Huxley

HUXLEY MAQUILADORA Short Report # 1

1. Problems Identified:

Ð'* Should management move the labor intensive activities from the large San Diego plant related to SCC manufacturing to Mexico as a Maquiladora?

Ð'* If yes, how should the management go about site selection, location selection and selection of entry modes in Mexico?

Ð'* Also, which options among 1) Subcontracting 2) Shelter operation or 3) Wholly owned subsidiary should Huxley operate in Mexico as a maquiladora

2. Recommendations:

Huxley Manufacturing has a competitive advantage in its cutting edge engineering technologies in raw materials processing and part assembly. Nevertheless, the need to reduce production costs seemed a rational choice in the face of the environmental pressures faced in the industry. Undoubtedly, moving the labor intensive activities to Mexico through a maquiladora will bring with it various problems. However, it will also bring much benefit to Huxley, in the form of considerable savings in labor costs, patient workforce, and lower turnover rate.

In the interests of ensuring the benefit of using a maquiladora program, Huxley should go with the Coahuilla state location. Furthermore, to counter the disadvantages of the location Huxley manufacturing should go with intermediary option of Shelter Operation for operating as a maquiladora in Mexico .

3. Supporting Arguments:

- A maquiladora in the form of Shelter operation would provide Huxley with the following

benefits:

Ð'* As the Mexican company would provide Huxley with human resource management services,