Ethics and Plant Closure Situation Analysis -- Essay

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Ethics and Plant Closure

Situation Analysis -- ABC/DVD Manufacturing, Inc. must decide whether to close its plant in Anytown, MA. The plant closure would result in the lay-off of 50 employees. Management has asked for a brief outlining the ethical issues surrounding plant closures, and the questions apparent on profit vs. ethical behavior.

At the heart of the decision are several questions that must be considered prior to a decision. Each question plays into the overall analysis of the issue, and affects various stakeholders in different ways:

Primary Stakeholder

Affects

If plant closes, can a good portion of the employee base be transferred to other locations?

Employees: relocation of families, etc.

Company: costs for relocation.

Increased costs for corporation, but would those be absorbed by closing the plant?

Are jobs skilled or unskilled? Where will production be now (offshore?) Is it possible to relocate employees?

What affect would closure have on town?

Employees, citizens of the area.

Variable and dependent upon size and robustness of local economy. Do the salaries of these 50 people have a large effect upon the local area? Schools? Employment?

Very dependent upon size and demographics. If major urban area, employees might be absorbed into other industries. If small town, health of the town may be dependent upon ABC.

Reasons for closing?

All stakeholders

Is there a profit/loss reason for closure? Lease? COGS?

If keeping the plant open jeopardizes the P&L ability of the corporation, then stakeholders suffer.

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In addition, if the company cannot make a profit, they will eventually close anyway.

Job training and strategic partnerships?

Employees, company.

Could some of the employees be retrained?

Partnership with State and Local agencies, could some of the money from savings on plant closure be diverted to help in retraining employees for other jobs in the area?

Employee investment/buy out?

Employees

All stakeholders

Could the employees put together a stock option plan and buy this location; keep their jobs, and continue to run for ABC?

Bottom line costs?

All Stakeholders

What is the quantitative issue of plant closure?

Is closure an option or the only option? Could cost savings be realized through an austerity program? Could employees offer to freeze wages/benefits in order to retain jobs? Could local government offer tax reduction package, or utility credits?

Utilitarianism - In the global age it is not just important to make a profit. Instead, profits must be made in order to retain the viability of the organization, but corporate social responsibility and business ethics also….....

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