4 Columbia Business School Interviewer: Looking at the first option, how would you determine which plants to close? Interviewee: | would look at the overall cost per unit at each plant and determine which ‘would result in the most efficient overall location. Costs could be classified into major subsets such as labor, distribution (from Mexico vs. Minnesota). I would also want to know if quality of product differs across any of the plants. Finally, it would be valuable to analyze whether our client could change their plant size and configuration to generate further efficiencies. Interviewer: Good. Quality is fairly consisient across all of the plants and they are not looking into plant reconfiguration at this point. Labor costs are the most significant contribution to cost per unit. Given that, what do you recommend? Interviewee: I recommend our client closes the Minnesota plants and increases overall utilization of the plants in Mexico by adding shifts, Interviewer: What are the major risks/concerns of this recommendation? Interview © Negative PR resulting from closing US plants Scalability issues (can the Mexican plants quickly increase capacity?) Quality issues stemming from increased production Reliance on one location/region for all manufacturing Management Consulting Association Case Book 2007 43