In October 2012, the top management of Southern Recreational Vehicle Company of St. Louis, Missouri, announced its plans to relocate its manufacturing and assembly operations to a new plant in Ridgecrest, Mississippi. The firm, a major producer of pickup campers and camper trailers, had experienced 5 consecutive years of declining profits as a result of spiraling production costs. The costs of labor and raw materials had increased alarmingly, utility costs had gone up sharply, and taxes and transportation expenses had steadily climbed upward. In spite of increased sales, the company suffered its first net loss since operations were begun in 1982.
1. Evaluate the inducements offered Southern Recreational Vehicle Company by community leaders in Ridgecrest, Mississippi.
2. What problems would a company experience in relocating its executives from a heavily populated industrialized area to a small rural town?
3. Evaluate the reasons cited by O’Brian for relocation. Are they justifiable?
4. What legal and ethical responsibilities does a firm have to its employees when a decision to cease operations is made?