BUSINESS CYCLES AND EMPLOYMENT PRACTICES IN A DOMESTIC GARMENT COMPANY
PART A: MANAGEMENT’S DILEMMA You are on the management team of a rapidly growing, privately-held apparel company that had $80 million in sales last year and is projecting $150 million for next year. The company’s operations are entirely U.S.-based, an anomaly in an industry that has moved almost all manufacturing to foreign countries in search of cheap labor. Your company has succeeded by targeting a niche market that will pay more for fashionable styles, making the speed and flexibility of operations more important than the price. Your company is also unique in its employee policies. Poor working ...view middle of the document...
Therefore, you must determine how to reduce your actual production over the next 20 weeks to only two-thirds of full capacity. Wages for sewers are not based on the number of hours they work, but on the number of pieces they sew. The efficiency of production at your company is partly responsible for the high wages workers earn.
This case was prepared by Research Assistant Keely Byrne and Professor Jim Detert of the Pennsylvania State University. Translation between English and Spanish for many interviews conducted for this case was provided by Professor Tatiana Sandino of the University of Southern California. Copyright © 2005 by the Business Roundtable Institute for Corporate Ethics (www.corporate-ethics.org). Reproduction and use for direct educational purposes permitted. All other rights reserved.
Typical industry practice in the U.S. and abroad is to lay off excess labor for the winter season, with no severance pay or other assistance and no promise of rehire. Many of your sewers have lost their jobs elsewhere during the slow season for several years. However, if your company made such a move it would contradict the company’s philosophy regarding the treatment of employees...