Download Case 3 - Loss of manufacturing jobs

Case 3 - Loss of manufacturing jobs
The original manufacturing facility of the privately-held XYZ Widget company is no
longer as efficient as it once was and some in upper management believe that the
profitability of the company could drastically decline in the near future and eventually
lead to bankruptcy. After an extensive analysis, a consulting firm has proposed to the
CEO and Board of Directors that one option to consider is to shut down this factory and
have the work they do accomplished in a LDC which is interested in giving its own
economy a boost and obtaining work for many of its impoverished citizens. This would
basically "out source" or "off-shore" the work presently being done in the older factory
and lower labor costs by drastically reducing salaries, eliminating many costs associated
with worker benefits and have other economic benefits as well.
Since the factories would not be in the U. S. and subject to U. S. laws, expenses
associated with meeting high U.S. environmental standards would also be eliminated, at
least from this one facility. Collectively, these changes would increase the company's
profitability and increase its share n the market place, making it more attractive to
investors.
Most of the workers in this less productive factory are older and close to retirement.
Many have been with the company for many years and have been recognized and
rewarded as loyal and dedicated employees. Management readily acknowledges that
because of their efforts, XYZ Widget is now an international corporation which has been
very successful. As a result of their hard work, employees have been well-paid and have
built up sizeable retirement accounts. However, the workers were expecting to continue
working at the factory until their retirement and the rumor of a plant closing has them
very concerned. The company has a reputation of treating its workers fairly and there has
been an excellent working relationship between management and the union. Union
officers are attempting to meet some of the demands of management but they also must
represent the desires of their membership.
Before a decision is made, the CEO wants to consider all the options open to her. In your
role as a consultant brought in by the company, what advice would you make and what
ethical factors would you have considered in reaching it? Who are the stakeholders who
could be influenced by the decision ultimately made by the CEO and what might the
influences be?