No Marshmallows, Just Term Papers
“The Scotts Miracle-Gro Company (Scotts), based in Marysville, Ohio, was formed by a
1995 merger of Miracle-Gro and The Scotts Company. The merger made Scotts the largest company in the North American lawn and garden industry. It was the world’s leading
supplier and marketer of consumer products for do-it-yourself lawn and garden care, with
products for professional horticulture as well.1 In the 2007 fiscal year, Scotts had net sales
of $2.7 billion
Synopsis of the Situation
Scott's Miracle-Gro plant in Temecula, CA is under the microscope of the corporate office. The company is comparing how cost effective keeping this plant would be compared to outsourcing a lot of its manufacturing to China. The plant manager needs to find a way to keep the plant in Temecula, while continuing to provide cost effective ways to manufacture their Seed Spreaders and continuing to have positive growth for the company.
The key issues in this case study consist of cost drivers that the Temecula plant has that could hinder the argument to keep the manufacturing plant in the United States rather than outsourcing to China. These cost drivers include:
Raw Materials- “The Temecula plant had developed an extensive “regrind” process
that allowed the Temecula plant to save annually an average of approximately $100,000* in raw materials costs,
relative to a typical contract manufacturer
.”(Gray) However, the cost of material compared to what other manufactures charge is pretty comparable. This makes the regrind process not as cost effective than originally thought.
Labor Costs- On average the hourly wage of the plants 195 employees...