14 February 2011

ShipBreaking at the Alang Shipyard:

The ship-scrapping yard at Alang is known to be one of the most hazardous places to work in India. Two of every 1000 workers died in a 10 year period, and the rate of death is nearly 6 times higher than in the mining industry.  People are working in the worst conditions possible. Their main job is to cut great ships apart with torches and salvage whatever can be resold. A few main causes of death are falling from heights, fire, and getting hit by falling objects. In addition to that, the industry is affecting the natural environment by contaminating it with toxic materials. Environmental and health justice activists are trying their best to turn these tragic events around to make the situation better.

Stakeholder Analysis:
There are many stakeholders who are involved in this case:

Workers: Although the job is very risky and unsafe, workers from impoverished regions in India are traveling 1000 miles to find jobs at Alang.

Arun Mehta, a trade-union leader, and other political leaders in Alang: “We are in favor of the ship-breaking industry. We want more employment generated in the ship-breaking yards,” said Mehta. Although Mehta is not for unsafe work, he supports the ship-breaking industry because it brings economic benefits in Alang.

Environmental and human rights groups: They argue that the methods that are used at the Alang shipyard are threatening both the workers and the environment surrounding Alang, affecting the health of the residents. Also, they argue that safety precautions are almost non-existent and must be measured and practiced appropriately.

Alang Shipyard: The industry believes that it is cheaper to use hundreds of laborers to tear apart a ship than to rely on machines operated by fewer but much higher paid workers. “The ship-breaking industry… has reverted back to labor-intensive technology, since the high-tech proposition has proved more costly,” the Alang shipyard notes on its Web site.

Jim Puckett, Seattle-based activist: Jim is an environmental and health justice activist who believes that changes could hurt the profit margin at Alang. “The correct way to do this job is not as labor-intensive as it is currently being done in India.” said Puckett.

The ethical issue:
The main ethical issue in this case is that workers are not provided with a proper working environment. There are no safety precautions or trainings, which causes numerous fatal accidents and grave injuries to the workers. They toil under the hot sun for $2 a day, which is very unethical considering the amount of risk they face day by day. Another issue is that removing asbestos and other toxic materials from the ship damage the natural environment and the health of the residents of Alang. As mentioned above, the method used to process these activities of removing parts from the ship cannot be properly done without the help of machines. There is no legal issue faced by the Alang shipyard.

Alternative courses of action:
The alternative courses of action are either to provide a better working condition and environmental justice by implementing the safety precautions and trainings and appropriately upgrade the shipbreaking procedure by obtaining machineries, or leave the matter as it is for the maximum profit margin.

Under the deontology theory, the shipyard industry must choose the first option. Deontology can be best described as absolute rules for right behaviors, and it basically states that everyone must be treated equally under the universal principle of morality. Regardless of the consequence, one must always do what is moral or ethical. In this case, in order to implement the safety system and proper procedures on removing toxic parts from the ship, Alang Shipyard must sacrifice their profit. The advantage of choosing this theory is that it will definitely reduce the amount of serious injuries and death by a large factor. Also, since the workers are less threatened and are able to work in a better environment with less risk, their performance level will rise making their jobs far more productive.

There are two disadvantages to these methods. One is that loss of profit could be unreasonably high. As mentioned in the article, to do the job properly, special machines must be purchased and also the operators of the machines must be hired at a very high cost. Another disadvantage is that, actually obtaining machineries and hiring professional operators, will result in reduction of employments, which will leave many workers jobless.

Alang shipyard should choose the second option under the theory of free market ethics. There are major differences between the deontology theory and the theory of the free market. First, while deontology theory ignores the consequence or result of an action and mainly focuses on morality, free market theory actually sets a goal or achievement for self interest satisfaction. Free market theory is described as making the best decision for the shareholders by following the law. As mentioned above, there is no legal issue faced by the ship-scrapping industry. Although it is causing serious accidents and hurting the environment, technically, it is not breaking any law. They are simply doing what seems to be the most beneficial for the shareholders, which is mainly profit maximization. In this case, Alang shipyard saves a lot by reducing the operating cost. Instead of buying high quality machines and hiring machine operators, it is hiring hundreds of laborers so they can do the job manually at a very low wage. Another advantage is that it does not only increase the profit of the company but also the profit margin of Alang overall. However, there are also disadvantages. One of the major disadvantages is that this method cannot satisfy everyone. By not taking any action to improve the working conditions and environmental issues, more activists will rise and more criticism will be heard that might hurt the company’s reputation. Although reputation is not valued as much as profit maximization, some shareholders believe that their reputation might actually hurt the company’s activities through interruptions by the activists.

Alang shipyard must take the first option into account and focus on workers’ safety and environmental issue because they will not lose anything in long term. Surely, their cost may increase and profit may fall, but based on the financial analysis the Alang ship-scrapping yard would still be profitable enough. Although there may be a little sacrifice for the Alang shipyard, there is still a net gain and at the same time, a greater number of stakeholders will be satisfied. This concept comes from the utilitarianism theory. This theory basically talks about bringing about as much happiness as possible for the greatest number of people. In this case, it would be about bringing the greatest overall good for the highest number of stakeholders. This is also related to Mackery’s view of social responsibility. This view follows the stakeholder model of corporate social responsibility. The main concept is that if you value the workers and the customers, profit will follow automatically. As mentioned earlier, workers will give greater performance levels once they feel that they are being treated appropriately and risk free. This without a doubt will increase the productivity, which will greatly affect company’s profit. A perfect example this case is how Jim Goodnight, CEO of SAS, runs his successful business by maintaining a strong tie and bond with his workers. The workers of SAS are very satisfied and happy to work for Mr. Goodnight because of all the benefits and pleasant treatment they get at work. Through their hard work, SAS is one of the most successful software companies out there.


In conclusion, there are many approaches that the Alang shipyard can take to solve this ethical issue. A few approaches mentioned in this paper are utilitarianism, free market ethics, and deontology theory. All these approaches have advantages and disadvantages. It is just a matter of choosing one based on ones belief and principles. In the end, it is impossible to fully satisfy everyone wills their needs and desire in business world. But before making any decision, it is very important to interpret and analyze all the choices available and choose the most beneficial option for the company. In this case, utilitarianism seems to fit best because this way you can satisfy both the shareholders and the stakeholders.

Source: Albert Bon Young Koo. Business, Society and Ethics
Section 14. Dr. Calvano. Final Paper. 12 September 2008

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