Your team represents HCC management in bargaining sessions with the UCPW Local 14. The team is expected to negotiate an agreement that will allow the company to achieve its strategic goals over the next three years. Your team will use the following items to formulate its initial demands and for negotiating a new collective bargaining agreement:
Item 1. Strategic Goals and Forecast of Factors Affecting the Firm’s Competitive Position
Strategic Goals Year 1 Year 2 Year 3 Incentive
Materials cost reduction 2% 3% 4% 4%
Labor cost reduction 4% 4% 5% 5%
Current Ratio 2.25 2.5 2.75 2%
Quick Ratio 1.0 1.2 1.5 3%
Inventory turnover 5.0 5.5 5.75 3%
Collection period 40 35 30 3%
Forecast…show more content… Facility engineering has identified three fixed options for upgrading the facilities:
Option 1 Year 1 Year 2 Year 3
Upgrade spending 1,000,000 500,000 500,000
Material costs reduction 2% 3% 4%
Manning reduction 10 10 10
Option 2
Year 1 Year 2 Year 3
Upgrade spending 1,000,000 1,000,000 0
Materials costs reduction 2% 4% 6%
Manning reduction 15 15 0
Option 3 Year 1 Year 2 Year 3
Upgrade spending 2,000,000 0 0
Materials costs reduction 4% 5% 6%
Manning reduction 20 10 0
The team’s choice of upgrade option will be influenced by the degree to which other negotiating factors (e.g., wages and benefits) add or subtract from the overall annual costs of settling a multi-year contract. The management team can input each option into its bargaining calculator to alternatively test which options in combination with other bargaining positions will produce the best forecast of strategic goals achievement.
Manning reductions related to the installation of automated molding machinery will eliminate thirty piecework-molding jobs (all of Job Class X). Installation of the new equipment will require that the production plant operate on a continuous seven-day, 24-hour per day schedule as opposed to the current five-weekday (Monday through Friday) operating schedule once the upgrade is completed.
The proposed facilities upgrade and subsequent manning reduction have not yet been discussed with the union. The company will introduce its demand for the
