Reference no: EM132172348

Stafford Chemical, Inc. is a privately held company that produces a range of specialty chemicals. Currently, its most important product line is paint pigments used by the automobile industry. Stafford Chemical was founded more than 60 years ago by Phillip Stafford in a small town north of Cincinnati, Ohio, and is currently run by Phillip’s grandson, George Stafford. Stafford has more than 150 employees, and approximately three-quarters of them work on the shop floor. Stafford Chemical operates out of the same plant Phillip built when he founded the company; however, it has undergone several expansions over the years.

Recently, a Japanese competitor of Stafford Chemical, Ozawa Industries, announced plans to expand its operations to the United States. Ozawa, a subsidiary of a large Japanese industrial company, decided to locate a new facility in the United States to better serve some of its customers: Japanese automobile manufacturers who have built assembly plants in the United States.

The governor of Ohio has been particularly aggressive in trying to persuade Ozawa Industries to locate in a new industrial park located about 30 miles from Stafford’s current plant. She has expressed a willingness to negotiate special tax rates, to subsidize workers’ training, and to expand the existing highway to meet Ozawa’s needs. In a recent newspaper article, she was quoted as saying:

Making the concessions I have proposed to get Ozawa to locate within our state is a good business decision and a good investment in our state. The plant will provide high-paying jobs for 400 of our citizens. Furthermore, over the long run, the income taxes that these 400 individuals will pay will more than offset the concessions I have proposed. Since several other states have indicated a willingness to make similar concessions, it is unlikely that Ozawa would choose our state without them.

George Stafford was outraged after being shown the governor’s comments.

I can’t believe this. Stafford Chemical has operated in this state for over 60 years. I am the third generation of Staffords to run this business. Many of our employees’ parents and grandparents worked here. We have taken pride in being an exemplary corporate citizen. And now our governor wants to help one of our major competitors drive us out of business. How are we supposed to compete with such a large industrial giant? We should be the ones who are getting the tax break and help with workers’ training. Doesn’t 60 years of paying taxes and employing workers count for something? Where is the governor’s loyalty? It seems to me that the state should be loyal to its long-term citizens, the ones who care about the state and community they operate in—not some large industrial giant looking to save a buck.

Questions/Solve:

- Define the problem (keep short, 1 to 2 sentences):

-Analysis of the situation:

-What are their alternatives? (minimum of 3):

-Give a recommendation (solves problem, specific and actionable) :