Microlite Case Study
Overview
Microlite S.A. is a company in Brazil that manufactures alkaline and zinc-carbon batteries. In 1992 the company was faced with a reduction of tariffs on imported manufactured goods which would mean that the international competition would increase significantly. Luiz Pinto, who was a Microlite manager at the time, was faced with the opportunity to reduce labor and manufacturing costs by closing down the plant in Guarulhos and move production to the plant in Jaboatao.
The choices that Mr. Pinto was faced with were to move the Guarulhos equipment to Jaboatao or to purchase new and faster equipment. Moving the Guarulhos equipment to Jaboatao would minimize the capital investment and also increase the workflow due to the reliability of the equipment. Purchasing the new equipment would require more capital investment but reduce labor and increase production. The new tariff reductions were set to be implemented in 1995 and the problems were that Mr. Pinto had to reduce labor and increase productivity in an effort to maintain the large share of the Brazilian battery market that it currently owned.
One non-production issue that Mr. Pinto is faced with is from a financial aspect. One option presented to Mr. Pinto is to purchase new Pan-Orient equipment. The investment in new equipment would be approximately $2 million. It is unknown from the case study how the $2 million would be paid or financed. This, however, would have an impact on the decision of the stakeholders on whether to accept this proposal or not.
The Current Situation
The current bottlenecks in the operation of the AA battery operation at Jaboatao are the steps “add paste to cup” and “inspect carbon rods.” These two steps operate below the required rate of production and would need to be corrected to improve productivity. In an effort to increase productivity, the Jaboatao plant should add one machine from Guarulhos dedicated to “add paste to cup” production. While this
Microlite S.A. is a company in Brazil that manufactures alkaline and zinc-carbon batteries. In 1992 the company was faced with a reduction of tariffs on imported manufactured goods which would mean that the international competition would increase significantly. Luiz Pinto, who was a Microlite manager at the time, was faced with the opportunity to reduce labor and manufacturing costs by closing down the plant in Guarulhos and move production to the plant in Jaboatao.
The choices that Mr. Pinto was faced with were to move the Guarulhos equipment to Jaboatao or to purchase new and faster equipment. Moving the Guarulhos equipment to Jaboatao would minimize the capital investment and also increase the workflow due to the reliability of the equipment. Purchasing the new equipment would require more capital investment but reduce labor and increase production. The new tariff reductions were set to be implemented in 1995 and the problems were that Mr. Pinto had to reduce labor and increase productivity in an effort to maintain the large share of the Brazilian battery market that it currently owned.
One non-production issue that Mr. Pinto is faced with is from a financial aspect. One option presented to Mr. Pinto is to purchase new Pan-Orient equipment. The investment in new equipment would be approximately $2 million. It is unknown from the case study how the $2 million would be paid or financed. This, however, would have an impact on the decision of the stakeholders on whether to accept this proposal or not.
The Current Situation
The current bottlenecks in the operation of the AA battery operation at Jaboatao are the steps “add paste to cup” and “inspect carbon rods.” These two steps operate below the required rate of production and would need to be corrected to improve productivity. In an effort to increase productivity, the Jaboatao plant should add one machine from Guarulhos dedicated to “add paste to cup” production. While this