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The hidden costs of off-shoring

Saving money south of the border can be an expensive proposition

By Anonymous

The hidden costs of off-shoring Saving money south of the border can be an expensive proposition

April 18, 2006

Back in the early 1980s, I worked for a company that made high-speed assembly machines. I don’t mean that the machines used “assembly language”; they were designed to assemble things, like desks, sinks, and garbage cans. They were governed by PLCs (programmable logic controllers), small computers designed to run machines in an industrial environment. They could even accept real-world input from devices such as push-buttons, limit switches, and sensors. My job was to program and troubleshoot the PLCs.

Aside from electronic controllers, these assembly machines were mostly mechanical: lots of gears, levers, and manual adjustments. In fact, you could change the speed of the machine to increase or decrease production simply by adjusting a pulley. After we tested a machine to make sure it performed properly, the machine would be crated and shipped to the customer. Most times, the customer would send its maintenance people to our facility for training on the machine before it shipped. But not always.

One job I did was for a manufacturing facility just outside Mexico City during the peak of the maquiladoras -- U.S. companies that set up shop in Mexico to take advantage of cheaper labor. On this occasion, I guess the plant management decided to save even more money by skipping the training.

The machine had been on the production line for about a week when we got a panicked call from the company’s U.S. office. Its new high-speed machine was down! Suddenly neither expense nor personal inconvenience was to be spared; they wanted me, the programmer, down in Mexico ASAP.

I called the assembly line manager in Mexico, but because I didn’t speak Spanish, and the manager’s English was limited, it was hard to get a clear idea of the nature of the problem. Early the next morning I was on a plane to Mexico, with a spare PLC in my carry-on.

When I got to the plant I noticed that something we had not shipped was connected to the machine. A variable transformer (often called a Variac) was wired into the incoming power to the PLC. I pointed at the thing and pantomimed curiosity. The maintenance person then explained everything -- in Spanish. I didn’t have the slightest idea what he was saying, so we found someone with minimal bilingual skills.

Yikes! Turns out, the machine had been running so much faster than the rest of the assembly line that the manager had to slow it down. He had slowed it down all right. He had fried the PLC by fooling with the input voltage, bringing the machine to a screeching halt.

It took about 60 seconds to hard-code the proper speed change into my spare PLC and another couple of minutes to install it. (They’re designed to swap in and out quickly.) Next, I showed the guy the right way to adjust the speed of the machine, by adjusting a tension pulley designed for that purpose. Then I was on my way back to the airport, where I prepared an invoice for over $25,000 in service fees, travel expenses, and replacement parts while I waited for my flight to board.

We never heard from that customer again. But when I read about the current controversies over outsourcing, I find myself wondering if that company’s CFO ever figured out whether skimping on training was really saving the company money. I mean, after he factored in those $25,000 service calls.

By Anonymous

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