Offshoring

Pacific Brands has built its brand image upon being Australian made. Brands such as Bonds and Holeproof have become Australian icons. Yet, this brand image has recently become less suitable for Pacific Brands, as it has now succumbed to the pressure of offshoring its operations in order to remain competitive with both local and international competitors. CEO Sue Morphet stated that although the timing of the decision to offshore the jobs of 1850 Australian workers was unfortunate in light of the global economic downturn, the decision was inevitable as a result of Australia's competitive disadvantage in the apparel sector. In defending her decision, Sue Morphet said, 'It's a clear competitive disadvantage for us to be carrying on clothing manufacturing in Australia'.

Critics of this decision have pointed to the fact that Sue Morphet received a large pay rise last year as a result of her promotion to the position of CEO within Pacific Brands. Questions have been asked as to why Sue Morphet s hould be rewarded for gains that are not the result of increases in sales but instead the result of sacking loyal employees. A pertinent question appears to be: what is the cost to the employees who have Lost their jobs as a result of this management decision?

Geoff Forbes, a 35-year-old equipment mechanic at Pacific Brands, said, 'We have put our heart and soul into work and kept the mill going through hard times and now this is what happens'. In a similar vein, John Bracun, a team leader who has been with Pacific Brands for 26 years, said, 'We have shown them loyalty but we're getting no loyalty back'.

On the other hand, how does an organisation continue to compete with competitors who are able to manufacture products for a fraction of the cost overseas ? The old idiom of if you cant beat join them appears to be have been applied by Pacific Brands. Yet, it seems that in making the decision to outsource the manufacturing of apparel to Asia, Sue Morphet did not adequately consider human cost of such a decision. There is an expectation withi n the community that organisations will only pursue strategies such as downsizing and offshoring as a last result; however, they now appear to be becoming legitimate business strategies in all states of financial health.

CRITICAL THINKING QUESTION

1. Outsourcing is a situation where it seems impossible to avoid having winners and losers among stakeholders. What ethical principles could guide managers in making decisions between conflicting stakeholder interest? WhIch principle or principles do you find most convincing?

2. National pride and identity have been integral to the Pacific Brands. In our globalised marketplace is there any room for such nation sentiments ? Does relying on such sentiments for corporate identity and marketing ' invoke any additional national responsibilities on behalf of the firm?