A stakeholder is any person or group that has a claim or concern in an organization. The interest of each of Acme Motor Company’s stakeholder (stockholders, maquiladora workers, consumer, and the Mexican government) can be affected by the scenario given. The case of a maquiladora worker named Enrique Santiago can benefit or harm some or Acme Motor Company’s entire stakeholder. Below are the perspectives of each of Acme Motor Company’s stakeholder on the scenario given:
Acme Management and Stockholders
Every company’s management goal is to maximize profit and to minimize costs. In some instances, the goal of being cost-effective means neglecting the welfare of its workers.
The passage of the North American Free Trade Agreement (NAFTA) has a “tremendous impact on trade competitiveness” (TED , 1996). Companies avoid labor issues such as environmental, , working conditions and pay since these are all barriers of a free trade affecting profits (TED case study, 1996). Most of the investors who buy a company’s stock are interested on the profits that a company can earn and do not put much attention to other factors such as the welfare of its employees or workers. The cost of doing business in Mexico is cheaper, thus most company’s has lower production cost resulting to more profits. Most companies provide lower wages due to the lower cost of living in Mexico.
The cost savings of manufacturing in Mexico is one the reasons that the maquiladora industry has grown significantly under NAFTA (Celestino, no date). Under the Mexican Labor Law, maquiladora workers are entitled to overtime premiums and a provision of free medical and transport services. Mr. Enrique Santiago and other maquiladora workers of Acme Motor Company working for 14-15 hours a day are entitled to an overtime pay and a transport service since they are working beyond the regular working hours specially at night. In addition, Mr. Enrique Santiago must be provided with a free medical service since his daily task can harm his physical well-being. It is important that Maquiladora workers understand the risks or dangers they deal at work in order to protect their interest.
According to Sawicki (1998), “majority of the Mexicans that work in the maquiladora's experience an unpleasant working environment that includes exposure to many potentially hazardous materials, lack of information, and shortage of protective equipment”. Workers must demand their employers for a safe workplace. In addition to a safe workplace Maquiladora workers at Acme Motors Company should be provided with sufficient facilities such as clean drinking water, wash area, and proper working clothes. Wages in the Maquiladora is equal to an average of two Mexican minimum wages which is still not enough since an average of four to five minimum wages per day is necessary to attain minimum sustainability.
Customers are always after a company’s product quality, good customer service, and fair price.
However, the above scenario can have an effect on Acme Motor Company since issues facing a company specially labor-related issues could influence customer’s decision making.
A reduction on workforce of some companies due to the recent economic downturn in the United States affected the auto industry and other industries in Mexico. The impact of globalization introduced laborsaving manufacturing processes that affect more than 30% of Acme Motor Company’s maquiladora workers. The global economic mandate in Mexico brings the establishment of the maquiladora, which increased the profits of many companies due to lower labor cost, absence of environmental, safety, and health restrictions, and greater control against labor union movements.
Mexico is a country with one of the strongest labor codes. However, the lenient enforcement of health, safety, and salary standards of the maquiladora industries in the country can cause harm to workers since their safety and benefit are taken for granted in lieu of maximizing profits. The maquiladora industry is an example of the cost of economic policies that privilege corporate profits rather than bringing them into balance with the needs of workers, communities, and the environment (The maquiladora industry, 2006). The Mexican government should strictly enforce the country’s labor code in the maquiladoras since the passage of NAFTA brought the decline in the working conditions, labor rights, and social protections of the workers.
Acme Motor Company must not take for granted the welfare of its maquiladora workers. The company’s management must formulate ways on how to boost employee morale, productivity, job satisfaction, and incentives to motivate workers. There is a saying that “prevention is better than cure”. The cost of labor uprising is greater; since it can affect not only the production operations at Acme Motor Corporation but also a loss on the company’s image and goodwill.
Celestino, M. L. (no date). Manufacturing in Mexico. Retrieved December 13, 2006 from: http://www.maqguide.com/Worldtrade.htm
Sawicki, S. (1998). The maquiladoras: Back door pollution. Norwlak: the environmental magazine, Volume 9 Issue 4 TED case study (1996). Nafta and the Environment. Retrieved December 12, 2006 from: http://www.american.edu/ted/Maquila.HTM
The maquiladora industry (2006). Retrieved December 13, 2006 from: http://www.afsc.org/mexico-us-border/maquiladora.htm