Southern Recreational Vehicle Company Essay

714 Words2 Pages

Southern Recreational Vehicle Company A Case Study Southern Recreational Vehicle Company (SRVC) began having hardship despite increased sales. The increasingly rise in labor, utilities and materials along with taxes and transportation expenses put SRVC in a position to consider and ultimately relocate from St. Louis, Missouri to a new plant in Ridgecrest, Mississippi to reduce its operating cost. Evaluate the inducements offered Southern Recreational Vehicle Company by community leaders in Ridgecrest, Mississippi. Ridgecrest, Mississippi is a small city with great incentives that will help re-establish a revenue source for SRVC by exempting county and municipal taxes for 5 years, receiving free water and sewage services, incentives to expand when needed, and support with training. Furthermore, Mississippi is a right to work state which means the state prohibits labor unions and employers from entering into contracts that …show more content…

Are they justifiable? O’Brian claims relocation is needed due to the increase in operating costs and unreasonable demands forced upon by the union as stated in a letter to employees. Yes, O’Brian’s reasoning’s are justified. With the high cost of doing business in St. Louis with the increase in transportation tax, material cost, utilities, and high salaries, SRVC will benefit greatly with lower taxes, lower wages, and lower transportation taxes. It is important to analyze operation expenses as it makes up 50% of a company’s operation budget (Heizer & Render, 2014). Did O’Brian do all he could to stay in St. Louis? Were discussions had with the city for possible tax incentives? Did he work with suppliers to reduce cost? Did he work with unions to identify salary solutions? Did he talk with staff and weigh in their solutions? These are all the questions that needed to be answered along with the analysis of a new location. If these were not done, O’Brian did not foster due

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