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Managerial ethics – Shutdown at Eastland Assignment

Labor lobbyists and union leaders express concern and outrage at Speedy Motor Company’s seemingly hasty decision to close down its Eastland, Michigan based auto manufacturing plant. The lobbyists and union leaders point to the Eastland plant shutdown as a reason why there should be Federal laws regulating plant closures.

Answers to Questions

The closing of a plant when it ceases to be profitable does not violate the “moral minimum” unless: the closure is the result of internal fraudulent action(s), the closure violates or breaks employee contracts, or the closure harms others (the phrase “harm others” is difficult to quantify and is largely subjective…but I am mostly speaking of the financial hardship levied against the employees and the greater community). (Sollars, Lecture 5, 2001).

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From the information presented in the case, we are not able to tell if conditions number one and two are true or not. We are, however, able to show that condition number three is satisfied, therefore if we apply the question to this case, we can show that the closure of the Eastland plant does violate the “moral minimum” because of the hardship (harm) it causes to its employees and to the community.

The affected stakeholders include all of the following: Eastland plant employees, business that hold contracts with the Eastland plant, Eastland plant suppliers, stockholders in the Speedy Motor Company, and, to a lesser extent, businesses that profit from the Eastland plant being open (ie, the community at large). The stakeholders interests should be evaluated and considered based upon a graduated scale of significance.

In other words, the concerns of those stakeholders that are directly involved in the company operations (employees, suppliers, contractors) should be considered above the needs or concerns of the greater community. The considerations of stakeholders who are primary investors in the company (stockholders) should receive the highest priority because they potentially stand to lose the most money as the result of any actions that affect the company stock price (like a plant closure).

The company should take primary responsibility for those laid off or terminated due to a plant closure because doing so would reinforce a positive company image in the community and would give hope and encouragement to the affected employees. By providing job placement assistance, hassle-free unemployment compensation, and/or generous separation benefits, the company would demonstrate to its stakeholders that the decision to close the plant was a “tough one” and that the company valued those individuals and businesses that supported it.

Opinions & Conclusions

I believe companies should be able to close plants as they see fit, so long as the plant closure does not violate local laws or is not done with the intention to harm its employees or the surrounding community. I think that companies should give their employees adequate notice of an upcoming plant closure (3 months or so), and should be willing to provide employment placement assistance once the closure takes place. I understand, though, that there are times when adequate notice cannot be given, and in those situations, the company should strive to do more for the affected employees than it would otherwise do.

I believe the above because I believe in the freedom and flexibility of the free market economy. Further, to federally regulate plant closures would start us down a slippery-slope of anti-corporate legislation, the results of which would be financially devastating.

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