The chief operating officer (CEO) at Cambridge Cooling Systems (CCS), an industrial cooling system manufacturer, has been asked for his recommendations on CCS’s plants in Canada and Mexico. The company has had a reversal in its strategic plan in the past year and is shifting from a focus on growth to looking for operating efficiencies. CCS’s global plants are running below full capacity, and opportunity exists to reduce costs through the consolidation of operations. The current focus is on Canada and Mexico, and the CEO is exploring moving custom work from Canada to Mexico, where labour and overhead rates are lower. The challenge for the CEO is to consider the implications of such a move. He needs to determine if it is economically preferable to move production to Mexico, and consider the implications of making changes to CCS’s operations strategy.
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