Question

You are the owner of WC Progressive Products a manufacturing facility located in the Midwest. Throughout the various business cycles and hardships, you have been able to keep all your employees on-the-job without resorting to permanent or temporary layoffs. You employ between 500 – 700 people from the local area, depending upon the season and the demand for your product [fyi: at this time, you can identify the type of product]. WCPP has had a significant impact on the local economy. The general population in the surrounding area has been very loyal and supportive of the company during good and bad times.

Throughout the years your family has made an effort to invest a good portion of the profits into the maintenance of the structure. However, it seems that the amount of investment was not enough. You just learned that the facility does not meet contemporary safety and environmental codes. Your accountant informed you that bringing the facility up-to-code would mean that you would have to spend your entire projected profit margin for the next ten years. You would have the necessary funds to operate the business and employ the workers at their current salaries, but the expense of updating the facility would prevent you from investing in research and development of new products or offering your employees any raises during the coming decade. What you are facing is a very serious challenge, not only for you as a business owner, but also for the surrounding community.

Recently, your company attorney has made you aware of a proposal from the country of Valhalla. The Prime Minister of Valhalla wants to discuss the possibility of moving your operations to a specific location in their country in order to help boost the economy of that region. The Prime Minister has promised the following benefits:

• Valhalla will assist in the cost of construction of the new facility.
• There are no environmental rules and regulations that you must follow.
• The local population is eager to work; however, you learned that they have no experience in your specific industry.
• The cost of labor is equal to 30% of the labor cost in the U.S.

The offer is very tempting, but you are torn. What is bothering you is the potential devastating effect that the loss of WCPP will have on the local economy and the people who live in the area.

The Prime Minister of Valhalla requests an answer within 30 days. WHAT WILL YOU DO?

1. Decide what you will do, and explain your decision in detail.

2. Explain how you will notify the employees.

3. What will you say if you stay? What will you say if you decide to move the facility? Write a clear statement directed to the employees explaining your decision.

Answer 1

1. I would decide to stay in the Midwest in spite of the lucrative offer made by the Prime Minister of Valhalla. Since, the inception of the company, the local population have been through the tough times of the company. Around 500-700 families depends on the company for their livelihoods. It would be unethical and unjustified to move the facility out of my country to generate quick profits and spare the environmental factors which are considered costly.

A proper plan in reduction of production cost, stagnant salary for a few years would not hurt the locals as much as moving the facility out of the country , amounting to lay offs and sudden termination of a huge number of locals dependent on the company for their livelihoods.

2. An urgent meeting of all the stakeholders, including the employees , who are the majority stakeholders would be called to brief the situation. Prior to the meeting all the possible alternatives must be discussed by the management. The expertise of the employees must be kept in mind. It can be noted that people at Valhalla are novice, they need to be trained, which is also a cost. In this time, the quality of the products must not be hampered. The people of the Mid-West who have been with WCPP , will lose faith on the organization and a negative impression will percolate among the shareholders and the customers of the product as well. The whole supply chain has to be revamped and new suppliers and other participants of the value chain have to be found out if relocated. Citing all the reasons, the employees must be taken into confidence that more effort from them in terms increased production, cost cutting through strategic use of available resources and stagnation of some part of the salary is justified, rather than moving the operations to a new country. Some part of the job like research can be shifted to Valhalla , as only a few people are required for it. The research team can be headed by the existing research head of the organization, while some locals from Valhalla can be employed. A empathizing nature of discussion is bound to generate desired results , rather than a authoritative tone of information.

3.

To our beloved employees

The company is going through a tough time as a lot of investment is to be made due to some environmental codes to be followed as per Government guidelines.

There have been offers and directives to move the the company to countries with lesser environmental codes and less labor cost. As a team, we have always faced tough times together, and I believe we can overcome this situation as well by working together with more concentrated effort and passion , as we have been doing for such a long time.

I have declined the offer to go to safer locations in terms of cost and decided to stay here in the mid-west. I have confidence on you and believe we can win over the situation together. To stay competitive and to save cost, strategic utilization of resources by cutting cost at all levels is the need of the hour. Increasing our production based on demand and becoming the first choice of our customers should be the motto. A regularization of the salaries meaning lesser increments on some of the pay slip component is also considered in this regards.

This is only a temporary phenomenon, which I am sure , will pass with our efforts and passionate contribution. Hopefully you will understand the situation and co-operate so that the situation improves fast and we can be back to our glory days.

Thanks and Regards