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Anticipating plant closures: the role of advance notification


GŁnter Krumme


The "redundancy", or "displaced worker" or "reductions in force" problem has become a subject of considerable academic and political interest. "The mass layoffs create instant pockets of unemployment, often made up of people with years of dedicated service and acquired skills" ( Horvath, 1987, p.3). The way in which political bodies, corporations, unions and other institutions cope with this problem and its consequences reveals much about the finer differences in industrial relations and social climates within and among industrial countries ( Greenhalgh et al., 1988; Horvath, 1987; Howland, 1988; Massey and Meegan, 1982; Raines et al., 1982; Rainy et al., 1973; Root, 1987; Townsend and Peck, 1985).

The closure of entire plant facilities constitutes a corporate action which goes beyond laying off individual or groups of employees in that it usually signals the permanent withdrawal of the corporation from the community and the cutting of numerous ties to the local economy in addition to severing employment relations. Such often sudden departures thus do not merely affect the personal job, career and family plans of individual employees but also those of employees and owners in other affected businesses, of local infrastructure providing governmental agencies and, in numerous ways, the public at large. It should not be surprising that, with increased individual career consciousness and ambitions, increased integration of plants into the local economic fabric and increased levels of public investments in support of corporate activities, the calls for local corporate responsibility and stability will also increase. Given the needs for structural adjustments and ultimately unavoidable plant closures, one would have to expect increased demands for predictability and prior notification of such major changes in corporate activities.

In most western industrialized countries, legislated mandates concerning employment security and worker notification and consultation practices have become exceedingly comprehensive ( Emerson, 1988; Yemin, 1982). In the United States, in contrast, improvements in such rights have occurred only slowly and tended to be fragmented and narrowly focussed ( Addison, 1986). Admittedly, the notification rights of those non-employees only indirectly affected by plant closures are yet to be defined, unambiguously, anywhere in the Western world. Yet, it could be suggested that in the U.S. context, the difficulties of overcoming the specifically American legal "employment-at-will" doctrine ( Hill, 1987) have the same roots as those slowing the process of rethinking the analogous, but less explicit, "closure-at-will" principle and of extending information responsibilities to the notification of other "stakeholders".

The Worker Adjustment and Retraining Notification (WARN) Act which the U.S. Congress was finally able to pass in 1988, is a case in point. The controversial nature of the underlying issues resulted in a compromise which proponents hope and opponents fear may lead to further job protection measures and an intensification of disclosure provisions ( McKenzie, 1984). The debate and a series of bills preceding this legislation had, over a period of at least fifteen years, narrowed from a relatively comprehensive layoff assistance program to the mere provision of advance notification ( Bluestone and Harrison, 1982; BNA, 1988; Howland, 1988; Rothstein, 1986).

This ultimately narrow perspective made it easy to discuss the provisions intermittently in the context of the 1988 trade bill. It was now argued that plant closures are mainly the result of international economic restructuring and the "flight of jobs". Thus, the notification bill was supported by some quite openly as a protectionist measure, which would prevent or slow down closures rather than merely provide an early warning and facilitate adjustments ( Business Week, 1988a, 1988b). For others, advance notification simply remained "the decent thing to do" when one cannot, or does not want to, prevent closures altogether. Opponents saw the measure not only as an undesirable anti-trade measure, but also as contributing to locational regimentation and as yet another step in the wrong direction on a path which, allegedly, had led to most of Europe's economic problems ( McKenzie, 1984; Blinder, 1988).


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