Phase 1 Discussion Board 2 Patrick Eschete Colorado Technical University Online MGMT640-1301B-02 : Operations Management Date: February 19,

2013 Instructor: M. Zelihic

Introduction For the purpose of this discussion we will be addressing the effects that governmental regulations, restrictions and laws will have on the Smitheford Pharmaceuticals manufacturing company while owning farcicality in Canada. We cover the advantages this company and others would have before and after the implementation of The North American Free Trade Agreement (NAFTA), as the NAFTA has impacted ownership of these pharmaceutical manufacturing companies. North American Free Trade Agreement definition and purpose The North American Free Trade Agreement (NAFTA) is trade agreement that was implemented on January 1 of 1994. The purpose of this agreement was to remove any present or potential barriers for trade and/or investments made by companies between Canada, Mexico and the United States. With this agreement there was the encouragement of economic stimulations and relations between the three countries and within their own respective economies. This done by the increasing the trades which in turn would increase productions and manufacturing, worker wages and increased employment with each country. The North American Free Trade Agreement was credited for increasing trades between the three nations from $330 billion in 1993 to a dramatic and profitable $1.2 trillion as of 2011 (North American Free Trade Agreement (NAFTA), 2013). Advantage Prior to the NAFTA in Canada There are several advantages for this company to attain if they own and operate a manufacturing plant in Canada. Smitheford will be presented with all the benefits and annuities that manufactures typically given within Canada. Some of the advantages given to Smitheford Pharmaceuticals and other manufacturing companies prior to the introduction of the North American Free Trade Agreement were lower labor and lower real-estate (as long as it was

classified as industrial property) in Canada. Power, other utilities and natural resources were comparatively lower. Other advantages for manufacturing expenses included things such as transportation cost, this was reduced by 30%, then there was encouraging monetary exchange rate, metal production plants, decreased annul cost index and metal production plants (Canadian manufacturing, North American Free Trade Agreement, production, competitiveness, 2013). Advantages after the implementation of NAFTA in Canada The advantages hindered after the implementation of the North American Free Trade Agreement as it distressed the high package production jobs, increased strains on the infrastructure and allowed outsourcing of workforce and labor into other countries. The changes after the implementation of the North American Free Trade Agreement have had some very adverse effects on manufacturing plants presently in Canada. One of the major hurdles the pharmaceutical manufactures faced as a cause of the North American Free Trade Agreement, was it did not include other manufacturing plants, other than that under this agreement industry implemented a new form which includes increased labor cost through mechanization and modernization. The biggest of the hurdles faced by the manufacturing industry in Canada are the labor cost, monetary exchange rate, materials and other resource prices and availability, and the lack of skilled workers and professionals. One must not forget the lack of coordination and organized boarder regulation that has come into light as a big challenge for the manufacturing industry (manufacturing, Canadian dollar, parity, manufacturers, exporters, cross-border trade, NAFTA, foreign competition, 2013). With that being said, the North American Free Trade Agreement has been given credit for having a very huge positive impact ownership of manufacturing plants within Canada. Canada has shown benefits due to the increased division of their labor workforce and restructuring which was a direct result of the North American Free Trade Agreement (The NAFTA's Impact, 2013) These production plants remained the same after the agreement. The lower tariff barrier provided by Canada under the North American Free Trade Agreement allows more FDI or (Foreign Direct Investments) in the manufacturing industry. With The increased incursion of foreign direct investments, this has allowed for increased production capacity within the company.

References Deloitte | Canadian manufacturing, NAFTA, production, competitiveness. (n.d.). Deloitte | Audit, Consulting, Financial Advisory, Risk Management and Tax Services. Retrieved February 19, 2013, from http://www.deloitte.com/view/en_CA/ca/pressroom/ca-pressreleasesen/fcd9ae59be0fb110VgnVCM100000ba42f00aRCRD.htm

Deloitte | manufacturing, Canadian dollar, parity, manufacturers, exporters, cross-border trade, NAFTA, foreign competition. (n.d.). Deloitte | Audit, Consulting, Financial Advisory, Risk Management and Tax Services. Retrieved February 19, 2013, from http://www.deloitte.com/view/en_ca/ca/702cae59be0fb110VgnVCM100000ba42f00aR CRD.htm North American Free Trade Agreement (NAFTA) . (n.d.). USDA Foreign Agricultural Service (FAS). Retrieved February 19, 2013, from http://www.fas.usda.gov/itp/policy/nafta/nafta.asp continent, i. t., economy, t. N., dry, e. o., more, t. r., Canadians, b. j., choice, m., et al. (n.d.). The NAFTA's Impact - Canada and the North American Free Trade Agreemen, NAFTAs Impact, Trade Results. Foreign Affairs and International Trade Canada (DFAIT) | Affaires trangres et Commerce international Canada (MAECI). Retrieved February 19, 2013, from http://www.international.gc.ca/trade-agreementsaccords-commerciaux/agr-acc/nafta-alena/nafta5_section04.aspx?view=d