1. Apply three definitions of ethics to the case, then discuss how values and perceptions
Influence our ability to work with people from different cultures who may have different ethical views.
2. Identify, describe and explain the main ethical concerns in the McWane organization.
3. What factors and reasons give rise to ethical concerns?
4. How was the ethical behavior and decision- making influenced by organizational culture and values?
5. Name four to six stakeholders and describe their sensitivity to and awareness of the ethical considerations. Consider how members of any one stakeholder group may agree or disagree on these considerations.
6. Specifically how did the values of the senior leaders of McWane, the communities surrounding the company plants, the labor force and the regulators affect the organization’s overall performance?
7. Do you agree with any stakeholder positions, behaviors or decisions? Disagree?
8. Do you believe the original managers acted in the best interest of the company given the business environment?
PowerPoint Presentation Case 15: McWane Cover image coming soon. Stanwick, Understanding Business Ethics 3e. © 2015, SAGE Publications. mCwANE: A DANGEROUS BUSINESS Case 15 2 Stanwick, Understanding Business Ethics 3e. © 2015, SAGE Publications. Introduction McWane started in Birmingham, Alabama in 1921 and is controlled by the McWane family. McWane employs approximately 5,000 employees in 12 plants located in the US and Canada. 3 Stanwick, Understanding Business Ethics 3e. © 2015, SAGE Publications. Introduction McWane is privately held with annual sales of approximately $2 billion. McWane would buy old inefficient plants and increase efficiency by reducing costs. 4 Stanwick, Understanding Business Ethics 3e. © 2015, SAGE Publications. Management Philosophy Used “disciplined management practices”. “Time equals pipe and pipe equals money”. Each line worker was evaluated based on meeting daily quotas. Frederick Taylor’s Scientific Management. 5 Stanwick, Understanding Business Ethics 3e. © 2015, SAGE Publications. Management Philosophy If a worker did not meet his daily quota he would receive a “D.A.” or disciplinary action. After a number of DAs, the worker would be considered to be on “death row”. McGregor’s Theory X and Y 6 Stanwick, Understanding Business Ethics 3e. © 2015, SAGE Publications. Employee Dangers At some of the McWane facilities, the annual turnover rate was close to 100 percent for the employees. From 1996 to 2003, McWane was cited over 400 times for safety violations by OSHA. 7 Stanwick, Understanding Business Ethics 3e. © 2015, SAGE Publications. Employee Dangers From 1996 to 2003, 9 employees died of injuries sustained in McWane facilities and over 4,600 workers were injured. After a worker died in an explosion, McWane paid a $500,000 fine. 8 Stanwick, Understanding Business Ethics 3e. © 2015, SAGE Publications. Employee Dangers The plant manager where the explosion took place was fined $85 and plead guilty to a misdemeanor charge. When McWane bought Tyler Pipe it fired two thirds of the workers and increased the plant’s level of productivity. 9 Stanwick, Understanding Business Ethics 3e. © 2015, SAGE Publications. Working Conditions A former McWane plant manager stated that “the working conditions are the worst you can possibly imagine”. If the workers complain about safety or get hurt, there is a bulls-eye placed on them. 10 Stanwick, Understanding Business Ethics 3e. © 2015, SAGE Publications. OHSA If OHSA came to a plant for inspection, the company policy was to delay entrance of the OHSA inspectors for as long as possible. Once an employee mastered one machine, they were in charge of a second machine and then a third machine and so on. 11 Stanwick, Understanding Business Ethics 3e. © 2015, SAGE Publications. OHSA A safety violation that could lead to death carries a maximum fine of $7,000 A willful violation that causes death has a maximum fine of $70,000. 12 Stanwick, Understanding Business Ethics 3e. © 2015, SAGE Publications. Employee Relations Workers had to have permission to leave their positions in order to go the bathroom. If permission was denied, the workers had to relieve themselves at their workstation. 13 Stanwick, Understanding Business Ethics 3e. © 2015, SAGE Publications. Employee Relations McWane supervisors are encouraged to discipline workers who are injured on the job. By punishing the workers, the workers would be hesitant to report an injury in the future. 14 Stanwick, Understanding Business Ethics 3e. © 2015, SAGE Publications. McWane When McWane took over Tyler Pipe, it eliminated “luxury” items such as soap, medicated skin cream and hand towels. Workers were also told to bring their own toilet paper to work. 15 Stanwick, Understanding Business Ethics 3e. © 2015, SAGE Publications. McWane Managers would limit the amount of ice the workers could have in their drinks. McWane also took away the portable heaters from the loading dock. 16 Stanwick, Understanding Business Ethics 3e. © 2015, SAGE Publications. McWane McWane replaced $17 heat resistant gloves with $2 cloth gloves In the year after McWane took over the Tyler Pipe facility, the plant generated a $50 million profit which was double the previous profit level. 17 Stanwick, Understanding Business Ethics 3e. © 2015, SAGE Publications. McWane McWane also stopped ordering protective aprons, face shields and safety boots after the supply inventory left over from the previous owners was used up. 18 Stanwick, Understanding Business Ethics 3e. © 2015, SAGE Publications. McWane It was so hard to find workers at the Tyler plant that McWane had to recruit ex-convicts in order to find enough employees. McWane also wanted to reduce the medical costs of its workers. 19 Stanwick, Understanding Business Ethics 3e. © 2015, SAGE Publications. Medical Strategy McWane’s medical strategy was that every medical injury was fake by the workers. The workers had to prove they were really injured. In 2000-2001 over 350 employee at the Tyler facility were disciplined for reporting accidents. 20 Stanwick, Understanding Business Ethics 3e. © 2015, SAGE Publications. McWane As the employees recovered from their injuries, they were put on “modified duty”. Modified duty included menial tasks such as cleaning the toilets. Modified Duty resulted in the employees quickly returning to work so they didn’t have to clean the toilets or the employees quitting their jobs. 21 Stanwick, Understanding Business Ethics 3e. © 2015, SAGE Publications. McWane McWane stated that it had to compete with foreign manufacturers in China and Latin America which did not have the same safety and environmental standards as the United States, giving McWane a competitive disadvantage. 22 Stanwick, Understanding Business Ethics 3e. © 2015, SAGE Publications. Guilty Plea McWane plead guilty to federal safety and environmental violations in its Union Foundry facility located in Aniston, Alabama. McWane admitted that is purposely violated federal safety rules which resulted in a death of an employee because there were no safety guards on a conveyor belt. 23 Stanwick, Understanding Business Ethics 3e. © 2015, SAGE Publications. A Large Fine In April 2006, a federal jury found that McWane owned Atlantic States Cast Iron Pipe was guilty of conspiring to evade workplace safety and environmental laws. They were required to pay a fine of $8 million in April 2006. 24 Stanwick, Understanding Business Ethics 3e. © 2015, SAGE Publications. OHSA It was alleged that that managers lied to government regulators, tampered with evidence and forced employees to remain silent pertaining to the health and safety violations. Atlantic States was found guilty on 32 charges and 4 managers were found guilty of multiple felony charges. 25 Stanwick, Understanding Business Ethics 3e. © 2015, SAGE Publications. Canadian Operations McWane started Canadian operation in 1989. They have 3 plants in Quebec and 1 plant in New Brunswick. McWane has had to address a number of safety issues in its Canadian plants. 26 Stanwick, Understanding Business Ethics 3e. © 2015, SAGE Publications. Environmental Issues From 1996 to 2003, McWane had been charged over 450 times for pollution and emission violations. In March 2005, McWane pled guilty to 2 felony charges related to environmental violations at Tyler Pipe. 27 Stanwick, Understanding Business Ethics 3e. © 2015, SAGE Publications. Environmental Issues In December 2005, a federal court in Birmingham convicted McWane of dumping wastewater into a Birmingham creek. McWane was fined $5 million and had to donate $2.7 million for a community project. 28 Stanwick, Understanding Business Ethics 3e. © 2015, SAGE Publications. Environmental Issues Three McWane executives were convicted of polluting the creek and conspiring to violate the regulations in the Clean Water Act. McWane and the plant managers ordered employees to release polluted waste water into the creek. 29 Stanwick, Understanding Business Ethics 3e. © 2015, SAGE Publications. Environmental Issues In July 2010, McWane agreed to pay $4 million to settle more than 400 violations related to federal and state environment laws. McWane was also ordered to fund seven environmental projects at a total cost of $9.1 million. 30 Stanwick, Understanding Business Ethics 3e. © 2015, SAGE Publications. Frontline Returns In 2008, Frontline revisited McWane to see if any positive changes had taken place since its original broadcast. 90% percent of the senior management were new and McWane had hired more than 125 new environmental health an safety employees. 31 Stanwick, Understanding Business Ethics 3e. © 2015, SAGE Publications. Frontline Returns McWane bought new software that tracks environmental compliance and injuries. In January 2012, McWane was accused of illegally conspiring to fix prices of pipe fittings with two other companies. 32 Stanwick, Understanding Business Ethics 3e. © 2015, SAGE Publications. Questions for Thought Explain the concept of disciplined management. Has it worked at McWane? Identify the ethical issues associated with the McWane Corporation. 33 Stanwick, Understanding Business Ethics 3e. © 2015, SAGE Publications. Questions for Thought Research the McWane Corporation. Identify some of the positive things the company has done. It seems every time one turns around, McWane is paying another large fine. How can the company sustain paying these fines? 34 Stanwick, Understanding Business Ethics 3e. © 2015, SAGE Publications.