https://theses.gla.ac.uk/ Theses Digitisation: https://www.gla.ac.uk/myglasgow/research/enlighten/theses/digitisation/ This is a digitised version of the original print thesis. Copyright and moral rights for this work are retained by the author A copy can be downloaded for personal non-commercial research or study, without prior permission or charge This work cannot be reproduced or quoted extensively from without first obtaining permission in writing from the author The content must not be changed in any way or sold commercially in any format or medium without the formal permission of the author When referring to this work, full bibliographic details including the author, title, awarding institution and date of the thesis must be given Enlighten: Theses https://theses.gla.ac.uk/ [email protected] FOREIŒ DIVESTMENT AND EMPLOYEE DISCLOSURE AND CONSULTATION IN THE UK, 1978-1985. by Michael C. McDermott Thesis submitted in fulfilment of the requirements for the degree of Doctor of Philosophy. School of Financial Studies, University of Glasgow, August 1986. ProQuest Number: 10991898 All rights reserved INFORMATION TO ALL USERS The quality of this reproduction is dependent upon the quality of the copy submitted. In the unlikely event that the author did not send a com plete manuscript and there are missing pages, these will be noted. Also, if material had to be removed, a note will indicate the deletion. uest ProQuest 10991898 Published by ProQuest LLO (2018). Copyright of the Dissertation is held by the Author. All rights reserved. This work is protected against unauthorized copying under Title 17, United States C ode Microform Edition © ProQuest LLO. ProQuest LLO. 789 East Eisenhower Parkway P.Q. Box 1346 Ann Arbor, Ml 48106- 1346 This work is dedicated to parents CONTENTS ACKNOWLEDGEMENTS (xiil) ABSTRACT (xiv) TABLES (xvl) PART I 1. INTRODUCTION 1 1.1. : The Problems being investigated 1 1.2. : Importance and Contribution of the Study 3 1.3. : Outline of the Study 2. THE MAOriTUDE and NATURE of FOREIGN DIVESTMENT 9 A. INTRODUCTION 9 B. US FOREIGN DIVESTMENT 10 2.1. : Its Magnitude 10 2.2. : Geographic Distribution of US Foreign 15 Divestment 2.3. : Method of Exit 18 2.3.1.: Involuntary Divestments 18 2.3.2.: Voluntary Sales 20 2.3.3.: Voluntary Liquidations 20 2.3.4.: Summary 21 2.4. : Characteristics of Foreign Subsidiaries 22 Divested by US MNCs 2.4.1.: Principal Activities 22 2.4.2.: Ownership Characteristics 23 (i) 2.4.3.: Size of Divested Operations 24 2.4.4.: Summary 25 2.5. : Characteristics of Divesting Parents 25 2.5.1.: Number of Divestments per parent 25 2.5.2.: Average Size of the Divesting Companies 27 2.5.3.: Importance of International Operations 29 2.5.4.: Summary 30 C: UK FOREIGN DIVESTMENTS 31 2.6. : Its Magnitude and the Method of Exit 31 2.7 : Geographic Distribution of British Foreign Divestment 33 2.8 : Characteristics of Foreign Subsidiaries 33 2.8.1.: Principal Activities 33 2.8.2.: Ownership Characteristics 36 2.8.3.: Size of Divested Operations 38 2.9. : Characteristics of Divesting Parents 39 2.10. : Summary of UK Foreign Divestment 39 D: FOREIGN DIVESTMENT: THE HOST COUNTRY PERSPECTIVE: 41 THE SCOTTISH EXPERIENCE 2.11. : Foreign Owned Plant Closure in Scotland 41 2.12. : Summary 3. FOREKW DIVESTMENT THEORY 46 3.1. : Introduction 46 3.2. : Condition-Based Theory 48 3.2.1.: Exit Barriers 51 (a) Structural Barriers 52 (b) Strategic Barriers 55 (c) Managerial Barriers 56 3.3. : Motivation Based Theory 58 3.3.1.: Poor subsidiary performance 58 (ii) 3.3.2.: Poor Pre-Investment Analysis 59 3 .3 .3 .: Structural and Organizational Factors 61 3 .3 .4 .: Problems in the Parent/Lack of Fit and Resources 61 3 .3 .5.: The Internal-External Market Failure Model 62 3 .3 .6.: Product Life Cycle Models 64 3 .4 . : Precipitating-Circumstance Based Theory 66 3 .5. : Summary 68 4. THE FOREIQI DIVESTMENT DECISIW: 71 EMPLOYEE AND HOST GOVERNMENT REACTION 4.1. Introduction 71 4.2. The Divestment Process 72 4 .3 . The Role of Parent and Subsidiary Management 74 4.4. Implementing the Divestment Decision 75 4.5. Notifying Employees 76 4.5.1. Multinationals* Secrecy 79 4.5.2. Extreme Employee Reaction to the Threat of 81 Divestment 4.6. : Foreign Direct Investment and Divestment: 83 Host Government's Reaction 4.6.1. : Hyster 84 4.6.2. : Allied Corporation 85 4 .6.3 .: Timex 86 4 .7 . : Summary 89 PART II 5. HOME COUNTRY CULTURE AND COLLECTIVE DISMISSALS 91 LEGISLATION 5.1. Introduction 91 5.2. National Culture 91 5.2.1. Large or Small Power Distance 92 5.2.2. Strong or Weak Uncertainty Avoidance 94 5.2.3. Individualism vs Collectivism 94 5.2.4. Masculine vs Feninine 95 (iii) 5.3. Culture and Secrecy 96 5.4. Convergence or Divergence 98 5.5. Plant Closure Legislation and Culture 102 5.5.1. United States 104 5.5.2. Canada 106 5.5.3. Europe 107 5.5.4. EEC Legisaltion: Mass Dismissals Directive 110 5.6. UK Plant Closure Legislation 116 5.6.1. Part IV of the EPA 1975 Act 117 5.7. Summary 121 6. THE OECD'S GUIDELINES FOR MULTINATIONAL ENTERPRISES 123 6.1. : Introduction 123 6.2. : The Guidelines* Paternity 123 6.3. : The Guidelines* Administrators 126 6.3.1.: The Committee on International Investment and 132 Multinational Enterprises 6.3.2.: The National Contact Points 132 6.4. : The Status and Effectiveness of the Guidelines 134 6.5. : Challenges to the Guidelines 135 6.6. : The Employment and Industrial Relations Guidelines 137 6.6.1.: Paragraph 2B, 3: Collective Bargaining 141 and A True and A Fair View 6.6.2.: Paragraph 6: "Reasonable Notice** in Case of Major Change 146 6.6.3.: Paragraph 9: Access to Decision Makers 147 6.6.4.: "The Chapeau Clause" 149 6.7. : The Ford Amsterdam Case 159 6.8. : The Firestone Case 152 6.9. : Conclusion 153 (ivj 7. THE EEC'S "VREDELING" PROPOSALS 158 7.1. : Introduction 158 7.2. : "Vredeling/Richard’s" Historical Background and legal basis 161 7.3. : The Formulation of The "Vredeling Proposals" 168 7.4. : The October 1980 Proposal 169 7.4.1. : The Requirement to Inform Workers 170 7.4.2. : The Obligation to Consult 171 7.4.3. : Penalties for Non-Compliance 172 7.4.4. : Summary of 1980 Proposal 173 7.5. : The Watering down of the Text 174 7.6. : "The Richard’s Directive: Adoption by The Commission 179 7.7. The Revised Text 179 7.7.1. International Aspects in the RevisedText 180 7.7.2. Threshold Number of Employees 181 7.7.3. Disclosure of General Information 181 7.7.4. Disclosure of Specific Information 181 7.7.5. Confidential Information 182 7.7.6. The Hostage Clause 183 7.8. The View of Employers 183 7.8.1. The Reaction of British Employers 184 7.8.2 . The Institute of Directors 185 7.8.3. The Confederation of British Industry 186 7.9. The Unions’ View 188 7.10. The U.S. Dimension 191 7.11. The View of Britain’s Political Institutions 192 7.12. The U.K. Conservative Government’s View 193 7.13. The Revised Text and Proposed Plant 195 Closures in the Community 7.14. : The Reaction of the CBI and the TUC To Article 4 197 7.15. : Conclusion 198 (v) PART III 8. RESEARCH METHODOLOGY 201 8.1. : Introduction 201 8.2. : Identification of Foreign-Owned Plant 204 Closure Announcements 8.3. : Data Collection 207 8.3.1. : Verification of Plant Closure 207 8.4. : Company/Union Cooperation 220 8.4.1. : Access to Trades Union Officials 221 8.4.2. : Interviews with Management 222 8.5. : The Case Studies 224 8.5.1. : The Man-Made Fibre Industry 225 8.5.2. : The Domestic Appliance/Consumer 226 Electronics Industry 8.5.3. : The Tyre and Rubber Products Industry 227 8.5.4. ; The Farm and Construction Equipment 228 Industry 8.6. : Summary 230 9. THE MAN-MADE FIBRE INDUSTRY 231 9.1. : Introduction 231 9.2. ; The Industry’s Problems 231 MONSANTO 9.3. : Monsanto: Origins and Company Background 233 9.4. : The Implications for Monsanto 235 9.5. : Precedents to Dundonald’s Closure 236 9.6. : The "Proposal" to do s e Dundonald 238 9.7. : The dosure Announcement 243 9.8. : The View of the Company 243 9.8.1. : The Divestment Decision 243 (vi) 9.8.2. : Disclosure of Information 245 9.9. : The Trade Union Representatives View 246 AKZO 9.10. Introduction 248 9.11. Background 249 9.12. Decision to Modernise Revoked 250 9.13. Closure Warning Issued 252 9.14. BEL Issues Ultimatum to Government 255 9.15. Closure is Announced 256 9.16. Enka Reverses Divestment Decision 257 9.17. Final Decision Reached 262 9.18. The Company’s View 264 9.18.1. The Divestment Decision 264 9.18.2. Codes of Conduct and Employee Disclosure and Consultation 265 9.19. : The Union’s View 266 9.20. : Epilogue 266 9.21. : Conclusions 26 8 9.21.1. : Divestment Theory 268 9.21.2. : The Divestment Decision and Employee Disclosure and Consultation 269 10 THE DOMESTIC APPLIANCE/CONSUMER ELECTRONICS INDUSTRY 273 10.1. Introduction 273 SINGER 10.2 . Origins and Success 274 10.3. Competition and Singer’s Decline 274 10.4. Company and Plant, 1958-1975 277 10.5. The New Men 283 10.6. Clydebank: The Final Years 2 83 10.7. Employee Disclosure and Consultation 286 (vii) 10.8.