“That’s all I could ask for. Keep me informed.”
Gil Parsons has been President of Local 33 for six years. When Adam approached him with his offer, Gil saw a chance to advance his position with Sports & Entertainment Workers Union management. The SEWU could score big points with UNITE (Union of Needletrades, Industrial and Textile Employees) by arranging for the delivery of four thousand garment workers formerly employed by Elegant Sportswear, workers from non-union plants. Adam promised that Hampton Industries would not resist any organizing attempts at the new plants, virtually making the unionization of their facility a fait accompli. The number of members, those paying dues, was the essential measurement of a labor union; especially when the numbers were growing at a significant pace. Often deals were made that did not provide any tangible benefits to the workers, but which added to the membership count. and it was not unusual for unions to make “sweetheart deals” with management in order to accomplish this goal; the workers be damned.
Chapter 18
Marcia looked at the stack of folders on the desk. Each had a bright yellow label identifying it as belonging to the Elegant Sportswear/Hampton Sportswear amalgamation. One month’s worth of detailed analysis was in the folders. A month of painstaking comparative study, elbow-to-elbow with Kane Masterson. She was gaining respect for the man. They were even on a first name basis now. She thought it remarkable that he could set aside any resentment he may harbor to assist in the orderly disintegration of Elegant Sportswear, his favorite Preston division. He’s quite a guy.
Marcia ignored the phone when it rang. She decided to let it go to the machine, but over the sound of the answering machine’s message she heard Adam’s voice. “Pick up if you’re there, Marcia. I’ve got to speak with you, immediately.”
She waited for the end of the pre-recorded message and beep, before picking up the phone. “Adam, what’s up?”
“Legal just called. A number of Preston’s customers have cancelled their purchase agreements and switched to other manufacturers. They’re all effective the first of next month. That’s just two weeks from now. Take down these names. Norton Wholesale, Wellington Clothiers, Carson-Manners, Mesa-Verde Outfitters and Leighton& Sons. Did you get that?”
“Yes I did. As I recall, these are some of Preston’s largest customers. Probably all of our garment divisions will be affected. What do you want me to do, Adam?”
“This whole thing just doesn’t make any sense. Nobody can match Preston’s designs or quality. I want you to check with their buying departments to find out what triggered this, but before you talk with them, find out what their terms were with Preston. When you speak with them see if the door is still open for negotiations. It’s not fair for them to arbitrarily switch vendors without even giving Hampton a chance to compete. Also check to see if Masterson knew anything about this. I can’t believe he didn’t have any inkling of a change this big. Lastly, if these changes are irrevocable. I’ll need to know the impact the losses will have on our projected bottom line.
“I’ll get right on it, Adam. All five are west coast companies. It’s mid-afternoon out there. I should be able to reach them today.”
“I need this information fast. There may still be time to reverse their decisions. There was no way I could have seen this coming, but I’m wondering if these companies are bolting because Hampton took over Preston. Maybe, for some reason, they don’t want to do business with us. If that’s the case, I want to know the details that went into their decisions.”
“That could be it, but companies of this caliber are usually driven by quality of product and the bottom line, personal likes and dislikes aside. Still, it’s always possible that they’ve gotten some bad information about us. I’ll try to nail them down.”
“Thanks, Marcia. If you need any help from Finance, IT or Legal, just contact them. I’ll alert them right away and then I’ll be at home if you need me.”
“I’ll get back to you as quickly as I can. It may be tomorrow morning though, before I can put all the figures together. The bottom line impact will take time to re-calculate.”
“That’ll be fine. Just do it as quickly as you can and get back to me,”
Marcia spent the next two hours hunting down the appropriate contact at each of the companies. A picture slowly formed about what had happened. Each of the companies had been contacted by representatives of a consortium of European Common Market producers and offered supply agreements and designer contracts too good to turn down. The five year contracts were going into effect within two weeks, the decisions were irrevocable. Marcia was assured by each company that no one at Preston Industries could have had any prior knowledge of the negotiations or contracts. Everything had been done under a cloak of secrecy at an Italian villa.
Marcia slumped in her chair. She glanced at the stack of files she had brought home. They represented untold hours of painstaking research. How much of that work is worthless now? The production and profits estimates require a stable sales base with a plus or minus variable of six percent. These five customers represent more than that; we’re screwed. She reached for the “Sales Projection” folder. Ten minutes later after a quick check of her original calculations she confirmed that the loss of the five companies would impact sales by at least thirty percent. How could Preston have allowed a small group of customers to have such a major impact on their sales and profits. Marketing was her strong suit and she knew that when a company or group of companies dominate the sales base, special customer support is required. Why didn’t Kane have a preferred customer list? Ones that he handled personally as “house accounts”. While she had assurances that no outsider could have known about the change, someone as sharp as Kane should have had contingencies for the possibility of aggressive competitive bidding.
He should have known that the contracts with the five were nearing expiration. Personal agreements with the appropriate decision makers at the prime accounts would have assured that Preston would have had a chance to out-bid the competition. Maybe he is not the business genius that he is made out to be, or he just got too complacent. Damn! This is the worst thing that could happen now.
Marcia tried several times to reach Kane, but his cell phone was busy. She pushed her worksheets aside and leaned back in her chair. What the hell are we going to do now? I’ve got to reach Kane. I’m going to need help with this mess. She tried his cell again. This time he answered.
“Kane?”
“Yes. Is that you, Marcia?”
“Yes, and we’ve got a very big problem.” She spent several minutes updating him on what happened.
He smiled when she mentioned that every customer assured her that only the negotiating parties had any knowledge of the agreements prior to today’s announcement. He felt bad that Marcia was getting caught up in the middle of what was supposed to be his private retaliation against Adam and Hampton Industries. He was just beginning to see past her tough veneer and was liking what he saw.
“How can I help?”
“I’m not exactly sure. I know that much of the data we compiled is meaningless in the light of what will be a major hit on our sales and earnings. I did a quick scan of the effect this would have on our sales estimates. It looks like it’ll be almost thirty percent.”