Question

Supplemental Case Week 5

Read the case and answer the following question at the end. 200 words total for your response.

In the 1990’s, Mr. Arzberger worked for 37 years at a Kroger store in Pittsburgh. He lost his job when Kroger closed 43 Pittsburgh-area supermarkets because their 2850 employees refused to accept pay cuts, benefit reductions, and other contract changes. With wage rates as high as they were, Kroger was simply not competitive with the other food chains. A competing food chain paid $2 an hour less, and independent supermarkets were paying $3 to $4 less per hour. Kathy Koch was the head cashier at a Kroger store in Plymouth, Michigan. She experienced the closing of her store as Kroger closed 70 of its 82 Michigan stores. Operating costs were simply too high and unionized employees refused to accept contract concessions. The Michigan closing cost Kroger $10 million in severance pay and other benefits for more than 4000 employees. The Pittsburgh stores were purchased by Wetterau Inc., a food wholesaler that sold the stores to independent operators, who operate them with lower-paid help. Other companies—Greyhound, USX, and Goodyear Tire and Rubber, to name just a few—have said to workers: your wages are too high. Either accept cutbacks or we may have to go out of business. The city of Dayton, Ohio, is still recovering from him closing of NCR facilities there when union workers did not accept pay cuts years ago. Greyhound worked through many of its labor concession by means of an old strikebreaking effort. It hired replacements for 12,000 striking drivers and resumed limited operations. Trans World Airlines farmed out some of its maintenance work to nonunion concerns. Some 3500 employees have to work for the new firm for less pay or quit. United Auto Workers, faced with the choice of closing plants or taking pay cuts, chose the pay cuts but put job security clauses into new contracts. Ford has threatened to move production facilities overseas unless labor concedes to cuts in pay.

Now, most of these companies are prospering again. Were the decisions and sacrifices made by management and unions the correct ones? Explain your answer.

Answer 1

Yes I believe that the decision and sacrifice made by the management was correct, at the end of the day, workers at least had the job security in their hands instead of losing a job and have no money in the case. Here the pay cut, was although a harsh step for workers still the company and management had the obligation of keeping the workers to their jobs and workers indeed had job security at the time of recession.

When a company decides to go abroad for its labor, it will cost company also a lot of money and also they have to full fill the regulatory requirement for both the countries which is not just cost inclusive but also takes a lot of time to set up the plant and run the business, and you never know how the receiving country will react to the plant and hence it was not only beneficial for the workers but also for the company to keep its business going with some job security for the workers.