It was a bad year for Yardran Clothing. The firm had producing clothing for the entire family for more than seventy-five years. People had purchased Yardran Clothing because it was good clothing at a reasonable price. The company had never tried to be top-of-the-line, feeling that it better served the middle class family. It also refused to produce low-end clothes because of wanting to maintain its reputation of good quality. The market over the years had changed and now more people were shopping for price. The upper class continued to buy upscale clothing, but many middle class buyers beset by unstable employment and rising prices especially for gas to run their cars and heat their homes resorted to buying cheaper clothing largely from overseas. Yardran Clothing feeling the pressure had started to move production to the Far East and Latin America. The three remaining plants in the United States were in Massachusetts (the oldest and the first plant), North Carolina, and South Carolina. The Massachusetts plant had a union and the other two plants did not.

The contract for the Massachusetts plant was going to expire in ninety days and union was talking about wanting more pay and benefits. Henry Mack, the plant manager, was schedule to be the chief negotiator for the company. Henry was a veteran with the company and no other plants had unions so he was the logical choice to represent the company. He had a management degree from a state university and had been with Yardran for thirty years. He was aware that gasoline price had gone up and that heating oil and natural gas had also increased greatly in price. He was also aware of the fact that some production had been moved overseas. He had also seen the closing of the Vermont plant a year earlier. Just before negotiations were scheduled to start, Henry was approached by Tom Black, the company president. Tom told Henry that the company would not give him much because of the current situation. Henry was told to be tight on the negotiations or that there may be layoffs or a Vermont situation. Henry was used to negotiating with Frank Murphy, a man that had been with Yardran as long as he had. Frank and Henry were firm, but fair and they always seemed to be able to work out a deal that both company management and union workers could support.

As many of the older workers retired from Yardran, Frank lost the support that had kept him union president for more than twenty years. After the union election, Bob Franklin was the brash and cocky new union president and was eager to get Yardran to the table where he would get the workers' share. Bob was supported by the younger workers who wanted more money and benefits. The older workers were somewhat leery of Bob and were afraid of what he might do to their jobs.

When negotiations started, Henry and his middle aged management team found themselves looking at Bob Franklin and his twenty to thirty year old union team. Bob Franklin started the negotiations by telling Henry and the management team that a new sheriff was in town and it not going to be negotiations as usual. Henry began cautiously by suggesting that they start with environmental issues and work toward the more complex economic issues later. Henry was hoping that this would buy him time and help to settle Bob down. Henry and Bob knew the existing contract had been a good one for environmental issues like safety, union shop (workers agree to join the union or pay union dues after being hired), probationary period for new workers, grievances, production process, production standards, breaks, overtime, holidays, vacations, and inspections. Both sides got through most of the contract in thirty days of less than intense work. They were some minor changes, but the new contract looked very much like the existing contract. The only real issues left on the table were wages and benefits. The union started out by asking for $4.50 per hour raise over the next three years and a phase out of contributory benefits over the same period. This meant the union workers would get $1.50 per year raise for each of the next three years and that the contributory part of the benefits would decrease by 33% for the next three years. This would result in the employees getting a $4.50 per hour raise and paying no out-of-pocket costs for their health benefits after three years. Henry started his part of the negotiations by stating that the wages and benefits would remain the same for the next three and the company would try to keep everyone employed. Obviously, the negotiations began to bog down as each side had to consider what the other had offered.

Henry returned to the table with a raise of 50 cents an hour over the next three years and a one time 10 % cut in what employees had to pay toward benefit costs. Bob counter with a $1.35 per hour raise over the next three years and a 25% cut in what employee paid for benefits for each of the next three years. It became apparent to Henry that dealing with Bob was going to be very different than dealing with Frank. Over the next sixty days, the company and union had reached an impasse. Henry had moved to 65 cents per hour raise for each of the next three years and a one time cut in employee benefit costs of 25%. Bob had refused to move form $1.25 per hour and a one time cut of 60% of the employee benefits cost.

Bob, encouraged by the younger workers, remained steadfast and said he would not give anymore to the company. The younger workers were confident that their guy could put management in their place and give them what they wanted. The older workers were becoming worried that this hard line negotiating may backfire on the union. The younger workers wanted to strike and the older workers wanted to keep working when the existing contract expired. When the contract expired the union voted to go on strike against the company.

Henry was talking to Tom about the situation and Tom continued to tell Henry to hold the line or the big bosses would not like it. Tom told Henry to let them strike. Tom informed top management of what was going on and they decided to move production to the plants overseas and in the Carolinas. As the strike continued, more and more production was moved.

In a dramatic move, Tom told Henry to take the offer of the union and end the strike. Henry replied that taking the offer of the union was not financially feasible and would certainly mean the death of the plant. Tom said that the top bosses had instructed him to take the offer. Henry went back to the bargaining table with Bob and union members and took their offer. Bob and the union members ratified (approved) the contract and the contract was sign by the union and Yardran management. Bob's big win turned sour in three weeks when the mandatory sixty day notice was given that the plant was closing. The reason given was that the plant was not competitive and it cost too much to keep the plant open.

Debrief questions to answer:

Did we meet our objective?

Was this a more successful negotiation than in the past? Why or why not?

What went right?

What went wrong?

How can we use this to improve our processes?