Goodbye Indiana, Hello Mexico: The Whirlpool Plant Closing

Goodbye Indiana, Hello Mexico: The Whirlpool Plant Closing.

Case Study Analysis

Jennifer Decamps

Ethics & Stakeholder Management – MGMT 703

Luis Silva

Sunday, July 30, 2017

1. What are the arguments supporting the decision of the managers to close the Whirlpool plant?

In essence, the sole argument was a cost saving business decision. According to a statement issued by Whirlpool, “While Evansville certainly had the best quality, it had not been competitive in terms of cost for some time” (PBS, 2011).   NAFTA created a lot of opportunities for businesses to cut cost by moving their manufacturing plants to Mexico. This trade agreement resulted in an opportunity for the company to boost their profits by relocating.

1. What are the arguments supporting the position of the displaced Whirlpool employees?

When you dedicate your life to a company, you expect this organization to not just view you as a cost agent. Whirlpool represented the daily sustain of hundreds of families whose parents and grandparents had also worked for the company. Therefore, the bond that these individuals and this community had with Whirlpool shouldn’t had been treated so lightly by the firm.

According to Archie B. Carroll and Ann K. Buchholtz (2006), employees are stakeholders of firms; “from the business point of view, there are certain individuals and groups that have legitimacy in the eyes of management. That is, they have a legitimate, direct interest in, or claim on, the operations of the firm. The most obvious of these groups are stockholders, employees and customers” (p. 68). 

From an ethical school of thought, companies should consider the best interest of all of their stakeholders, including their employees, in their business decisions.  In this matter, the way Whirlpool handled this situation left a lot to be desired.  

1. If you were the business leader at Whirlpool, how would you have handled this dilemma?

Former Whirlpool employee Natalie Ford said it best when she was asked at a PBS interview what would she do if she was in a HR position where she would have to lay off hundreds of people. She said, “I realize that that is part of it, but I would bring a little more compassion to it”. (PBS, 2011).

A business’ main reason for existing is to generate profit for its shareholders. There is no denying this fact. Companies should not have to apologize for acting in their best interest. However, what I find ethically questionable about the way Whirlpool handled the situation is that in a city like Evansville, Indiana, where Whirlpool had such a huge impact in the economy and culture of the community, even going as far as the city being known as “The refrigerator capital of the world”, the company should have had a better action plan as to how to go about doing the right thing for their employees.