Page 241 - DMGT206_PRODUCTION_AND_OPERATIONS_MANAGEMENT

Production and Operations Management

Notes The type and level of skill possessed by the workforce must also be considered. If a
particular required skill is not available, then training costs may be prohibitive and the
resulting level of productivity inadequate.
In the call center business, the need of English speaking workers becomes a factor in
deciding the location of your business capacity. India has come on the map for software
development because it has a large number of skilled software personnel. Microsoft,
Texas Instruments, Cisco Systems, Oracle, etc., some of the best-known names in software
applications, have located facilities in India.
Many countries, like China and India, are turning out to be attractive locations for industries
that require large contingents of unskilled labour.

Did u know? Hyundai Motors recently announced that India would be its hub for supply of
small cars and automobile components worldwide. Companies like Nike, Reebok, etc.,
are setting-up supply chains in Asia and South America. Many US automobile
manufacturers are moving production facilities to Mexico.
Though, this is often very appealing, you need to bear in mind that conditions can change
in time. For example, while labour costs may be low in a certain geographic location now,
this will change if the demand for labour grows significantly.

In considering the labour supply, the following points should be considered.
(a) Skills available – size of the labour force – productivity levels.
(b) Unionization – prevailing labour – management attitudes.
(c) History of local labour relations – turnover rates – absenteeism, etc.
Some organizations have relocated from a high skill/high cost area to a low skill/low
cost area without any decrease in productivity. Sometimes it has been due to skill
availability and labour-management relations but often it has been the result of higher
investment in mechanization.

Notes Labour Costs of Manufacturing Workers in Different Countries

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