Case Study IV-5 • Systems Support for a New Baxter Manufacturing Company Plant in Mexico 643the cost of shipping, the problems in getting products
across the border, and the difficulty in predicting exactly
when a shipment will be delivered all make customers pre-
fer to have their parts produced locally for their Mexican
factories. BMC management decided that in order to be an
important factor in the growing Mexican market, BMC
must have a factory in Mexico.
BMC has assured its U.S. workers and the community
in which its current plant is located that no present production
will be moved to Mexico—everything produced there will be
new business. The U.S. plant has been expanded 18 times
since the first unit was built, and there is little room for fur-
ther expansion on the site. If BMC’s sales are to continue to
grow, new plants will have to be built, and those in the United
States will probably be built closer to major customers.
BMC decided to build the new plant in Queretaro, a
thriving metropolis located about a 3-hour drive northwest
of Mexico City. The city of Queretaro has a population of
about 500,000, and its metropolitan area has a population of
about a million. It has excellent infrastructure for Mexico,
with progressive city leadership and a university. This
university is paperless. All course work and homework is
completed on computers—no paper at all! There is a lot
of technology education available, including tool and die
training programs. Also, some major U.S. consulting firms
have offices there. This environment is why BMC’s cus-
tomer and other manufacturers are locating in Queretaro.
The new factory will be located reasonably close to
the customer plant that it will serve. However, Kyle Baxter
intends to expand BMC’s business in Mexico, so in the
long run this plant will supply parts to other customers.
The new plant will start out small, but BMC has plenty of
land and the plant has been designed so that it can be
easily expanded as the need arises. The plant’s initial
planned dimensions are about 200 by 200 feet, providing
40,000 square feet of space. It will start with six presses
(two 125-ton, two 200-ton, and two 300-ton presses) but
with none of the huge 600- to 800-ton presses that BMC
has in the main plant. It will have some welders, a tool
room, and a tooling facility where dies can be maintained.
There will be offices in the plant for quality control, plant
engineering, and a shift supervisor, and office space along
the front for the plant manager, accounting manager,
human resources manager, clerical workers, and a computer
room. In addition it will have a break room, a training
room, and shower and locker facilities—most plants pro-
vide shower facilities in that part of Mexico. And there will
be a small kitchen where the workers can cook meals.
Don Collins designed the computer room for the
Mexican plant. It is located in a secure area next to a
permanent wall and will have adequate power, air condi-
tioning, emergency lighting, and everything that is needed
for a computer room. The plant will be wired with
category-5 copper wiring throughout. There are plans for
fiber-optic cable as the plant expands, so internal commu-
nications will not be a problem. They may or may not
install a central computer at the start. An Ethernet LAN
will connect the PCs in the plant.
Initially this plant will employ about 35 people in a
single shift operation. As of May 1, 2000, the plant man-
ager, Jesus Salazar, and the financial and human resources
manager, Maria Alvarez, had been hired. Both were from
the locality and speak some English. It is expected that the
other managers will speak some English, although they
may not be completely fluent. But the rest of the workers
will not be English-speaking. Initially two experienced
BMC managers, one from the tool room facility and the
other from plant engineering, will be sent to Queretaro to
help with the start-up and training. These two expatriate
managers have no international experience and neither
speaks Spanish. They are scheduled to return to the United
States within 2 years, after which the staff in Mexico should
be entirely local.
For the foreseeable future BMC will do all engineer-
ing, designing, and building of the dies in its U.S. facility
and ship them to the Mexican plant. They will have to do
some final tuning down there. Die maintenance will be
done locally, so BMC will have to develop some skilled
people there. That is one reason BMC is sending the two
managers from the United States to help them get started.
The Mexican plant was designed, the land was
acquired, and ground was broken for construction in
January 2000. The Mexican plant was scheduled to begin
to deliver parts to its major customer in December 2000.
For tax and legal reasons, BMC has established a
wholly owned subsidiary corporation to own and operate
the Mexican plant. BMC will treat the Mexican plant just
like an outside contractor—customers will place orders
with the BMC home office and pay the home office for the
parts. Then the home office will pay the Mexican sub-
sidiary for the work it performs and the service it provides.
The Mexican plant will ship the parts it produces directly
to the customer, and will work directly with the customer
on operational issues such as quality.IS Issues
When BMC management decided to build a plant in
Mexico, Don Collins’ first concern was how to deal with
the systems needs of a plant in Mexico. When this question
arose BMC President Kyle Baxter’s first reaction was:We want to have good systems down there, and
we ought to use this opportunity to consider the