MANAGEMENT INSIGHT Time to Move to a New Neighborhood? If you have ever moved, then you know how complicated and costly it can be. Now consider what it would be like for a manufacturing company with 260 employees and a 170,000-square- foot facility to move from southern California to Idaho. That is what Buck Knives did in order to save its company from financial ruin. Electricity rates in Idaho were half those in California, workers' compensation was one-third the cost, and factory wages were 20% lower. Combined, this would reduce manufacturing costs by $600,000 per year. Moving the factory would cost about $8.5 million, plus $4 million to move key employees. Offsetting these costs was the esti- mated $11 million selling price of the California property. Based on these estimates, the move would pay for itself in three years. Ultimately, the company received only $7.5 million for its California property, only 58 of 75 key employees were willing to move, construction was delayed by a year which caused the new plant to increase in price by $1.5 million, and wages surged in Idaho due to low unemploy- ment. Despite all of these complications, though, the company considers the move a great success. Source: Chris Lydgate, "The Buck Stopped," Inc. Magazine (May 2006), pp. 87-95. What were some of the factors that complicated the company's decision to move? How should the company have incorporated such factors into its incremental analysis? (See page 1271.) 26-43