MODULE 9: Stakeholder Focus: Plant Closing
Core Module Issues:
• When, if ever, is a company obligated to consider employees if the
needs of the employees are at odds with creating shareholder wealth?
• When, if ever, are communities relevant stakeholders?
• If a plant relocates within the US, if it fundamentally different than if a
plant relocates overseas?
Module Teaching Notes
This module is a close cousin of the last one (Module 8), but the focus here is on communities and not
employees. The workers in this scenario will have a change to keep their jobs, and so the downside is on
the town that may be left behind.
When plants close, especially when the plant is a major employer, communities can be devastated.
Unemployment rises at the same time the tax base diminishes. Property values tend to decline, and a
downward spiral sometimes begins.
Michael Moore made a name for himself by documenting Michigan towns in the aftermath of plant closings.
If you like, you might show a clip from his film in class.
The introduction to the last module featured the Ford v. Dodge case. A good case that compliments Ford is
Ypsilanti v. GM, and I like to lecture on it before raising discussion questions. The town of Ypsilanti was
actually successful, at least temporarily, in stopping GM from shutting a plant. The town in essence argued
"no fair! We'll be ruined!" and a lower court judge played along.
Although the case was overturned on appeal, it does make for a nice example of a lower court judge
attempting to require a company to consider stakeholders.
I like to stop and discuss the Ypsilanti case, sometimes for quite awhile. Many students have fairly strong
opinions one way or another. Some will praise the lower court judge for "standing up to a big corporation",
others will condemn the judge for "legislating from the bench". I'll often ask if the second group of students
would be more comfortable if Congress or a state legislature passed a statute dealing with plant closings,
and they will usually agree that they would be.
The imaginary Wood Works company in the scenario doesn't have to move. They will not go bankrupt, they
will, in fact, be profitable. But, they would be significantly more profitable if they changed locations.
It is interesting to compare the students' response to this scenario to the last. Last time, the proposed move
was overseas. This time, the company will stay in the US, and move about a two hour drive away. This