E: Yes, it was far and away the majority employer.
W: And most of these people have left the community, presumably to find employment elsewhere.
E: Definitely, there was a drastic decrease in the area’s population.
W: are you concerned, then, that our company can attract the 1,200 employees to Plainville from other parts of New England?
E: not in the least. We are absolutely confident that we will attract 12,00—even more, for that matter virtually any number we need. That, in fact, is one of the chief advantages of this proposal. I would think that the community would be very pleased to have us there.
W: On the contrary, I would suspect that the community will rue the day we arrived. Beyond that, though, this plan is totally unworkable if we are candid. On the other hand, if we are less than candid, the proposal will work for us, but only at great cost to Plainville. In fact, quite frankly, the implications are appalling. Once again, I must enter my serious objections.
E: I don’t follow you.
W: The temporary plant would employ some 1,200 people. Again, this means the infusion of over 4,000 to the community and surrounding areas, Byte Products, however, intends to close this plant in three years or less. If byte informs the community or the employees that the jobs are temporary, the proposal simply won’t work. When the new people arrive in the community, there will be a need for more schools, instructors, utilities, housing, restaurants, and so forth. Obviously, if the banks and local government know that the plant is temporary, no funding will be made available for these projects and certainly no credit for the new employees to buy homes, appliances, automobiles, and so forth.
If, on the other hand, Byte Products does not tell the community of its “temporary” plans, the project can go on. But, in several years when the plant closes (and we here have agreed today that it will close), we will have created a ghost town. The tax base of the community will have been destroyed; property values will decrease precipitously; practically the whole town will be unemployed. This proposal will place Byte Products in an untenable position and in extreme jeopardy.
E: are you suggesting that this proposal jeopardizes us legally? If so, it should be noted that the legal department has reviewed this proposal in its entirety and has indicated no problem.
W: No! I don’t think we are dealing with an issue of legality here. In fact, I don’t doubt for a minute that this proposal is altogether legal. I do, however, resolutely believe that this proposal constitutes gross irresponsibility.
I think this decision has captured most of my major concerns. These along with a host of collateral problems associated with this project lead me to strongly suggest that you and the balance of the board reconsider and not endorse this proposal. Byte Products must find another way.
The Dilemma
After a short recess, the board meeting reconvened. Presumably because of some discussion during the recess, several other board members indicated that they were no longer inclined to support the proposal. After a short period of rather heated discussion, the following exchange took place;
E: It appears to me that any vote no this matter is likely to be very close. Given the gravity of our demand capacity problem, I must insist that the stockholders’ equity be protected. We cannot wait three years: that is clearly out of the question. I still feel that licensing domestic or foreign is not in our long-term interests for any number of reasons, some of which have been discussed here. On the other hand, I do not want to take this project forward on the strength of a mixed vote. A vote of 6-5 or 7-4, for example, does not indicate that the board is remotely close to being of one mind. Mr. Williams, is there a compromise to be reached?
W: Respectfully, I have to say no. If we tell the truth namely, the temporary nature of our operations the proposal is simply not viable. If we are less than candid in this respect, we do grave damage to the community as well as to our image. It seems to me that we can only go one way or the other. I don’t see a middle ground.