Shutdown at Eastland

When Speedy Motors Company closed its assembly plant in Eastland, Michigan, lobbyists for organized labor cited the case as one more reason why Federal government should pass a law regulating plant closings. With less than a month's notice, the company laid off nearly 2,000 workers and permanently shut down the facility, which had been in operation more than 20 years. The local union president called the action "a callous and heartless treatment of the workers and of the community."

Company executives defended the decision as inevitable in view of the harsh competitive realities of the automotive industry. "Purchases of the Speedy model produced at Eastland have fallen to almost nothing and there is nothing we can do about changes in consumer preferences," a company spokesman said.

Labor lobbyists insist that instances such as this show the need for a Federal Law which would requires companies to give as much as two years' notice before closing a major factory, unless they can demonstrate that an emergency exists. The proposed legislation would also require the employer to provide special benefits to workers and the community affected by the shutdown.

"Closing plants needlessly and without warning is an antisocial, criminal act," a union leader said. "Giant corporations don't give a thought to the hardships they are imposing on long-time employee and communities that depend on their jobs. The only thing they consider is their profits."

Opponents of the legislation maintain that the proposed law would strike at the heart of the free enterprise system. Companies must be free to do business wherever they choose without being penalized," a corporate spokesman argued. "Plant closing legislation would constitute unjustified interface in private decision making. Laws which restrict the ability of management to operate a business in the most efficient manner are counterproductive and in direct conflict with the theory of free enterprise."

Read the case study entitled, "Shutdown at Eastland."

How would you have handled this situation?
In this assignment, propose a plan to close the assembly plant in Eastland, Michigan. In this plan, be sure to explain the following:
• Terms of the close - what notice would you give, what benefits would you provide, etc.
• Describe all of the affected stakeholders and how their interests will be considered.
• Who do you propose should take primary responsibility for those laid off as a result of the plant closing?
• How will this news be communicated to the workers, press, and community?