Reference no: EM133372989

Case Study: Columbian Boiler, a manufacturer of galvanized containers in Youngstown, Ohio, provides well-paid jobs that offer full benefits, even though many of the jobs do not even require a high school diploma. The company is doing well; however, it loses over $200,000 worth of business each month due to a shortage of workers. Where does that business go? According to Michael Sherwin, the CEO of Boiler, "Our main competitor in Germany can get things done more quickly because they have a better labor pool." One might ask, "What does it mean to have a 'better labor pool' when the jobs don't even require a high school education?" The answer is: a labor pool that can pass a drug test. Over 25% of applicants to Boiler fail drug tests. This company's experience is far from extraordinary, but rather representative of a broader national problem that is only getting worse. The opioid epidemic is part of the culprit in this case, and this has been true for several years. However, increasingly, new laws that allow for the recreational use of marijuana have greatly expanded the number of failed drug tests across the country. Seven states in the U.S. allowed for the recreational use of marijuana in 2017, and in 2018, voters in three more states, Michigan, Utah and Missouri joined their ranks. Still, even though it may be fine for the government to ignore someone's drug use, this is much more difficult for employers. For example, back at Columbian Boiler, Sherwin notes that "the lightest product we make is 1,500 pounds and some go up to 250,000 pounds. If something goes wrong, it won't hurt our workers. It'll kill them." Any such incident such as this would trigger an investigation, and a drug test cannot discriminate whether a worker was doing drugs at work or at home, but this subtle distinction could be easily lost on a judge or jury in a wrongful death suit. Although few would argue that current drug use is a legitimate knock-out factor when it comes to employment, an additional question arises with respect to what to do with former users or addicts that can pass a test today, but given the evidence for recidivism, may not be able to pass a test tomorrow. Ironically, one of the industries that is most susceptible to hiring workers with drug problems, the restaurant industry, is also one where some of the most innovative "rehabilitation and re-employment initiatives" are being forged. For example, Rob and Diane Perez founded a restaurant called "DV8" (a play on the word "deviate") that only hires workers who are in treatment for opioid and related addictions. In fact, beyond just hiring these workers, the restaurant makes this unique personnel selection strategy the center of their business model. The name DV8 itself highlights the goal of helping the workers change the paths of their lives which have deviated from the norm. Customers are attracted to the eatery because of the delicious food, but also because it makes them feel good about supporting some of the local folks in the community that are trying to rebuild their lives. The restaurant was opened with a $300,000 gift from local charities and philanthropists, and works hand in hand with local rehabilitation centers in a joint effort to strengthen the community. In terms of product differentiation, one customer expressed it best when she admitted that "you wouldn't pay $4 for a cinnamon roll anywhere else, but I don't mind paying a little extra to help people get back on their feet.

Questions

1. How do the high positive rates for drug testing in the U.S. harm its competitive position and what can be done at the national level to help reduce drug use and enhance rehabilitation?

2. Do you believe the local experiment in the restaurant business described here could be replicated on a national scale, where a whole restaurant chain might be built upon this "dual purpose" business model that seeks to make money at the same time it tries to perform a public service? Can you think of industries other than hospitality that might also be suited, or suited better, for this unique business model?