Electrimex Case Study

Electrimex is a wholly owned subsidiary of a U.S. manufacturer of household electronics. The Electrimex plant based in Mexico was a result of competition from Asian sources; the company had formerly been based in the United States for several generations. The move to Mexico was decided when the company determined that their product could be manufactured at such a low price that they could afford to markdown their product to be able to sell to major discount chains such as Wal-Mart and Home Depot. The U.S. parent company was placing a lot of pressure on its Mexican subsidiary by introducing new product lines that were to be manufactured in the plant as well as wanting the plant to conform to a new quality assurance program known as ISO 9000. The ISO 9000 program was a quality management and quality systems guideline process that would allow the company to enter into new markets such as Central and South America. It was imperative that the company move swiftly to learn and adhere to these guidelines, as well as begin the manufacturing of the new product lines. There were several young managers at Electrimex. Below is a table of the managers for future reference:

Geraldo Ortiz General Manager

Anacleto Valdez I R Administrative Manager

Humberto Felix Accounting Manager

David Mutt Engineering Manager

Milton Estrada Production Manager

Raul Nazario Quality Assurance Manager

Alejandro Rodriquez Materials Manager

Ramon Villareal Maintenance Manager

Amilcar Torres QE/UL Manager

As I mentioned, the employees and managers of Electrimex were under a lot of pressure from their American owners to conform to new quality assurance guidelines as well as to manufacture new product lines; but these were not their only issues that needed resolution quickly. The General Manager; Geraldo Ortiz, had several young managers on his team. A lot of which did not have the maturity level to lead effectively. Ortiz had to often explain himself to his American superiors as to why he was missing important deadlines. The missed deadlines were due to more than lack of maturity by the management team. Several of the employees either didn't or couldn't follow directions. The non-management employees were also very young and immature. Most of them did not speak or read English which was a large issue since the instructions from the American owner came over exclusively in English. The management team was bogged down not only by their day-to-day operational work and planning efforts; but from receiving masses of emails from their superiors that had to be translated from English to Spanish for mass distribution. The company faced a seven percent turnover rate, and although that was better than the eleven percent Mexican average, it cost the company one-hundred and fifty dollars per lost employee or thirteen thousand six hundred and fifty dollars per year. Sexual harassment claims and a hostile work environment were typical. The company was growing at a faster rate than training could be provided which resulted in a very hostile work environment. The other challenges that were not employee related that the company faced was: fierce competition from low-cost Asian sources, currency differences, and wage and cost differences.

The above issues were company-wide and affected everyone; I would like to also address the issues in each department individually. The production department led by Milton Estrada had inconsistent production of quality products. The department had high employee turnover; especially on the seven am shift, which may have been due to a very weak supervisory staff. The parent company required Estrada to use the U.S. accounting methods to track his operating costs. This was not effective as Estrada didn't understand the method, and therefore did not accurately track his costs. Estrada was too loyal to his subordinates and had a hard time seeing others point of view. He also set very high expectations for his subordinates and expected them to grasp ideas and procedures with little instruction.

The materials department led by Alejandro Rodriquez was a struggling department. Rodriquez had the responsibility of purchasing materials and supplies on time to meet production deadlines. However, he had a very hard time getting the job done due to issues with: suppliers, customs, transportation, technology, and other miscellaneous internal problems. The internal problems included the same company-wide issues from the email/translation issue to being overworked and leaving his subordinates unsupervised for long periods of time.

Amilcar Torres led the Quality Engineering Department. He was a very egotistical man who was also too dependent upon his subordinates. In addition to his dependency, he would not delegate to his subordinates due to lack of trust. This resulted in his feeling overworked right along with all of the other managers. The managers between departments did not communicate much outside of their mandatory meetings, they had no outside relationship. Torres often rushed projects. He had no formal requisition process, as well as an overall lack of documentation in his department which concerned his superiors greatly.

Raul Nazario was the quality assurance manager. He was in great need of training, as were all of the managers. His employees as well as the other departments lacked formal education so cross training his and the other departments were difficult to impossible. His department received a lot of complaints from customers; however, there were no consequences to his individual employees for errors. The references for the control processes in his area were in English, and again, the employees did not speak English.

In the Engineering department there was a large staffing issue. The department was running with only half of its staff and the packaging manager was pregnant and expected to leave soon. The staff was paid a very low wage which caused a very high turnover rate as employees would leave often for higher risk jobs or self employment because they felt that they had nothing to lose. The department was dealing with the high pressures of the new product lines as well as the overwhelming documentation process for ISO certification. The documentation was also in English which caused large issues; because again, there were language barriers. David Mutt managed this department and was most likely highly frustrated with his circumstances.

Ramon Villareal is the maintenance manager and was a former supervisor. His department lacked