Analysis Paper

MINICASE: MGMT - 05 BUSINESS ETHICS PROGRAM

Something’s Rotten in Hondo

Topic: Environment

Characters: Derek Plant manager Harrison, Joshua's boss

Derek Mackee thought of himself as bright, energetic, and [having] lots of potential. So why was this happening to me, he thought. Derek, married, two children, with his wife, Tiff had moved to Hondo, Texas, from El Paso four years ago and was now the manager of Ardnak Plastic Inc., a small plant that manufactured plastic parts for small equipment. The plant employed several hundred workers, which was a substantial portion of the population of Hondo. Ardnak Plastics Inc. had several small plants the size of Hondo’s, and Derek had a good relationship with Harrison, his boss, in Austin, Texas.

One of the problems Derek's plant had was that the smokestack emissions were consistently above EPA guidelines. Several months ago Derek got a call from Harrison, stating that the EPA had contacted him about the problem and fines would be levied. Derek admitted the situation was a continual problem, but because headquarters would not invest in new smokestack scrubbers, he didn’t know what to do. Harrison replied by saying that margins were at their limits and there was no money for new scrubbers. Besides, Harrison commented, other plants were in worse shape than his and they were passing EPA standards. Derek ended the conversation by assuring Harrison that he would look into the matter. He immediately started calling his contemporaries at other Ardnak plants. He found they were scheduling their heavy emissions work at night so that during the day when the EPA took their sporadic readings they were within standards. Derek contemplated this option even though it would result in increasing air contamination levels.

A month went by, and Derek still had not found a solution. The phone rang; it was Harrison expressed his displeasure with the new fines for the month and reminded Derek that there were very few jobs out in the industry. That’s when Harrison dropped the whole thing into Justin's lap. Harrison had been speaking to the Mexican government and had received assurances that no such clean air restrictions would be imposed on Ardnak if they relocated 15 miles south of Hondo in Mexico. However, Ardnak must hire Mexican workers. Harrison explained that the reason for relocating would be to eliminate the EPA problems. Harrison told Derek he had one week to decide whether to eliminate the fines by correcting the current problems or by relocating.

Derek knew that relocating the plant on the Mexican side would devastate the infrastructure of the city of Hondo and would continue to put contaminants into the air on the U.S. side. After mentioning the possibility to Tiff, other concerns were reinforced. She did not want him to be responsible for the loss of jobs for their friends and extended families. What should Derek do?

Author: Dr. John Fraedrich, Assistant Professor of Marketing, Southern Illinois University

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