, Jim felt as if a knife had been stuck in his side, just below the rib cage. As president of the Wisconsin Specialty Products Division of Lamprey Inc. He knew quite well the challenge of dealing with high-cost labour in a third-generation, unionised US manufacturing plant. And although he had done the analysis that led to his boss’s knee-jerk response, the call still stunned him. There were 520 people who made a living at Lamprey’s facility, and if it closed, most of them wouldn’t have a journeyman’s prayer of finding another job in the town of 9000 people. Instead of the US$16 – per-hour average wage paid at the plant, the wages paid to the Mexican workers – who lived in a town without sanitation and with an unbelievably toxic effluent from industrial pollution – would amount to about US$1.60 an hour on average. That was a saving of nearly US$15 million each year for Lamprey although it would be offset in part by increased costs for training, transportation and other matters. After two days of talking with Mexican government officials and managers of other companies in the town Jim had enough information to develop a set of comparative figures of production and shipping costs. On the way home, he started to outline the report, knowing that unless some miracle occurred, he would be ushering in a blizzard of pink slips for people he had come to appreciate. The plant in Oconomo...
Please join StudyMode to read the full document