Law, Business and Society 11th Edition by Tony McAdams

Exercise 36

Obviously, ethical theory does not provide magical answers to life's most difficult questions. Those theories are useful, however, in identifying and sorting the issues that lead to better decision making. Apply those theories to the Toyota and Malden Mills cases that follow, as you think about when layoffs are ethical.
Are Layoffs Unethical Case One-Toyota
Despite its highly publicized product defect problems and the global financial crisis, Toyota has tried to continue its half-century-old policy of not laying off permanent employees. When Toyota halted production in some of its U.S. plants in 2008, the 4,500 idled workers were kept on with full pay and benefits at a cost estimated at more than $50 million. Toyota executive Norm Bafunno said the retention decision was easy because the company used the economic slowdown as an opportunity to retrain its team members. Bafunno said Toyota used a shared sacrifice approach:
During these times, we suspended all overtime, we suspended all variable compensation (bonuses), we suspended pay raises, and in addition, for our senior leadership team... base pay was reduced … everyone needs to sacrifice together.
As Latondra Newton, general manager of Toyota's Team Member Development Center in Erlanger, Kentucky said: "We're not just keeping people on the payroll because we'renice. At the end of all this, our hope is that we'll end up with a more skilled North American workforce."
Despite its protective policies, Toyota has laid off thousands of temporary workers and in 2010, its Fremont, California plant was shut down leaving 4,700 workers without jobs. Toyota's lifetime employment policy suffered another jolt in 2012 when 8 percent of its workforce at its Melbourne, Australia, factory reportedly were laid off owing to declining demand for some models.
Do you share Toyota's vision that all workers should sacrifice in order to avoid layoffs for permanent workers
Sources: Norm Bafunno, "2010 Management Briefing Seminar," August 2, 2010 [http://pressroom.toyota.com/pr/tms/2010-management-briefing-seminar-165965.aspxl; Lindsay Chappell, "Toyota Idles Factories but Can't Lay Anybody Off," Workforce Management, August 18, 2008 [http://www.workforce.com/section/00/article/25/71/62.php] ; and Hans Greimel, "Toyota's 'Lifetime Employment' Takes a Hit with Australian Layoffs," Automotive News, January 30, 2012 [www.autonews.com/].