Reference no: EM131451583

Question: An ethics charter. Divide into groups of three or four. Each group develops a charter that documents its company's commitment to ethical behavior. What industry is your company in? What does ethical behavior look like in that industry? What will your company's commitment consist of? A code of ethics? Performance guarantees? Corporate governance policies?

Thinking Critically

MOTT'S: SOUR APPLES

In 2009, the Dr Pepper Snapple Group (DPS) reported a net income of $555 million, compared with a loss of $312 million in 2008, with sales down 3 percent at $5.5 billion. The beverage conglomerate owns 50 brands including 7UP, A&W Root Beer, and Hawaiian Punch, but lately it has been receiving the most media attention for its Mott's apple juice plant in the Rochester area of upstate New York. The 305 hourly workers at the plant have been on strike since Monday, May 24, 2010, in response to a new contract offer by the senior management of the plant that reduced production wages by $1.50 per hour, froze pension benefits, ended pension benefits for new hires, reduced employer contributions to the 401(k) plan, and increased employee copays in the health care plan.

The rationale for the pay decrease is that the Mott's workers-all members of the Retail, Wholesale, and Department Store Union (RWDSU)- are overpaid in relation to the other blue-collar production workers in the Rochester area, where companies like Xerox and Kodak have made large layoffs resulting in high unemployment. This negotiation, in line with "local industry norms," has been quite transparent. The parent company has confirmed that its finances are very healthy and that there are no plans to close the plant or move production operations overseas. When the company was spun off as a separate entity from UK conglomerate Cadbury Schweppes in 2007, the stock stood at $25 a share-it's now in the high 30s. DPS's three highest paid executives, including CEO Larry Young, all saw pay increases of more than 100 percent in 2009. The average hourly production wage in the area, according to a U.S. Bureau of Labor Statistics National Compensation Survey conducted in 2009, was just over $14 an hour.

Union offi cials estimate that 70 percent of Mott's production workers earn less than $19 an hour under the contract that expired in mid-April 2010. Many have reached that level after more than a decade of service. Chris Barnes, a spokesman for the Plano, Texas-based DPS, insisted that the company approached the contract negotiations in good faith: "We offered to keep wages unchanged after three years of salary increases and, unfortunately, the union rejected this offer. We have to manage our costs the same as everyone else and ensure that they remain sustainable over the long term." RWDSU President Stuart Appelbaum has a different perspective. He has seen fi nancially strapped companies needing to cut costs and has agreed to concessions in some dire situations, but to have a profi table company with strong prospects seeking to leverage high local unemployment rates to reduce wage costs is a fi rst for him. The striking workers see this as more than just a strike over money. They don't begrudge the company profi ts or high executive salaries, or even the 67 percent increase in the dividend paid to shareholders in April 2010. What they see is an attitude of unfettered corporate greed. "When you get down to it, this situation is much bigger than just some unhappy workers at a Mott's apple juice plant in upstate New York," Applebaum said. "This is about a large company doing extraordinarily well demonstrating outrageously greedy behavior. It's beyond outrageous. It's un-American."