Case Study on THE BRAZILIAN SUBSIDIARY

A large, well known Canadian company had fully depreciated the equipment used to make specialized automobile components for North American Automobile producers. Although the equipment had been well-maintained and worked well, it required considerable hands-on labour to use. The result was high labour costs that made the company’s brake assemblies, axle mounts, and related products unprofitable. A decision was made to replace the equipment with more highly automated, numerically-controlled machine tools. Since the economic value of the old equipment exceeded its value as scrap, the equipment was shipped to the company’s Brazilian operations, where labour costs were considerably lower.

Upon arrival and set up of a new facility, the company received numerous profitable orders from Brazil’s rapidly growing automobile industry. Though the labour hours per product remained about the same, the lower Brazilian labour rates per product remained about the same, the lower Brazilian labour rates allowed the new facility to be profitable. Soon a second shift was added, and problems began. The equipment experienced a growing “downtime” because of machine failures. Quality-particularly on part dimensions-declined dramatically.

At a staff meeting the Brazilian plant manager met with his staff, including several industrial engineers who had been trained in Canada and the Union States. The engineers argued that the problems were almost certainly caused by maintenance since the machinery had worked well in Canada and initially in Brazil. The HR director agreed that maintenance on the old machinery was probably involved, but also noted that many of the “On-machine” instructions and maintenance manuals had not been translated into Portuguese. He also observed that the problems began after the second shift was hired.

QUESTIONS:

1. From the discussion of job-analysis information and job design in this chapter, what actions would you recommend to the HR department?
2. Given the problems associated with the second-shift, what differences would you look for between first shift and second shift workers?