EPA - Exporting Production Abroad Recently the EPA has notified your company tha
ID: 428304 • Letter: E
Question
EPA - Exporting Production Abroad
Recently the EPA has notified your company that they must install a very expensive new water pollution control device. No federal aid or help is available or offered. This same problem has happened to other competitors in the industry, most of whom have moved to Mexico to take advantage of the NAFTA agreement and build less capital-intensive production facilities to avoid the strict new EPA standards.
How would you go about solving this problem?
Are there other alternatives than closing up U.S shop and moving to Mexico?
Explanation / Answer
Ans. As we all know EPA standards are pretty high in terms of environment protection. The U.S environment protection agency's main agenda is to go for sustainable water conservation and cut down on water pollution.
As you have mentioned in the question that as per the new directives of EPA, the company must install a very expensive new water pollution control device that means something or the other has to be done about this.
The goal can be achieved by through planning and taking an educated decision on the problem.
I certainly rule out the option of moving to Mexico and I have very strong reasons for that. Few of them would be:-
1. Everybody else is doing it. Think about this, when everybody is moving out of the states that means there will be a gap in demand and supply immediately. This can be used to your advantage.
2. What is Mexico notifies something in the similar pattern tomorrow when you already have settled down your manufacturing there. No matter what, but that is a sovereign country and therefore nothing is guaranteed.
Alternatives other than closing up U.S shop and moving to Mexico.
1. You eventually need to install the device in compliance with the directives but there can be a way out. The company can recover the cost in various other ways. Ex- adjust the cost of production, Adjust the cost of goods on the retail price level, Plan aggressively for a while to adjust the expense incurred for this new device.
2. Begin talks with the concerned authorities and show them your interest in helping for a cause. However, let them know it will be a financial blunder for the company to bear the cost alone and unlike other companies, you do not want to take away so many jobs as a result of closing the manufacturing plants in the USA. If you put across the point a way that reaches the rite ears I think they will be bound to find a sweet spot and hence a chance to share the expense.
3. Involve concerned Unions. Try and sensitize them on the issue so that they lend you a hand at showing the strength. At the end of the day this decision will impact so many lives so why not take them along to the negotiation table?
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