Enterprise Services Outlook Logo

Eaton Corp Still Pro Outsourcing Even After Huge Tax Incentives

By ESOutlook | Tuesday, April 28, 2015

content-image

Power management company Eaton Corp announced that it will be outsourcing the manufacture of printed circuit boards from its factory in Watertown Wisconsin to Tijuana Mexico. This is the second time in the past three years that Eaton has outsourced part of its manufacturing concern to Mexico. This move by the company will cost 93 of the existing employees at the Wisconsin plant their jobs. According to Eaton Corp spokesperson Ann Marie Halal these moves were made in response to the rough market conditions. "These actions are in response to ongoing business and market conditions and a continued challenging business climate. They will allow the business to continue to compete globally and meet market demand”, she said.

Eaton Corp has received nearly $370,000 in tax incentives from the Wisconsin Economic Development Corporation (WEDC) from 2012. In 2013 Eaton had laid off 163 employees at its Cooper Power Systems plant in Pewaukee after receiving $190,000 in tax credits from the WEDC. The WEDC officials have raised severe concerns over the actions of Eaton, through which Eaton has violated the rules and objectives set by the WEDC to which the companies are bound when they are awarded the tax incentives. Mark Maley a WEDC spokesperson had this t o say on the issue "All companies that receive awards from WEDC are contractually required to meet certain objectives, which typically include job creation, job retention and/or capital investment. Companies failing to fulfill contractual obligations are subject to clawbacks or denial of tax credit claims." WEDC officials have already held discussions with Eaton regarding the impact of their decision on all the people involved including the employees currently under contract at their existing plant. Amidst all the problems Eaton assured that the existing facility in Watertown will continue to functions with a complement of employees which will be around 124 at the end of this year. While the laid off employees have not given any official statement on their employer’s, reports state that the employees have parted on good terms. This decision by Eaton however, brings to focus the potential of Tijuana as a prime location for technological production outsourcing, with more and more companies opting to shift their manufacturing process to there in the past decade.

 

Sourcing Insights

William Miller, SVP & CIO, Broadcom, Inc.

Confluence of Trends is Changing the Landscape of Industry

By William Miller, SVP & CIO, Broadcom, Inc.

Dr. Cheryl Flink, Chief Strategy Officer, Market Force

Boosting Store- Level Performance through Big Data

By Dr. Cheryl Flink, Chief Strategy Officer, Market Force

Paul Kent, VP-Big Data, SAS

Using Hadoop as an Analytics Catalyst

By Paul Kent, VP-Big Data, SAS