Bluebird Smelter Case

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Bluebird Smelter Case

The Bluebird Smelter case unfortunately is not an uncommon situation. Even with increased governmental regulations of industrial pollution and waste, there are those not so ethical companies that emit more than their fair share of toxins into the environment. I am from a community that depends greatly on industry to keep its economy progressive, and I have many friends whose families depend on the continued success of these organizations, so I understand the value they can bring to the general public. But I also see the yellow sulfur exhaust that billows out of the smoke stacks, and on certain days when there is a lot of excess, there is a powerful flame that flares in the night's sky. This is indeed a concerning sight.

The primary issue in this case is the pollution that results from the processing of copper ore at the smelter plant. This causes visible pollution to be discharged from the smoke stack, and leaves a filmy substance over a large portion of the Bison Valley. Much public concern has been generated as a result of the invisible impurities the factory produces including sulfur dioxide, sulfuric acid, and inorganic arsenic. Studies of the area have shown higher than normal incidences of emphysema, lung cancer, tuberculosis, pneumonia, and ischemic heart disease, most likely a result of the smelter's pollutants. Usually, this type of pollution is caused by multiple organizations, in urban areas, so as to not have a definite point of origin, but in this case there is no question. Bluebird Smelter is the only industrial pollution producer in the valley. Of course there are the pollutants that are a result of auto use, both private and commercial, but these would in no way have the effect to the environment that has befallen the Bison valley.

Through legal action and political pressure, an environmental protection group, the Earth Riders, has raised awareness on the issue. They pushed for installation of pollution control equipment that has reduced the emissions of the smelter by 75%, from a previously uncontrolled level. As a result, air quality has improved overall, but there continue to be adverse health effects, damage done to crops, and visible pollution being produced. This was not an inexpensive endeavor for the Bluebird company, and a few years later they made it known that with escalating pollution control expenses and future control increases, they would be operating the plant at a long term financial loss. The closure of the plant was threatened, and the Bluebird City Council proposed several variances about the federal and state air quality standards, despite some opposition. Since then, a couple of studies have come to light relating to the health effects of this lone instigator of industrial pollution. One study by a state public heath official used the standard mortality tables, relating to normal occurrences of causes of death, and found that there had been 5 so called, "excess deaths" of the diseases I listed earlier over the past five years. These excesses were difficult to precisely determine, as they were a part of hundreds or thousands of expected or ordinary deaths. The other such study was done by a leading group of economists, determining the costs and benefits to society and the community that Bluebird Smelter produces. The total benefits and total costs were accrued, and the results stated a net social loss of $70,000. The managers at the smelter questioned many of the costs, and claimed that they were unrealistic. They claimed that the risks presented by smoking and drinking are greater than those of the smelter, and that their contributions to the community were great. However, the Earth Riders felt that this study would make a solid case for the community to close down the plant if it would not comply to reduce its waste with acceptable levels. The debate rages on, and a decision must be made, as there are multitudes of people who desire a resolution.

Professor R. Edward Freeman defines stakeholder in his book, Strategic Management A Stakeholder Approach, which I site from Ethical Issues in Business A Philosophical Approach 7th Ed., "A stakeholder in an organization is (by definition) any group or individual who can affect or is affected by the achievement of an organization's objectives." (p.4) There are several major stakeholders, and some to a lesser degree that I will make apparent and illustrate their varied interests in the actions of Bluebird Smelter. First, the local employees of the factory have a great deal at stake, and wish the factory to stay open for what are some fundamental reasons. These employees wish to maintain financial stability by retaining employment and job security. There is also goodwill towards your coworkers as friends, and even towards your company that might suffer as a result of a closing the plant. They would refrain from the process of a job search, unemployment funds collection, or a potential move to another community in hopes of finding better luck. The next group is a very broad sample, roughly 5,000, but each is exposed to the externalities created by the smelter. Of course I am referring to the citizens of Bison Valley. They deal with visible pollution in the form of smog, and must tolerate the smudgy mess that settles on most anything that is left outdoors. This residue and the potential for acid rain presents a troubling realization, that their property will be greatly devalued as a result of their proximity to a polluting factory. Yet, if Bluebird were to close up shop, they stand to be in an area hit by a consequent economic recession. The corporation that owns the company stands to be at a loss if the factory were to close. This would be a failure of management, if there were to forfeit any possible profit that could be shared with stockholders. Tourists and the tourism industry also pay the price for the disturbed surroundings. These people are looking for a clean pollution free environment to spend time and money. The devaluation of property values may decrease any likelihood of these people purchasing land for vacation purposes. The tourism industry stands to lose huge amounts of business, approximately $500,000. Their product, quality of life and clean environment, is being destroyed by the externalities created by the smelter. Another industry hurt by the pollution is that of agriculture, as farmer's welfare, or crops, are being jeopardized by the chemicals that are emitted by the smokestack. These farmers are not realizing the full potential or value of the work that they put into their crops. If it ever becomes serious enough issue, farmers face the prospective farm failure, unemployment, and a job search. Farming is not the only locally concerned business in the area; all small businesses in the area are affected by the action, or inactions of Bluebird. If the plant were to close, the area stands to lose $4.6 million dollars generated in the community, money that would likely be spread pretty evenly throughout the region. With the possibility of a recession, many citizens would look to move to more favorable economic area, which would also cause a decline in revenues. And finally, political figures of the area are concerned with the dealings of the company, as negative reactions may put re-election chances in jeopardy.

Shaw and Barry essentially defined rights as, "An entitlement to act or have others act in a certain way," later linking rights and duties saying, "if you have a right to do something, then someone else has a correlative duty to act in a certain way."(p.7) Employees of the plant have a duty to the company, which is to perform their prescribed tasks to the best of their ability, and to not do anything to intentionally harm the business. It is not fair to say that they have a right to stay employed, because that is up to the employer. The citizens of Bison Valley have universal human rights not to be affected by the externalities produced by a profit maximizing industry. These negative rights entitle the fundamental interests that humans have in being uninhibited by an external hindrance, and would include the affects of the pollution to their property, and to their personal health. The factory has a duty not to be a nuisance to the surrounding community, and to bring greater benefits to the community than it does harm. This must be done within the limits and regulations established by the people, represented in our state and national governments. They also have a duty to create a relationship with the community that does not simply make the people in it a means to an end. Kenneth Goodplaster states, "Much of what makes responsible decision making difficult is understanding how there can be an ethical relationship between management and stakeholders that avoids being too weak (making stakeholders mere means to stockholders' end) or too strong (making stakeholders quasi-stockholders in their own right)." (p. 4) Tourists have the right to enjoy their free time in a place that is conducive to the atmosphere that they please. Farmers also have the right not to be affected by the externalities of the plant. They have the right to the payoff for their work, and to not be burdened by corporation caused problems. Shareholders in the corporation have the right to voice dissatisfaction with management of the firm, or to pull their investment out of the company. Local businesses have a duty to provide honest products and services, and to deal with society in a civil manner. They also have the right to close and relocate if their current situation is not satisfactory. Political figures have a duty to hear out their constituents, and to be their voice when it comes to matters of civil turmoil. They have the right to weigh options presented to them, and make a decision based on their instinct and good judgment.

Each of the parties involved in this case are of the consequentialists normative moral thinking, in that each has self-interest or the greater good in their interests. Shaw and Barry substantiate the trade off between self-interest and utility saying this, "Both self-interest and utility play important roles in organizational decisions, and the views of many business people blend these two theories. To the extent that each business pursues its own interest and each businessperson tries to maximize personal success, business practices can be called egoistic." They continue, "But business practice is also utilitarian in that pursuing self-interest is thought to maximize the total good, and playing by the established rules of the competitive game is seen as advancing the good of society as a whole." (p.64) The authors then went on to comment on capitalist author and economist Adam Smith's views, expressed in The Wealth of Nations, "He argued that if business is left to pursue its self-interest, the good of society would be served," and suggested the idea of "restrained egoism", explaining it by saying, "Such a position is egoistic because it recommends the pursuit of self-interest; it is restrained because it permits pursuit of self-interest only within the rules of business practice." (p.64) Most of the stakeholders that are involved in the business aspect of the situation make their moral decision based on restrained egoism. Bluebird strays away from this with their failure to maintain operations within the set boundaries, as they could not function profitably employing mandatory pollution control equipment. The citizens would most likely take an egoist view, because individuals are each affected by pollution. Some are more adamant on the issue than many, and others still claimed to be willing to tolerate "a little dirty air."

So, now I am to put myself in the shoes of Smelter's management and devise three reasonable action options for our situation. First of all, we could sit and do nothing. From our comments refuting the meaningfulness of evidence from the economists' study, and suggesting that health risks from smoking and drinking were greater to the community, I take it that this might be our current stance. If we were to do this, the externalities would stay as they are, or potentially get worse. Since the city council passed the ordinance to reduce regulations, we are likely to see profit similar to before any regulations were administered. Additional costs might be accumulated from continued legal action enacted by the Earth Riders and victims of diseases that are a result of our operations. Another option would be to forget the hassle and close the plant. With the environmental regulations that are proposed, we would be operating at a net loss. In nature as in capitalism, there is the survival of the fittest. This economic Darwinism allows those who can produce at the lowest cost to prosper, and those who cannot survive within the boundaries don't. If this were to occur, the pollution would stop, and eventually the environment would be near its state prior to the establishment of the plant. All of the 15 employees would be out of work for a time, and an economic recession could result. And finally, our engineering teams could attempt to redesign our smelting process to be more economical and greatly reduce the amount of pollution we produce. This could also include design of more efficient and cost effective pollution control equipment. If the process were to become more profitable as a result, we could afford to pay for reduction instruments and still operate profitably. This would allow continued employment of factory workers, and cleaner air for citizens, farmers, and tourists. Local businesses would retain their current business levels, and the politicians would look like heroes.

When I consider an issue like this, I would like to see the greatest number of people possible benefit from the decision. Using this utilitarian view, I would suggest the company should attempt to change their current process, because there really are no losers. The company stays in operation, the community has improved quality of life and aesthetic beauty, and local businesses would not have to face a recession. Bluebird would show concern for society, and a willingness to compromise, which would likely build goodwill with the community. The tourism industry would again be able to blossom, and those retirees and weekenders could again enjoy the pristine mountain views from the Bucolic Bison Valley. This would not be the easiest option to enact, as developments such as these would be groundbreaking and could net more profit for the company than Bluebird Smelter. The bottom line, something has to be done, Bluebird cannot simply do nothing and expect everything to be all right. In the short term, this seems like a good option, but further down the road there will inevitably be complications from continued health problems and excess deaths in the valley. As soon as negligence lawsuits start piling up, they will be forced to pay for those damages, and will be faced with a damaged public image, and the plant would likely be closed anyway.

Works Cited

Donaldson, Thomas, Patricia H. Werhane, and Margaret Cording, eds. Ethical

Issues in Business A Philosophical Approach. 7th ed. Upper Saddle River, New Jersey Prentice Hall, 00.

Shaw, William H., and Vincent Barry. Moral Issues in Business. 8th ed.

Stamford, Connecticut Wadsworth Thompson Learning, 001.

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