Moving to Mexico Free

7/29/2019 Moving to Mexico Free

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The Barton Textile Factory was a major employer in a smallMidwestern town. Three hundred people were on thepayroll. Although the jobs were not really high-paying, thetypical $6 per hour wage helped many families to make

ends meet in this rural part of the state.

Competition in the clothing industry was vey intense, andmargins were very tight, but the operation had always been

profitable. Then, the owners learned that they could open afactory across the border in Mexico where they could hireas many employees as they needed for only $.60 per hour – significantly increasing profits for the company.

Case 4: Moving to Mexico



This would eliminate the advantage that other manufacturers had who were already manufacturingoffshore.

To keep from killing the morale of the employees, theannouncement to the public was kept secret until just twomonths before the owners decided to shutdown the factory.Two months later, the factory closed on schedule, and the

operation moved to Mexico, The town was devastated, for no other local employers could take up the slack.

Case 4: Moving to Mexico



Areas of Consideration

To Move Not To Move

1 Competition was very intense

and the margins were verytight.

Employing 300 people, BTF is a

major employer in a small ruraltown.

2 BTF could get labor for $.60per hour across the border.

The operations had always beenprofitable.

3 Other manufacturers werealready manufacturingoffshore.

The factory transfer left the towndevastated for no local employerscould take the slack.



Areas of Consideration

Per

Hr

# of

Hrs

# of

Emp

Per Day Per Mo.

(25 days)

Per Year

(300 days)

Savings

Per Yr

Midwestern 6.0 $ 8 300 14,400 360, 000 4, 320, 000

Mexico .60 $ 8 300 1,440 36, 000 432, 000 3, 888, 000

(270) 174,960,000 @ 45



What is the basis of ethical responsibility of businessowners? Mutuality, i.e., a company owes responsibility tothose who contributed to its success.

To whom are business owners ethically responsible?

Tools of Analysis

Stakeholders Responsibility

1 Owners Earn a profit or a return on their investment.

2 Employees Provide a safe workplace and adequate pay.

3 Customers Offer quality and affordable products.

4 Community Promote social and economic welfare.



Business establishments need to balance their responsibilities to these groups, especially when theyconflict.

In case of conflict, the Pyramid of Social Responsibilityprovides the hierarchy of responsibilities.

Tools of Analysis



Tools of Analysis



1.) Did the noble end – significantly enhanced profits – justify theignoble means – leaving a town economically high and dry? Was it

ethical to move the factory?

Yes. BTF is able to save about 90% of its direct labor cost if it

establishes a factory across the border. The difference would

eliminate the advantage of other manufacturers who were already

manufacturing offshore.

Although its operations had been profitable, BTF cannot becomplacent. An even more intensified competition or an economic

recession could result to business losses, even closure. Its own

survival compels BTF to look forward and move to a place where it

can earn profit and avoid losses.

Questions:



2.) Did the company owe the town anything? Were the ownersethically responsible?

Yes, the company is duty bound to improve the community which

provides it with workforce, infrastructure and safety. However,

BTF’s compliance of this obligation depends on its financial ability,which is being threatened by intense competition, tight margin and

uncertain future.

BTF could mitigate the impact of its decision by providing

separation pay and livelihood training. It could also reduce theworking days in the last 2 months to give the workers time to look

for another source of livelihood.

BTF voluntarily came to the community to earn profit. It should be

as free to leave, especially if so doing is necessary for its self-

preservation.

Questions:



3.) Should the owners have given the town a longer lead time, or atleast let the employees know they were thinking about? How early?

Should they have given the town another month? More time? Was

management ethical to keep the move secret at all?

The two-month notice is fair enough. The period allows the workers

time to prepare and minimizes the dip in production that will be

caused by loss of morale.

In so far as it contributes to the success of the factory transfer,management was ethical to keep the move a secret. The

management would have difficulty leaving the town if the planned

relocation was made public too soon.

Questions:

Documents

Moving to Mexico Free