\\\\\\In October 2012, the top management of Southern Recreational Vehicle Company of St.

Louis, Missouri, announced its

plans to relocate its manufacturing and assembly operations to a new plant in Ridgecrest, Mississippi. The firm, a major
producer of pickup campers and camper trailers, had experienced 5 consecutive years of declining profits as a result of spiraling
production costs. The costs of labor and raw materials had increased alarmingly, utility costs had one up sharply, and taxes and
transportation expenses had steadily climbed upward. In spite of the increased sales, the company suffered its first net loss since
operations were begun in 1982.

When management initially considered relocation, it closely scrutinized several geographical areas. Of primary importance to
the relocation decision were the availability of adequate transportation facilities, state and municipal tax structures, an adequate
labor supply, positive community attitudes, reasonable site costs, and financial inducements. Although several communities
offered essentially the same incentives, the management of Southern Recreational Vehicle Company was favorably impressed
by the efforts of the Mississippi Power and Light Company to attract "clean, labor-intensive" industry and the enthusiasm
exhibited by state and local officials, who actively sought to bolster the state's economy by enticing manufacturing firms to
locate within its boundaries.

Two weeks prior to the announcement, management of Southern Recreational Vehicle Company finalized its relocation plans.
An existing building in Ridgecrest's industrial park was selected (the physical facility had previously housed a mobile home
manufacturer that had gone bankrupt due to inadequate financing and poor management); initial recruiting was begin through
the state employment office; and efforts to lease or sell the St. Louis property were initiated. Among the inducements offered
Southern Recreational Vehicle Company to locate in Ridgecrest were:

1. Exemption from county and municipal taxes for 5 years

2. Free water and sewage services
3. Construction of a second loading dock - free of cost - at the industrial site
4. An agreement to issue $500,000 in industrial bonds for future expansion
5. Public-financed training of workers in a local industrial trade school

In addition to these inducements, other factors weighted heavily in the decision to locate in the small Mississippi town. Labor
costs would be significantly less than those incurred in St. Louis; organized labor was not expected to be as powerful
(Mississippi is a right-to-work state); and utility costs and taxes would be moderate. All in all, the management of Southern
Recreational Vehicle Company felt that its decision was sound.

On October 15, the following announcement was attached to each employee's paycheck:

     To: Employees of Southern Recreational Vehicle Company

     From: Gerald O'Brian, President

     The Management of Southern Recreational Vehicle Company regretfully announces its plans to cease all manufacturing
operations in St. Louis on December 31. Because of increased operating costs and the unreasonable demands forced upon the
company by the union, it has become impossible to operate profitably. I sincerely appreciate the fine service that each of you
has rendered to the company during the past years. If I can be of assistance in helping you find suitable employment with
another firm, please let me know. Thank you again for your cooperation and past service.

Answer below questions in this document:

Question 1
Evaluate the inducements offered Southern Recreational Vehicle Company by community
leaders in Ridgecrest, Mississippi.  If you were on the Board of Directors for Southern Recreational
Vehicle Company, would you agree or disagree with this proposal? If I were on the board member of the
Southern Recreational Vehicle, I’d support the proposal because foremost, tangible costs such as tax exemptions and
free construction are on offer and this could only be of benefit to the organization. The same applies to intangible
costs such as the public financed training of workers. Secondly, political risk, values, and culture appear to be skewed
in the company's favor as evidenced by the issuance of $500,000 in industrial bonds for future expansion. Proximity
to markets will also influence my decision because, with guaranteed industrial bonds for future expansion, the
organization will definitely have the ability to reach the people. Fourth, the costless construction of a second loading
dock at the industrial site will guarantee proximity to suppliers, and this is indeed a very tempting proposal. Finally,
the company's proximity to competitors also serves as a reason to my decision because there doesn’t appear to be a
clustering in Ridgecrest.

Question 2
What problems would a company experience in relocating its executives from a heavily
populated industrialized area to a small rural town? A company would experience a number of problems
when relocating its executives. First, it will affect their morale due to the quick change in lifestyle. Moving from a
fast moving urban environment to a relaxed and slower one is not easily adaptable for most people. Secondly, the
decline in availability of amenities due to the rural nature of the town may lead to the company experiencing
resistance from the executives. Also, the company risks losing talented employees due to their unwillingness to
relocate, and the executives may resign due to their inability to cope with the cultural change. Married executives and
those with school going children would be greatly affected. This would distort company operations because new
executives would have to be hired and additional training costs may be incurred. Lastly, the company will need to
commence with employee integration programs as the executives will need time to adjust to their new surroundings
(Zhu, 2017).

Question 3
Evaluate the reasons cited by O'Brian for relocation.  Are they justifiable? The reasons cited by O’Brian
are justifiable because, for one, increased costs are expressed in mathematical, rather than theoretical terms. This in
effect makes the reason indubitable. Any argument against this has to be based on the pretext that O’Brian is actually
lying about the costs. It is highly unlikely that the president would risk this, knowing the resulting backlash that
comes with it. In regards to the unreasonable demands placed by the union, this claim is difficult to argue against as
one would have to be inside O’Brian’s head to confidently state its authenticity. Furthermore, for O’Brian to attach
this reason in the employees’ paycheck, he had to be confident that it would make sense to them. This indicates that
the employees are already aware of their union’s demands and shouldn’t find it hard to reconcile that with the fact
that O’Brian can no longer concede to their demands.

Question 4
What legal and ethical responsibilities does a firm have to its employees when a decision to
cease operations is made? In regards to the ethical responsibilities of the firm to its employees, certain
procedures must be followed. Foremost, it is imperative for the firm to ensure that its actions, as it pertains to the
termination of employment, are above reproach. This prevents an unwanted scenario whereby employees are laid off
for the wrong reasons. Secondly, the firm must communicate with the employees and clearly state the reasons for
their termination. This is a polite way to inform employees that their services are no longer required. Legally,
documentation is key when terminating workers’ employment as this will prevent any long, drawn out court process.
The firm must have all of its documents regarding employees in order. This shall be used in a court of law if needed
be. Where applicable, the firm and the employees can agree upon a certain amount of severance pay and part ways
amicably. Once the severance pay is provided, employees may have to sign a release (Heathfield, 2016).
 References

Heathfield, S. M. (2016, October 12). How to Fire an Employee. Retrieved June 9, 2017, from thebalance:

https://www.thebalance.com/how-to-fire-an-employee-1917907

Zhu, A. (2017). Challenges in Company Relocation from Urban to Rural. Retrieved June 9, 2017, from operations-

management: https://operations-management.knoji.com/challenges-in-company-relocation-from-urban-to-

rural/