Electrolux: A Case Study of Plant Relocation from Michigan to Mexico

  • maite piedra fiu
Keywords: Juarez Mexico, Electrolux, Greenville Michigan, outsourcing, plant relocation, outsource, case study


This report provides an analysis and evaluation of the incentive for and affect of firms relocating their manufacturing plants from Michigan to Mexico; using the case of the
Swedish manufacturer, Electrolux, as evidence of all points discussed. The method for analysis employed will be to explore the historical stock price of Electrolux to match
stock performance at specific times with the firms strategic decisions of those same points in time. This will be used to aid in showing economic incentives for multinational
firms to relocate to low labor cost countries. For the intents and purposes of this study, the dates of most interest will be those just before and immediately after Electrolux
announced that the Michigan plant was to be closed and relocated to Mexico, with January 16th being the date the announcement was made (Share Price Development, 2004). After
analyzing the economic incentive for plant relocation, the lasting effect left on the state of Michigan in terms of laid off workers and economic downturn will be reviewed to
illuminate the detrimental effects that firm relocation form the United States to Mexico can have.

The information gained from the data and information analyzed shows that Electrolux’s decision to relocate from Greenville, Michigan to Juarez, Mexico provided the firm with
the most economic return, but at the cost of lost company goodwill, a highly trained and experienced workforce, and a deteriorated economic environment left for the newly