The main issue affecting Malesckowski and the company is that the Oconomo plant has lost its economic viability. This situation is forcing the management of the company to consider alternatives to justify the economic performance of the Oconomo plant. Three sets of issues arise from this situation. First, the company must solve the business concerns relating to the operations of the Oconomo plant. The profits are currently so low that if the company put the same investment in a bank it would receive more income through interest. Competitors have already managed to offer similar products at a reduced cost. Projections show that competitors will soon overtake the Oconomo plant in volume of sales.
The second issue affecting Malesckowski is an ethical dilemma. He is the one who identified the poor business performance of the Oconomo plant, and he went to Mexico to compare the production cost there. His report may determine whether the five hundred and twenty workers in Oconomo will keep their jobs. The focus of the company’s CEO is to get the company back to profitability. The CEO is considering closing down the Oconomo plant and opening a new production plant in Mexico. This is because labor costs in Mexico are ninety percent lower that the labor costs in Oconomo.
The third aspect is the legal angle. The workers union at Oconomo does not want to take pay cuts to save the company. The company has no way of forcing the workers to take a pay cut (Goldman & Nieuwenhuizen, 2006). If the workers union does not agree to a pay cut, then the company will have to close down. Malesckowski prefers to save the company.
Strategy for Changing Things
The strategy for changing things to resolve the impasse must solve the issue of profitability. The only way that the Oconomo plant will remain profitable is by reducing its labor costs (Kazmi, 2008). It can achieve this in two ways. First, it may force the workers to take a pay cut. This way, it will retain its current volume of production, and compete favorably with its competitors. The second option is to reduce the number of employees in the plant (Kazmi, 2008). This option will also require it to increase the efficiency of its operations to enable it to improve its margin. Increased efficiency means that the output per worker will increase without a corresponding increase in the cost of labor.
Strategy for Changing People
Malesckowski needs to change the attitude of the workers union as well as the attitude of the CEO to ensure that the plant remains in Oconomo. The union refused to take pay cuts at the plant. It also opposed efforts to cross-train existing employees. These two measures can help to turn around the company. On the other hand, the CEO is looking at the financial performance of the company, and the potential profits the company can make by relocating to Mexico. While this is sound business thinking, the consequences of making such a move is that the existing workers at the Oconomo plant will lose their source of livelihood. To win over the union, Malesckowski needs to tap into their fears and their sense of ownership in the company as a means of making them appreciate the realities at hand. Since the union can appreciate the imminent loss of jobs if the plant closes, it can accept lower wages for the workers to save their jobs (Flannes & Levin, 2005). In addition, Malesckowski needs to use the fact that the union will not want to be responsible for the closure of the company. On the other hand, Malesckowski must convince the CEO to shelve the relocation plan temporally to allow an attempt to revive the plant.
The business case is not very strong now, but the moral case is very strong. On one hand, closing down the Oconomo plant will lead to hundreds of job losses. This will affect the reputation of the company and may affect its business. On the other hand, moving to Mexico will also raise ethical questions regarding the housing of the employees. The housing conditions of employees working in plants owned by the company’s competitors in Mexico are very poor. Malesckowski has a very strong ethical case against relocating the plant to Mexico.
Arguments to present to the Union
Malesckowski has two main arguments to present to the workers union. First, he needs to present to the union the inevitability of job losses if the union does not cede to lower wages. The facts are clear and the union can verify that the company cannot compete with plants in Mexico. Secondly, Malesckowski needs to present to the union the loss the community will suffer if the company closes down the Oconomo plant. The plant is part of the Oconomo community. Therefore, its closure will lead to the loss of an important aspect of the Oconomo community. Communities tend to associate strongly with local companies. This bond will make the union more open to solutions that will save the company and jobs.
References
Flannes, S., & Levin, G. (2005). Essential People Skills for Project Managers. Vienna, VA: Management Concepts.
Goldman, G., & Nieuwenhuizen, C. (2006). Strategy: Sustaining Competitive Advantage in a Globalised Context. Cape Town: Juta and Co Ltd.
Kazmi, A. (2008). Strategic Managenent and Business Policy. New Delhi: Tata McGraw-Hill.