Problem
Munster Manufacturing ("Munster") owns and operates the world's largest manufacturing company specializing in the design and creation of carnival rides (e.g., merry-go-rounds, roller coasters, Ferris wheels, etc.). Munster is located at 1313 Mockingbird Lane, Bellingham, Washington. Munster sells its rides throughout the world, but most sales are in the United States, Canada, Mexico and Europe. For the last five years, the cost of manufacturing has increased 7.75% per year. The increased manufacturing costs has caused Munster to lose money for the last three years in a row.
To address this serious loss, Munster is considering whether it should relocate to a foreign country. The average employee at Munster currently earns $21.75 per hour. In addition, all employees are provided with a fully paid medical and dental plan. After three years of employment, employees are also eligible to participate in the company's retirement plan. Average wages for comparable work in the foreign country where Munster may relocate is $9.75 per hour. To help improve the welfare of foreign employees, Munster will increase its average wage to $11.75 per hour and also provide a fully paid medical and dental plan. A retirement plan and profit-sharing are under consideration, but no decision has been made.
If Munster relocates outside the U.S., approximately 2,000 people will lose their jobs. It's been estimated that it will take over a year for these 2,000 people to find comparable work, but most companies no longer provide comparable medical and dental. To help these workers better cope with the loss of their job, Munster plans to "create" a fund of money that each employee can draw from until they land a new job or for six months, whichever is sooner.
After factoring in the higher cost of shipping, the lower wages and the lower cost of taxes and infrastructure, Munster has determined that it can begin making a 3% profit the first year after relocation, 5.5% in the second year and 8.75% in the third year. Munster is confident it will continue to grow at a steady pace thereafter.
i. Explain, in detail, how "Utilitarianism" supports Munster's decision to relocate. List all positives and negatives.
ii. Explain, in detail, how "Social Contract Ethics" best supports Munster's decision not to relocate.