Southern Discomfort Case Analysis
Jim Malesckowski remembers the call of two weeks ago as if he just put down the telephone receiver: “I just read your analysis and I want you to get down to Mexico right away,” Jack Ripon, his boss and chief executive officer, had blurted in his ear. “You know we can’t make the plant in Oconomo work anymore, the costs are just too high. So go down there, check out what our operational costs would be if we move, and report back to me in a week.” At that moment, Jim felt as if a shiv had been stuck in his side, just below the rib cage. As president of the Wisconsin Specialty Products Division of Lamprey Inc., he knew quite well the challenge of dealing with high-cost labour in a third-generation, unionized U.S. manufacturing plant. And although he had done the analysis that led to his boss’s knee-jerk response, the call still stunned him. There were 520 people who made a living at Lamprey’s Oconomo facility, and if it closed, most of them wouldn’t have a journeyman’s prayer of finding another job in the town of 9,900 people. Instead of the $16-per-hour average wage paid at the Oconomo plant, the wages paid to the Mexican workers-who lived in a town without sanitation and with an unbelievable toxic runoff from industrial pollution-would amount to about $1.60 an hour on average. That’s a savings of nearly $15 million a year for Lamprey, to be offset in part by increased costs for training, transportation, and other matters. After two days of talking with Mexican government representatives and managers of other companies in the town, Jim had enough information to develop a set of comparative figures of production and shipping costs. On the way home, he started to outline the report, knowing full well that unless some miracle occurred, he would be ushering in a blizzard of pink slips for people he had come to appreciate.

The plant in Oconomo had been in operation since 1921, making special apparel for persons suffering injuries and other medical conditions. Jim had often talked with employees who would recount stories about their fathers or grandfathers working in the same Lamprey company plant-the last of the original manufacturing operations in town. But friendship aside, competitors had already edged past Lamprey in terms of price and were dangerously close to overtaking it in product quality. Although both Jim and the plant manager had tried to convince the union to accept lower wages, union leaders resisted. In fact, on one occasion when Jim and the plant manager tried to discuss a cell manufacturing approach, which would cross-train employees to perform up to three different jobs, local union leaders could barely restrain their anger. Yet probing beyond the fray, Jim sensed the fear that lurked under the union reps’ gruff exteriors. He sensed their vulnerability, but could not break through the reactionary bark that protected it. A week has passed and Jim just submitted his report to his boss. Although he didn’t specifically bring up the point, it was apparent that Lamprey could put its investment dollars in a bank and receive a better return than what its Oconomo operation is currently producing. Tomorrow, he’ll discuss the report with the CEO. Jim doesn’t want to be responsible for the plant’s dismantling, an act he personally believes would be wrong as long as there’s a chance its costs can be lowered. “The costs are too high, the union’s unwilling to cooperate, and the company needs to make a better return on its investment if it’s to continue at all. It sounds right but feels wrong. What should I do?” Jim Malesckowski has asked you, as a consultant, to provided strategies that address any or all of the factors above. You are to analyze these alternatives and recommend one strategy for implementation.

Daft, Richard L. Organization Theory and Design. 7th ed. Cincinnati: South-Western College, 2001.