The Viatris Pharmaceutical Plant in Morgantown, West Virginia: A Case Study in Manufacturing Closures and Worker Ownership

The closing of the Viatris pharmaceutical plant in Morgantown, West Virginia, is a stark reminder of the fragility of manufacturing jobs and the challenges faced by local communities when faced with such closures. A pertinent question arises: If the plant was at least partially owned by its workers, either as a worker cooperative or through an employee stock ownership plan (ESOP), would it still be operational today?

Drivers of Manufacturing Plant Closures

Generally speaking, the closure of manufacturing facilities like the Viatris plant in Morgantown is primarily driven by two key factors: lack of demand for the products manufactured at the site and the availability of alternative facilities with lower production costs.

Lack of Demand for Products

When product demand is insufficient, manufacturers cannot sustain production levels that cover operational costs. In a market-driven economy, companies must constantly assess their product's demand and adjust their operations accordingly. If the demand falls short, even the best-managed plant cannot remain viable. This scenario often leads to facility closures regardless of the ownership structure.

Lower Production Costs

Alternative facilities with lower production costs can also lead to closures. Companies are naturally inclined to seek out the most cost-effective locations for manufacturing. If a new facility can produce the same products for a lower price, the existing plant may need to close. This factor is particularly relevant in the pharmaceutical industry, where economies of scale and technological advancements can significantly reduce production costs.

The Limitations of Employee Ownership

While employee or community ownership might seem like a viable solution to address these challenges, it does not fundamentally change the two primary drivers mentioned above. In theory, employees might be able to address the cost issue to some extent, but their primary tools for doing so are workforce reductions and pay cuts. These steps, while potentially delaying shutdowns, are not sustainable solutions and may even exacerbate local economic problems.

Workforce Reductions and Pay Cuts

Workforce reductions (layoffs) and pay cuts are common strategies used by employee-owned companies to address cost issues. However, these measures can lead to reduced community impact and long-term economic stability. If the local workforce is significantly reduced, it can result in higher unemployment rates, which in turn can affect the broader local economy.

Impact on Local Communities

The closure of a manufacturing plant, even if partially employee-owned, can have a profound and lasting impact on the local community. It can lead to a loss of skilled jobs, reduced tax revenue, and a decrease in services such as healthcare and education. Workers who lose their jobs may struggle to find new employment, further disrupting the local economy.

The Case of the Auto Industry

The auto industry provides a compelling example of how workforce reductions and pay cuts have failed to prevent plant closures. In the United States, several major auto manufacturers have closed plants in favor of newer, more cost-effective facilities in other states or even other countries. This has often resulted in significant financial hardship for the communities that relied on these plants.

Pitted Plants Against Each Other

In some cases, workforce reductions and pay cuts have led to a situation where plants are pitted against each other. Companies may choose to scale back operations in one plant while expanding in another, regardless of the potential social and economic consequences. This approach does not address the root causes of plant closures and can exacerbate the negative impact on the communities involved.

Conclusion

In conclusion, while the idea of worker ownership and community involvement in manufacturing plants is appealing, it does not provide a comprehensive solution to the challenges faced by manufacturing closures. The primary drivers of these closures are a lack of demand for products and the availability of lower-cost alternatives. Employee or community ownership can help address some immediate financial challenges, but it is not a fix-all solution.

The case of the Viatris pharmaceutical plant in Morgantown highlights the broader issues facing manufacturing jobs and local communities. It is crucial for policymakers, business leaders, and community members to explore sustainable and inclusive solutions that can create stability and resilience in the face of economic challenges.