Hccw Management

1222 Words May 5th, 2012 5 Pages
HCC Management Team Bargaining Information

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
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Item 3. Strikes, Lockouts, Unfair Labor Practices

Management may elect to lockout labor at any time if it believes that no reasonable progress has been made in negotiations. Work stoppages will severely damage HCC customer relationships and its valued reputation as a firm dedicated to the prompt delivery of quality products. For each strike, lock-out, or sustained unfair labor practice charge related to management bargaining practices, the gross sales percentage change for all future years will be reduced by 1% and material costs will rise by an additional 1% per year.

Item 4. Facilities Upgrade and Production Manning

In order to meet customer demands for higher product quality, to comply with federally-mandated environmental regulations, and to reduce production costs, HCC must spend $2,000,000 within the next three years to upgrade equipment. The upgrade is expected to result in production efficiencies that will lower material and labor costs by reducing defective products, process waste, in-process inventory, and production man-hours through simplified work processes. It has been over a decade since significant modifications were made to the production facilities. Those changes were mostly technical in nature and did not substantially alter work processes or reduce overall employment. The average productivity gain in the industry for the past five years has been 3% per year. Financing for the loan to purchase the equipment

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