Lower Wage Costs example essay topic

The article I found is called GM, Ford Step Up Efforts to Reduce Costs in Europe. GM's Opel subsidiary in Germany has become the largest European employer and wants employees to work longer without a raise. The Jaguar unit in the United Kingdom is planning to cut productions by 15,000 cars. Jaguar is being effected by the US dollars weakness against the British pound and the euro, which undercuts the profits for European companies that export mist of there products to the US. Opel wants to move its company out of Germany to lower wage regions because they have high labor cost.

The want to extent their workweek from 35 hours a week to 40 hours a week and they want to freeze works pay. Mercedes Benz was thinking about giving their workers a 2.8% raise but didn't do it instead they are making their workers work longer hours with no additional pay. The general workers union in the United Kingdom called the production cuts "a tragedy" but said that they have received assurances that there would be no job cuts as a result of production cuts. This article touches upon many topics we had discussed in class, one is job design. The companies have had to come up with a plan to cut losses. They had to ask themselves what will be done, who will do it, how will it be done, and where will it be done.

Their biggest goals here are productions and cut down on losses. In the case of Opel, the answers to those questions are simple. Producing cars is what will be done, factory works will do it, its will be done by extending the workweek from 35 hours a week to 40 hours a week without additional pay, and it will be done in eastern Europe or a lower wage region. This will lower their costs and they will still be able to produce the same about if not more cars.

Another topic this article touched on is need for location decision. The key here is cost of doing business. They need to look at long term commitments and cost; identifying locations were lower wage regions are, adding new factories and the move. The first stage is to minimize transportation costs, labor factors and regional taxes, regulations and trade barriers.

Opel wants to move to another place they have to see the advantages and disadvantages of bringing raw materials to their new factory. Will it cheaper to buy steal when they get a new factory or will it be cheaper to import it from their other factory? These are questions they need to ask themselves. Stage two is community considerations which involve quality of life, taxes, environment regulations and utilities.

Here they need to find out if there are any places for them to move to or if they should build a new factory, this involves seeing if that state or country will allow them to built a new place and what their regulations are on environmental laws. The next stage is three and in this stage you need to look at the land. They need to look at access, availability of water sewers and utilities; they also need to look at development and environmental costs. When making a decision on moving they need to focus on cost, energy cost, labor cost, building and leasing cost.

These are very important to Opel. Moving to a lower wage region may help them in the labor cost category but it may still be expensive to build or lease a facility. When making location decisions decide on criteria, identify the important factors in this case lower wage costs, develop location alternatives and evaluate them.