Foreign Divestment and Employee Disclosure and Consultation in the UK, 1978-1985

McDermott, Michael C (1986) Foreign Divestment and Employee Disclosure and Consultation in the UK, 1978-1985. PhD thesis, University of Glasgow.

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This thesis has two main objectives, namely, - to contribute to the theory of foreign divestment through a detailed analysis of the causes of UK plant closures by foreign-owned MNCs, - and to evaluate UK legislation on employee disclosure/consultation, with particular reference to its effect on foreign MNCs. The Financial Times has recorded since 1978 the closure of 96 manufacturing operations majority-owned by foreign MNCs. This thesis analyses 13 of them which involved compulsory redundancy of 500 or more employees in four industrial case studies. A total of 11 MNCs from 5 countries are examined, and the impact of home country culture is assessed. Of the three theoretical explanatory models of foreign divestment, condition-based theory emerges as far more appropriate than the motivation-based, and precipitating- circumstance based theories. The plant closures by foreign MNCs were due to certain unfavourable changes in the business environment, though these were not always sufficient to explain some closures. Deteriorating conditions created strong motives to divest, and new Chief Executives were often appointed. The arrival of a new man should be seen, not as a cause of, but, as a signal to divestment. The Department of Employment is content that workers receive the statutory minimum notification of redundancy, or pay in lieu of notice. Thus, not surprisingly, British employees' representatives were not consulted "at the earliest opportunity", but were informed some months after the decision had been made by the parent company at corporate headquarters. Regardless of market conditions and the parent company's financial situation, Union Officials will always castigate companies which close plants. It matters little whether they receive three months or three years notice, and whether or not their representatives meet the Chief Executive Officer of the parent company. Proponents of greater information disclosure believe that employees would use the knowledge to save Jobs, but in two closures, the fully-informed workforces voted against proposals in the knowledge that rejection endangered their plants. The behaviour of the Dutch, French, German and Canadian MNCs conformed with cultural profiles. Home country culture appears to have had influence on the three European MNCs and on the Canadian firm, but the behaviour of the seven US MNCs is so disparate that national culture appears to have had little impact. The British TUC has accused one foreign-owned firm of breaching the OECD's Guidelines for Multinational Enterprises during the divestment process. This case is analysed and reinforces the view that the key section on Employment and Industrial Relations is of little value. This crucial chapter of the Guidelines has no impact on corporate behaviour and is ineffective because it does not in any way supplement national law. While the EEC's "Vredeling Proposals" would raise the minimum legal requirements, many firms already exceed the UK legal minimum in some respects, eg. period of notice of closure. All of the plant closures examined in this thesis were part of a broader corporate restructuring strategy. Britain has not lost its attraction for foreign investors, though divestment will continue. Delays in restructuring may ultimately prove counterproductive. As the rate of technological change accelerates, the western world must come to grips with its fundamental economic and social problem, ie. a surplus of labour. Protracted debate and discussion on further legislation on employee disclosure and consultation has tended to divert attention from more pressing matters.

Item Type: Thesis (PhD)
Qualification Level: Doctoral
Keywords: Economics, Finance
Date of Award: 1986
Depositing User: Enlighten Team
Unique ID: glathesis:1986-77434
Copyright: Copyright of this thesis is held by the author.
Date Deposited: 14 Jan 2020 11:53
Last Modified: 14 Jan 2020 11:53

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