Company A (Co. A) is a heavy industry manufacturer. It is comprised of 380 employees. 80 percent of the employees are unionized while the remaining 20 percent are office staff - engineers, administrative staff and higher management. The history of the company stands as far back as 50 years. Over the 50 years, the Company changed hands through different owners several times. The most recent ownership change occurred approximately 3 years ago. The previous owners had sold the company off 2 years after a strike devastated their last efforts to reel the company back from three straight years of financial losses.
The new owners have benefited tremendously from the new union contract the previous owners managed to negotiate after the strike ended. The contract is very much to management's benefit given that the union granted many concessions in order to gain employment back for their members after the strike. This favorable union contract has greatly reduced labor costs for the existing management in terms of wages and benefits.
The company's customers are international MNCs who sell the equipment they manufacture internationally. Co. A manufactures is considered a source of core products used by the international MNCs in the manufacture of their equipment. The explosion of cheaper labor markets outside of America EG: Asia and China, has led several of the MNCs to buy their products from outside America, where manufacturers similar to Co. A. are able to produce cheaper and accordingly sell cheaper to the MNCs. This increasing competition has caused the MNCs to pressure Co. A. to consistently reduce the price of their products. Unfortunately, labor costs and vendor costs have consistently risen. Thusly Co. A. faces the challenge of either containing costs or diversifying its product line into less competitive markets where sales will yield higher profit margins.
A strategic plan has been put together to build a business development unit to explore diversification opportunities. This strategic plan also includes strengthening the company's HR department in an effort to ensure the HR department efficiently uses its limited resources and contains labor costs.
Another challenge the company faces is employing qualified suitable, skilled candidates to perform the blue-collar heavy industry work the company is involved in. This paper discusses how Co. A. intends to handle this challenge by improving employment decisions, training and development.
Human Resources Function
During the strike of 1995, many of the office employees had to undertake the work on the production floor, in order for Co. A. to meet some of the sales commitments already made. As a result, many of the office employees left the company to seek more suitable employment elsewhere. Even after the strike, in an attempt to cut costs even more, management decided to scale back the HR department to only one employee-the labor relations specialist. When the new owners took over, they inherited a HR department that was barely functioning.
Alone, the labor relations specialist was unable to effectively handle the various administrative and strategic roles that an adequately staffed HR department is capable of. Management's first priority was to boost production on the shop floor. This required investing in new equipment, re-establishing relationships with customers and rehiring many of the former qualified office employees whose engineering and manufacturing experience was greatly needed to help turn the company around. Management’s priorities did not include re-staffing the HR department. The department performed rudimentary roles of recruiting, administering employee pay and benefits, and ensuring labor relations remained non-antagonistic.
A year and a half after the new owners took over, the company's bottom line improved and surplus funds were finally available for investment into other...