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    Advantages of Manufacturing in Canada

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    Smitheford Pharmaceuticals was founded by a former officer in the Civil War, General Robert Smitheford, in 1878. He moved his family to Colorado Springs to aid in his wife's tuberculosis condition. At the time, it was believed that the sunshine and high altitude had curative effects.

    The company quickly grew and expanded. To improve the economies of several growing towns in Colorado, General Smitheford built additional manufacturing facilities in Pueblo, Grand Junction, Fort Collins, and Durango, Colorado.

    Smitheford was an excellent leader, as demonstrated by his rapid rise in the Union Army. He used management incentives and was an early follower of Frederick Taylor on methods improvement and employee satisfaction. The company has since adopted total quality management (TQM) philosophies but has done a poor job of implementing these principles in manufacturing.

    By the 1950s, Smitheford Pharmaceuticals grew to become the 6th-largest pharmaceutical firm in the United States. Expansion in manufacturing occurred in the 1970s and 1980s with operations in Canada, Puerto Rico, France, Japan, Mexico, and Brazil.

    Many challenges are facing the industry today. NAFTA impacted some advantages that Canadian manufacturing might have had. Stricter FDA guidelines have made transportation of partially manufactured products more complicated; drug interactions, especially for the elderly, can seriously affect whether or not to release a new product, and manufacturing equipment has become more sophisticated, and with the advanced technology comes increase fixed costs.

    Midlevel manager of production operations at Smitheford. Look at several methods to improve efficiency and effectiveness for its area of responsibility. Ue quantitative and qualitative methods to make recommendations for the improvements.

    Government regulations have impacted the site planning and capacity planning at Smitheford Pharmaceuticals. NAFTA has had an impact on the advantages of the ownership of manufacturing facilities in Canada.

    In preparation for a meeting with leadership, review and discuss the following:

    What advantages did Smitheford Pharmaceuticals have by owning manufacturing facilities in Canada prior to NAFTA?

    With the passage of NAFTA, what advantages remain by having manufacturing facilities still in Canada according to your research and judgment?

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    Advantages Prior to NAFTA

    Smitheford Pharmaceuticals had several advantages by owning manufacturing facilities in Canada prior to NAFTA. It had labor and real estate at lower cost in Canada before the implementation of the North American Free Trade Agreement. In addition, company had to follow easy process for transportation of partially manufactured goods due to less strict FDA regulations. Other resources such as technology, power, capital, etc. were available at comparatively lower cost that made the production of manufacturing company cost effective and smoother (David, 2006).
    Before implementation of this agreement, company easily exported its products in foreign countries without any fear of quality concerns. Therefore, after NAFTA, company has to increase its investment on research and development that has increased its cost of production. Before this, it was convenient for the company to manufacture its products as per standards and regulations in manufacturing industry (Hufbauer & Schott, 2005). But now, it is cumbersome for the company to comply with all rules and regulations under this agreement.
    In past, transport cost was also less that was advantageous for the company to reduce overall cost of the production. Apart from this, there were no international and regional standards that were beneficial for the company to trade ...

    Solution Summary

    The advantages of manufacturing in Canada are determined.