Business Ethics, 8e Jennings
Both Sam Wasson and Frank Hoffman are fiduciaries of Triple Plus. The transactions they enter
into must be in the best interest of the corporation. Since the purchasing manager's decision has
been made, neither should use their authority or influence to change that decision. Further, the
disclosure of bid information in advance would be a violation of those fiduciary duties.
13. Lee Iacocca, chairman and CEO of Chrysler Corporation, announced on January 27, 1988, that
the automaker would be closing its Kenosha, Wisconsin, plant. Iacocca and his board of directors
were under significant pressure from shareholders due to Chrysler’s continuing poor financial
performance. Chrysler had acquired the Kenosha plant when it purchased American Motors
Corporation in 1987. In his announcement, Iacocca blamed national trade policy for Chrysler’s
declining sales and resultant earnings problems.
At the Kenosha plant, which manufactured the Dodge Omni and the Plymouth Horizon, 5,500 of
the 6,500 workers were to be laid off and production moved to a Detroit plant. Kenosha, a city of
77,000 on the shores of Lake Michigan, depended heavily on Chrysler’s presence.
The announcement of the closing came at a critical time. Chrysler was negotiating to renew its
contract with the United Auto Workers (UAW). Also, the Kenosha plant carried a history of union
financial assistance. The UAW had loaned American Motors over $60 million to keep the
Kenosha plant running, and Chrysler had assumed the loan obligations as part of the acquisition.
Also, Wisconsin had paid $5 million for job training at the Kenosha plant in 1987 after Chrysler
promised that the plant would build Omnis and Horizons for at least five more years.
Peter Pfaff, a member of the UAW Local 72 of Kenosha and an employee at the plant since 1972,
said: “I was there. We’ve got it on tape and in writing. They said they’d stay. Greenwald (then
Chrysler Motors chairman) keeps saying Chrysler never said that, but I was there when he said
The Kenosha local threatened to delay negotiations on renewing the national contract with 64,000
workers. After the threat, Iacocca announced that Chrysler would establish a $20 million trust
fund to aid the 5,500 Kenosha workers through housing payments and educational funding. This
fund would be in addition to severance pay, extended unemployment benefits, and repayment of
the UAW loans. While denying that Chrysler was setting a precedent, Iacocca declared it had a
“moral obligation” to Kenosha.
Wisconsin threatened to sue Chrysler over the job training program but agreed to hold off in
exchange for Iacocca’s promise to extend production at the plant for several months into the fall
Iacocca stated that Chrysler was “guilty as hell of being cockeyed optimists. Blame us for being
dumb managers, for spending $200 million to put two old cars (the Chrysler Fifth Avenue and the
Dodge Diplomat) in an eighty-six-year-old plant, but please don’t call me a liar when I’ve got to