Plant Relocation Essay
The chief executive of Electrocorp, an electronics company, which makes the onboard computer components for automobiles, is facing increased production costs. Electrocorp’s production plants, use complex hydrocarbon solvents to clean the chips and other parts that go into the computer components. Some of the solvents used are carcinogens and must be handled with extreme care. Until recently, all of your production plants were located in the United States. However, the cost of production has risen, causing profits to decline.
A number of factors have increased production costs. First, the union representing the workers in Electrocorp plants waged a successful strike resulting in increased salary and …show more content…
Mexican health and environmental laws are also favorable to production. Exposure to toxic chemicals in the workplace is permitted at higher levels than in the United States, allowing corporations to dispense to some degree with costly procedures and equipment. Mexico's environmental laws are less strict than those of the United States, and a solvent recovery system, used to reduce the toxicity of the waste before dumping, is not required.
The only identifiable business risk is possible bad publicity. The rate