AbitibiBowater to suspends at several plants, affects 1,500 jobs in Canada

AbitibiBowater to suspends at several plants, affects 1,500 jobs in Canada (redo)
http://ca.news.finance.yahoo.com/s/17092009/2/biz-finance-abitibibowater-suspends-several-plants-affects-1-500-jobs.html/

Summary
A Montreal-based company, AbitibiBowater, has to stop its production at several facilities due to its financial problems. Aside from stopping production, as much as 1500 jobs will be affected due to the outcome of this decision. The reason for this decision is because of the lessening demand for newsprint. A spokesman for the company said that the demand for newsprint has dropped as much as 30% within a year. Along with many forestry industries in Canada, AbitibiBowater has been greatly affected during the recession. An attempt to restructure the company would be difficult since AbitibiBowater is operating with little profit while carrying a huge debt load.

Connection
This article links with chapter 1 "Introductory Concepts" in the economic text book because the decision made by the company directly affect their oppotunity cost. Opptunity cost is the next best choice that someone has to give up when pursuing their desired decision,for exaple,wages expense. In this case, when Abitibibowater is facing financial crisis, they had to lay off their workers in order to reduce the expenses icurred from production. By choosing this decision,AbitibiBowater has forsaken the alternative of increasing production levels in hopes of stimulating sales which might have been the next best solution to help them recover from their financia crisis.


Reflection
When economy went into depression, a lot of company will cut jobs to keep their company running. When workers get lay off because of the depressions, they will start taking out their personal savings to help them buy goods and services, but they will reconsider before purchasing goods. On the other hand, the sales rate for psp, ps2, wii,and any other luxury items, which are considered want for their life, will decrease. By the time their sales rate decreased a lot, they will start to lower the price to promote their products. In conclusion, the price of products will decrease, and the interest rate of savings will increase because the bank need people to save up moneys in order to invest other business.