Globalization - Triumph and Consequences

In December, 2010, the Triconex factory moved most of its operations from Irvine, California to Reynosa, Mexico.   Over 100 people lost their jobs.    It was a triumph and consequence of globalization.   The factory had produced the high-end Triconex safety controllers for the past twenty-five years.  

When the factory started production, in 1986, there was a rigid and relentless commitment to quality, largely led by Denny Harris, who had joined the company from Ford.   In the sprawling diversity of Orange County, Triconex was staffed by largely by Hispanic and Asian immigrants.  The engineering drew from the booming local aerospace industry and tended towards Caucasian, Indian and Eastern European descent.  

The manufacturing move to lower cost areas meant that the core product, the Tricon, would be more cost competitive.  Some jobs would stay, and the project engineering department would grow and keep hiring.   Administrative tasks would largely be outsourced overseas and sales and marketing functions largely centralized in the U.S.  corporate headquarters.  

The triumph of globalization was a company that was more cost competitive by outsourcing business functions and the consequences were that people lost their job.   In an irony, the overwhelming number of people who lost their jobs at the Irvine factory that day were Hispanic - and their jobs were being sent to Mexico.

Triconex was a hardware company, with significant manufacturing costs.   Wonderware was a pure software solutions play, and their factory was intellectual property.  Still, among the lessons that Dennis Morin learned while working at Triconex was a culture of relentless  quality.   Employees at both companies knew they were producing the best products in market leading companies. 

Peter Drucker, the famed economist and management guru, once said that all jobs should be outsourced except that of the CEO.  He meant that businesses must continuously outsource tasks that can be done cheaper elsewhere (consequences) - and higher end jobs will continue to grow (triumph).

In the History of a Safer World, both Triconex and Wonderware operated locally but defined themselves globally from the start of their business. This bold and visionary template allowed the companies to thrive from their origin in a high cost area to succeed in the international marketplace.   Twenty-five years after the founding, it is still a template for success.

Because the visionary founders knew why they were building the products, customers wanted to know what they were building and become part of the user community.   The secret sauce was the hiring of risk-taking employees who formed a collective ego to change the world - and knew they had a chance to make more money here than anywhere else.