Jim Malesckowski remembered the call of two weeks ago as if he had 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 offi-cer, had blurted in his ear. "You know we can't make the plant in Oconomo work anymorethe 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."As president of the Wisconsin Specialty Products Divi-sion of Lamprey Inc., Jim knew quite well the challenge of dealing with high-cost labor in a third-generation, union-ized, 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 chance 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 workerswho lived in a town without sanitation and with an unbe-lievably toxic effluent from industrial pollutionwould amount to about $1.60 an hour on average. That would be a saving of nearly $15 million a year for Lamprey, to be offset in part by increased costs for training, transporta-tion, 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 people suffering from 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 com-pany plantthe last of the original manufacturing opera-tions 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. Jim thought he sensed an underlying fear, meaning the union reps were aware of at least some of the problems, but he had been unable to get them to acknowledge this and move on to open discussion.A week passed and Jim had just submitted his report to his boss. Although he didn't specifically bring up the point, it was apparent that Lamprey could put its invest-ment dollars in a bank and receive a better return than what its Oconomo operation was currently producing.The next day, he would discuss the report with the CEO. Jim didn't want to be responsible for the plant's dis-mantling, an act he personally believed would be wrong as long as there was a chance its costs could be lowered. "But Ripon's right," he said to himself. "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?"

Questions

1.Should the company go ahead with the move to Mexico or try one more time to work things out in the Oconomo facility? Explain your reasoning.

2.If Jim decides to try to turn around the plant in order to keep the jobs in Oconomo, how should he go about implementing the change? What steps should he take?

3.Why do you think the union leaders are resisting change so strongly? How might Jim overcome the union leaders' resistance to change?