Question

Something's Rotten in Hondo*

George Mackee thought of himself as a bright, energetic person with lots of potential. "So why is this happening to me?" he thought. George, with his wife, Mary, and his two children, had moved to Hondo, Texas, from EI Paso four years earlier and was now the manager of the Ardnak Plastics plant in Hondo, a small plant that manufactured plastic parts for small equipment. The plant employed several hundred workers, which was a substantial portion of the population of Hondo. Ardnak Plastics Inc. had several other small plants the size of Hondo's. George had a good relationship with his boss, Bill, who was based in Austin, Texas.

THE EMISSIONS PROBLEM

One of the problems George's plant had was that the smokestack emissions were consistently above EPA guidelines. Several months ago, George got a call from Bill, stating that the EPA had contacted him about the problem and fines would be levied. George admitted the situation was a continual Problem, but because headquarters would not invest in new smokestack scrubbers, he didn't know what to do. Bill replied by saying that margins were at their limits and there was no money for new scrubbers. Besides, Bill commented, other plants were in worse shape than his and they were passing EPA standards.

A QUESTIONABLE SOLUTION

George ended the conversation by assuring Bill that he would look into the matter. He immediately started calling his contemporaries at other Ardnak plants. He found they were scheduling their heavy emissions work at night so that during the day when the EPA took their sporadic readings they were within standards. George contemplated this option even though it would result in increasing air contamination levels.

THE DOUBLE BIND

A month went by, and George still had not found a solution. The phone rang; it was Bill. Bill expressed his displeasure with the new fines for the month and reminded George that there were very few jobs open in the industry. That's when Bill dropped the whole thing into George's lap. Bill had been speaking to the Mexican government and had received assurances that no such clean air restrictions would be imposed on Ardnak if they relocated 15 miles south of Hondo in Mexico. However, Ardnak must hire Mexican workers. Bill explained that the reason for relocating would be to eliminate the EPA problems. Bill told George he had one week to decide whether to eliminate the fines by correcting the current problems or by relocating.

George knew that relocating the plant on the Mexican side would devastate the economy of the city of Hondo and would continue to put contaminants into the air on the U.S. side. When he mentioned the possibility to Mary, she reinforced other concerns. She did not want him to be responsible for the loss of the jobs of their friends and extended families.

After reading the case answer the following questions:

1. Who are the stakeholders in the case? Describe their stakes in terms of power, legitimacy and urgency. Explain your reasoning.

Answer 1

Stakeholders in the case have been listed below.

(i) EPA - The regulatory authority, which has a legitimate reason to control the emission levels which are above specified limits, and impose fines against the offenders. It has high power as it can make the plant inoperative by imposing heavy fines and other enforcement actions. The urgency level is medium, where it can wait fir the company to take action before taking stringent measures.

(ii) Company and Bill - They have illegitimate concerns and want to continue with the emissions and using elusive methods to fool EPA, instead of improving gtheir processes. Their power is high because they can make severe and irreversible changes to the lives of the employees by relocating. The urgency is high because a decision needs to be taken immediately to avoid more penalties

(iii) Mexican government - They also lack legitimacy because they are willing to have double benefit of creating employment for their citizens and releasing emissions into US air. Their urgency and power is low,as the decision is on company.

(iv) Families of employees and community of Hondo - Their concerns are legitimate as the shifting of comapny will lead to the loss of job for locals and for dependent industries/ enterprises also, which would be worse than breathing in bad air. Their power is low because they are helpless in their positions, and depend on company's decision. Their urgency is high because, the comapny needs urgent action to ensure sustainable operations, on which depends much of their concerns.