Who is the protagonist and who are the primary stakeholders? In plant relocation?
Answers
The Case of the Plant RelocationProduction costs are rising. Your company can make more money for shareholders by relocatingyour plants to a country with lower labor costs and fewer regulations. Using this case, StanRaggio, senior vice president for sourcing and logistics at The Gap, and Karen Musalo, thendirector of the Markkula Center for Applied Ethics International Human Rights and MigrationProject, discussed the ethical issues companies should consider at an Ethics Roundtable forExecutives.You are the chief executive of Electrocorp, an electronics company, which makes the onboardcomputer components for automobiles. In your production plants, complex hydrocarbon solventsare used to clean the chips and other parts that go into the computer components. Some of thesolvents used are carcinogens and must be handled with extreme care. Until recently, all of yourproduction plants were located in the United States. However, the cost of production has risen,causing profits to decline.A number of factors have increased production costs. First, the union representing the workers inyour plant waged a successful strike resulting in increased salary and benefits. The pay andbenefits package for beginning employees is around $15/hour. A second factor has been stringentsafety regulations. These safety procedures, which apply inside the plant, have been expensive inboth time and money. Finally, environmental regulations have made Electrocorp's operationsmore costly. Electrocorp is required to put its waste through an expensive process beforedepositing it at a special disposal facility.Shareholders have been complaining to you about the declining fortunes of the company. Manyof Electrocorp's competitors have moved their operations to less-developed countries, wheretheir operating costs are less than in the United States, and you have begun to consider whetherto relocate a number of plants to offshore sites. Electrocorp is a major employer in each of theU.S. cities where it is located, and you know that a plant closure will cause economic dislocationin these communities. You know that the employees who will be laid off because of plantclosures will have difficulty finding equivalent positions and that increased unemployment, withits attendant social costs, will result. However, you are aware of many other corporations,including your competitors, that have shut down their U.S. operations, and it is something thatyou are willing to consider.You have hired a consultant, Martha Smith, to investigate the sites for possible plant relocation.Ms. Smith has years of experience working with companies that have moved their operations toless-developed countries to reduce their operating costs. Based on your own research, you haveasked Ms. Smith to more fully investigate the possibility of operations in Mexico, thePhilippines, and South Africa. A summary of her report and recommendation for each countryfollows:MexicoA number of border cities in Mexico would be cost-efficient relocation sites based on both labor,and health and safety/environmental factors. Workers in production plants comparable toElectrocorp's earn about $3 per day, which is the prevailing wage. There is frequent workerturnover because employees complain that they cannot live on $3/day, and they head north towork illegally in the United States. However, a ready supply of workers takes their place.
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