Drotos Electronics expansion proposal for Mexican manufacturing facility

Drotos Electronics Expansion Proposal

Drotos Electronics is one the largest electronics companies in the United States and in Germany. Currently, plans are being considered for expanding manufacturing capacities to Mexico. However, this expansion has facilitated expression of many concerns regarding this potential move. Concerns include the possibility that this expansion will allow an opportunity for increasing the power of drug cartels, environmental concerns, jobs that promote low pay and poor working conditions, and political concerns over opposition to expansion beyond the United States. This research will address those concerns and explore further how they will affect the current expansion proposal.

Drug Cartel Power

Author and filmmaker Natalia Almada, provided one of the most realistic portrayals of the power of the Mexican drug cartels and their ability to rule by fear. Almada provided perhaps one of the most graphic accounts of the violence utilized by Mexican drug cartels to gain power (Heckler, 2012). According to Almada, since 2006 nearly 50,000 people have died in the war against drugs on the border between the United States and Mexico. Almada also claims that the U.S. is one of the biggest consumers, funneling billions of dollars across the border to the cartel lords.

Almada's work highlights the scope and scale of the power of the drug cartels in Mexico. Mexico's drug cartel is a highly organized paramilitary organization that has enough power to challenge the Mexican army in an organized effort. The question is whether American manufacturers located in Mexico contribute to the problem. Recently, a well published attack on a Pepsi company subsidiary brought attention to the issue by the mass media. However, these cases are considered to be isolated and localized, rather than a general condition that is widespread. The Mexican and U.S. governments are taking active measures to prevent future attacks and to prevent them from becoming generalized. It is not felt that drug cartel activity would have a significant impact on the Mexican subsidiary of Drotos Electronics (Stevenson, 2012).

Low Wage Jobs

American companies have been accused of opening manufacturing facilities in Mexico seeking cheap labor. It is true that labor is cheaper in Mexico than in the United States where there is a more competitive market. Companies have been accused of providing unsafe working conditions, but for the most part, this practice is frowned upon and if caught, the company faces severe penalties, not to mention negative publicity. In addition, one cannot compare local wages in a small village in Mexico to the value of the same wage in the U.S. One has to consider local cost of living in the determination of fair wages. Drotos Electronics provides some of the best working conditions and wage packages for its employees in both U.S. And German facilities. It intends to continue this practice in any facility that it opens in the world.

Environmental Concerns

Environmental damage has a concern regardless of the location of a proposed expansion project. As part of NAFTA, stricter environmental policing of all manufacturing facilities was included as part of the agreement. Mexico now has environmental laws and enforcement capabilities similar to that of the United States and any manufacturing facility that intends to locate a facility in Mexico must abide by and follow environmental laws or face the penalties (Behre, 2008). Environmental laws have become global issues and manufacturing companies must abide by increasingly stringent laws, regardless of where they choose to operate in the world.

Political Concerns

Concerns have been expressed regarding criticism over manufacturing facilities moving overseas and the perceived lost U.S. jobs. However, the global economy continues to represent a highly integrated entity that has increased jobs in many sectors. One of the most significant impacts is an increase in jobs inthe transportation and international shipment segment of the market. International banking, and other sectors also continue to increase as a result of manufacturing jobs in any country. The job loss and impact of moving the manufacturing facility to Mexico would be small and localized in comparison to the many jobs that would be created through transportation and services related to the shipment of goods. Drotos electronics already operates in two different countries and operations in Mexico would not have an impact on operations elsewhere. Instead, it means more jobs through more products to be shipped, resulting in the continued growth of the transportation sector. Moving to Mexico does no mean a loss of jobs, it simply means a shift in the job market.