Evaluate the pros and cons of Levi Struss’s decision to close its south Zarzamora street plant. Was it a sound business decision? Was it a socially responsible decision? Could the company have reasonably been expected to keep the plant running?
The decision enabled Levi Strauss to save on the costs of operating in San Antonio. This is because the closure, according to Stallworth, was to cost only $13.5 million. The cost was reasonable since the company would be able to recoup all the costs within the first two years of operation in the Caribbean. Levi Strauss was also able to save on the costs of paying their workers. This is because operating in the Caribbean is cheaper than San Antonio since the workers do not demand maximum wage.
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The company also planned on hiring independent contractors would provide them with labourers. This makes the company save more since it does not pay directly for the worker’s health insurance and work accident compensation. The use of contractors also ensures the company saves on human resource management as well as time is taken for training employees and hiring.
The closure of Levi Strauss led to the largest lay off in San Antonio. This led to a negative reaction from civil activists who protested the decision and went further to file a case in court. Such a case was bad for the image of the Levi Strauss. The activists also mobilized the customers to boycott products by Levi. Even though these reactions were not successful, they embarrassed the company’s corporate image. As a result of public cry, Levi Strauss was forced to donate $100000 to finance the local agencies that were to retrain their former employees. They also parted with $340000 in costs for counselling their former employees and training.
The decision by the company was sound since the company’s closure was to enable it to make more profits abroad. The decision was not socially responsible but considering the extent to which Levi Strauss went to ensure their former employees were in good condition then the decision was responsible. The company could not run because the plant was not running at full capacity hence making it difficult for it to make profits. The number of employees in the plant was high compared to the number the company was to employ after it shifted.
Having decided to close the plant, was there more than Levi Strauss could and should have done for its laid-off workers?
Yes, Levi Strauss should have in the first place prepared the workers for future closure. This would have made them aware and thus prepared for the eventuality of the closure. Levi Strauss should also have provided their employees with retrenchment benefits which would have made them self-reliant and able to sustain themselves. Such a move would have reduced the public outcry due to the closure and sacking the workers.
How would you feel if you had been an employee at the plant?
Initially, I would feel betrayed and bitter at Levi Strauss, but in the long run, the laying off was for the better. This is because the company paid for the employees training and counselling and thus opening an avenue for them to explore new opportunities. I concur with the words of Bob Dunn, there was no need for the company to continue operating in San Antonio and yet it was not fully maximized. Its exit exposed the former employees to a new experience altogether and those who grabbed it will surely thank Levi Strauss.
With regard to Levi Strauss’s conduct both at home and abroad, does it make sense to talk about the company as a morally responsible agent whose action can be critically assessed, or can we assess only the action and decisions of individual human beings inside the company?
The company is a morally responsible agent, but the assessment should be based on the specific individuals in the company’s management. An example is a decision of pulling out of San Antonio, which was made possible due to the projections provided by Stallworth. The management of the company also pulls it out of China and Myanmar due to massive human rights violations. The management also decides on keeping less than fourteen-year-old workers in Bangladesh in school but offer them employment after they reach fourteen years according to their international guidelines. Hence, the actions of the companies morally are influenced by the decisions of individuals in the management.