Genre

Monday, January 4, 2016

Corporate Comparative

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1

Consider Corporation X in City A.  It is a publicly-traded, local aviation business, established to serve the sporting and recreational trade.

At first, it was a small, family business with fewer than 20 employees, all from the local area.  When a war in the Middle East began to seem likely, Corporation X re-adapted itself to produce military aircraft, and as war broke out, it grew rapidly, adding several hundred workers and relocating to a new, much larger building it constructed on the outskirts of City A. Some of Corporation X's leading engineers who were needed to make the needed adaptation were hired from larger cities in the region, but most of the workforce remained local, coming from families who had lived in the area for as long as the family who started the business.

To help make these necessary changes, Corporation X sold stock publicly.  A local chapter of a national union was formed, which was apparently considered a normal development.  The leaders of the local chapter were typical of the workers generally.  Contract negotiations usually went smoothly as the business prospered.

When the war ended, military contracts continued, but corporate executives (members of the family of original owners) considered them uncertain enough that they resumed some of the firm's original sporting and recreational manufacturing.  This kind of adaptability allowed the firm to continue to be profitable, though at a lower level.

At this time, just as the family members who had founded Corporation X were reaching retirement age, the world economy took a sudden, dramatic down-turn.  Some stockholders argued that the firm should move away from City A, seeking tax breaks and lower, non-union wages in a different region.  But the local stockholders, led by the remaining family members, decided to stay in City A.  The size of corporate earnings was reduced, thus lowering stock values. Hourly wages and professional salaries were curtailed from the highest to the lowest levels, in order for Corporation X to survive through the hard times.  Corporation X continues to do business, still in City A.

2

Now, consider Corporation Y in City B. 

Corporation Y was the answer to a prayer widely held in City B.  The small but prosperous city had suffered from continuing hard times for decades.  Small manufacturers had begun to go out of business in times of high inflation and rising labor costs.  The larger corporations had pulled up stakes to move to regions where workers were perhaps less skilled but also less organized and less expensive.

Led by an aggressive young County Executive, City B set out to recruit up-and-coming corporations from other states, even from other countries.  A pleasant lifestyle in an attractive region, welcoming churches and reasonably good schools, and - especially - alluring prospective tax breaks were City B's selling points.

And it worked!  After years of redeveloping a sparsely settled, flat area on the outskirts of town into an industrial park, city and county leaders were able to make a win-win deal with Corporation Y who was looking to expand and whose future business prospects looked good, both in the U. S. and abroad.  A favorable deal was brokered with the relevant union leaders, who considered dependable, lower-paying jobs as better than endemic unemployment.  So Corporation Y built a state-of-the-art, highly computerized new plant in City B's new industrial park.

Within a few months, Corporation Y's management team for City B had arrived and settled in new upper-middle class homes.  A team of accountants, corporate lawyers, personnel officers, and so on, was transferred in, and hourly workers were hired from the local community.  Unemployment went down, retail sales went up, population stabilized somewhat, just as planned.  Tax revenues increased, not dramatically but somewhat.

And then came a sudden economic downturn worldwide.  Things were not looking so good for Corporation B.  Anticipating that its global stockholders would start feeling antsy soon, corporate executives decided immediate action was necessary.  Had they over-expanded when the financial picture looked so rosy?  Well, don't look back; move on!

At 4:20 p.m. the Friday after Thanksgiving, a notice appeared in all the mail-slots of all Corporation Y employees in City B, and a notice from the Public Relations Office also appeared on all local media's emails.

The notice to employees said: "Due to the plunging economy and unrest abroad, Corporation Y has had to decide to close down all operations in City B.  Individuals will receive personal instructions as to when they should stop coming in to work, but by December 31, all will be laid off."

The release to the media said: "From Corporation B headquarters in XXXXX has come word that by December 31, 20XX, the plant in City B will cease to operate.  Unstable economic conditions globally have forced the company to make this unfortunate decision.  Individual employees may expect the formal lay-off notices by the end of next week.  Corporation B's operations in all other locations, please rest assured, are proceeding normally."

3

Which story seems the more realistic?

Curtailing executive salaries in order to keep the plant running and the workers employed?

Risking a temporary decline of stock prices?

These seem idealistic fantasies, don't they?  Putting at risk the short-term profits of stock-holders and top executives, in order to prolong the life of the company and in order to serve the long-term good of the community?  You're dreaming!

Are Corporations expected to make rational decisions for the long-term, for the good of the many instead of the few?  Do we have the means of holding Corporations responsible for the social effects of their actions?  Don't be crazy! 

Note:
If you found this article interesting, you might also be interested in this other one
http://byronderrick.blogspot.com/2010/12/corporations-are-not-people-are-they.html

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