BAF3M1
Option 2
Derek Leung
March 20th/13
As the Chief Accountant/Controller for Metalco Mines, over the past years Metalco’s net income was continuous start to decrease. With mining being with the most employees in the year of 2010 with 4000 employees.(Greater Sudbury, Economy) Mining in Sudbury is where the economy is. Being the chief accountant at Metalco, it was at the peak of there business with a strong net income with $120,000,000 in 2006. With Metalco’s income decreasing year after year it is estimated that Metalco will have a net loss of $10,000,000 in year 2011 and $20,000,000 in 2012.
Like any other when companies start to lose money the first thing to do would be to cut expenses and costs the cost does not need. In this case Metalco sees a solution in letting go 1000 workers. With the labour force of 90 thousand as of February 2013, laying off 1000 people would be close or at 1% of the labour force. (Labour Force Characteristics)
Laying off the 1000 workers for any company is hard to do, with those workers also having invested there life savings in the company, most likely they will end up selling there company’s shares. With the company starting to lose more money every year, selling Metalco’s shares can be a real challenge for them. When sellings stocks supply and demand are huge, because the company’s income is decreasing year after year the value of there stocks would not have a very high demand. (Stocks Basics). Basically demand is when the price of the good is higher, the less people demand it. (Economics Basics). With there stocks not having a huge demand selling there shares are difficult because either the company is doing poorly or the price is to high. With the 1000 workers being laid off, they will probably try and sell the shares for money. Again with the lack of demand the shares will mostly have decreased at a huge rate.
Unemployment cannot only affect the person but also the community they live in. Although 1000 is not as big when compared to 90 thousand the community is still affected because without a steady income, those who are not making a income will mostly not want to spend money on things they do not need. If the population of Sudbury was smaller around the range of 5000 people then the community would have been affected a whole more. Things like movie theatres, restaurants and many others would be greatly affected, because people would not want to spend money. IF Sudbury was around the population of 5000 most likely movie theatres, restaurants and many others would probably go out of business.
Unemployment can cause many social cost to a community. Factors such as depression and anxiety are examples when it comes to unemployment. With over 45% of the unemployed in the US being without a job for more than 6 months (Record Unemployment ) they seek professional help from psychologist to help with there depression. Psychologist say that they have a loss of their identity and have a sense of hopelessness. Their cure to this is to find another job or do a part time job so at least they have some income coming in. (Record Unemployment)
As chief accountant of Metalco company letting go of those 1000 workers would be the best idea. With Metalco keeping unneeded people because of their loyalty to the company, the company at be bankrupt tomorrow. The stats show that each and every year the income of the company is decreasing. Letting them go would be a helpful idea because the expense would decrease by 50 million dollars over the next two years making the net loss into at least a income.
Work Cited
"Economics Basics: Supply and Demand." Investopedia. N.p., n.d. Web. 26 Mar. 2013. http://www.investopedia.com/university/economics/economics3.asp "Labour Force Characteristics, Seasonally Adjusted, by Census Metropolitan Area (3 Month Moving Average) (Greater Sudbury (Ont.), Thunder Bay (Ont.), Winnipeg (Man.))." Government of Canada, Statistics Canada. N.p., n.d. Web. 26 Mar. 2013. http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/lfss03i-eng.htm "Record Unemployment Fuels Depression & Loss of Identity." LiveScience.com. N.p., n.d. Web. 26 Mar. 2013. http://www.livescience.com/13710-unemployment-depression-identity-job-search.html "Stocks Basics: What Causes Stock Prices To Change?" Investopedia. N.p., n.d. Web. 26 Mar. 2013.
http://www.investopedia.com/university/stocks/stocks4.asp
Cited: "Economics Basics: Supply and Demand." Investopedia. N.p., n.d. Web. 26 Mar. 2013. http://www.investopedia.com/university/economics/economics3.asp "Labour Force Characteristics, Seasonally Adjusted, by Census Metropolitan Area (3 Month Moving Average) (Greater Sudbury (Ont.), Thunder Bay (Ont.), Winnipeg (Man.))." Government of Canada, Statistics Canada. N.p., n.d. Web. 26 Mar. 2013. http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/lfss03i-eng.htm "Record Unemployment Fuels Depression & Loss of Identity." LiveScience.com. N.p., n.d. Web. 26 Mar. 2013. http://www.livescience.com/13710-unemployment-depression-identity-job-search.html "Stocks Basics: What Causes Stock Prices To Change?" Investopedia. N.p., n.d. Web. 26 Mar. 2013. http://www.investopedia.com/university/stocks/stocks4.asp
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