ACI is a leading supplier of components for the telecommunications industry. It sells components to companies like Alcatel, Northern Telecom, and Ericsson, who put the components into the equipment they make. ACI’s annualsales are around $1.5 billion. It has more than 2,500 U.S. employees as well as another 3,000 employees about evenly divided between Mexico, Taiwan, and Ireland. All of these hourly employees are represented by an international union. The Mexican operations were launched to take advantage of the low labor costs. Those in Taiwan ACI is a leading supplier of components for the telecommunications industry. It sells components to companies like Alcatel, Northern Telecom, and Ericsson, who put the components into the equipment they make. ACI’s annualsales are around $1.5 billion. It has more than 2,500 U.S. employees as well as another 3,000 employees about evenly divided between Mexico, Taiwan, and Ireland. All of these hourly employees are represented by an international union. The Mexican operations were launched to take advantage of the low labor costs. Those in Taiwan How should ACI handle the layoffs, if in fact they are necessary? 

If major layoffs cannot be avoided, which parts of the organization should be hit the hardest? 

Who should be protected? For example, should we lay off foreign or domestic workers first? Should we just lay off blue-collar workers and not management? 

Should we rely on our performance appraisal system to decide which employees to let go? If we do this, to what extent should seniority be considered? 

How should we communicate what we are about to do? To our workers? To the union? To the community? To the shareholders? To customers and suppliers? 

What should we do if the union turns against us? How do we avoid a major confrontation with the union? 

And what about the media? Might there not be an adverse reaction in the media if we have large-scale layoffs? And will not the media reaction snowball and we will lose considerable good will? At the meeting, the CEO turns to your team and asks for your advice. How do you respond?