Chapter 19: Winning

Liam

“LIAM, YOU NEED A SHOWER.”

“Not much chance of that happening, Randy. Is there an outdoor faucet and a hose around?”

“I think I know a better way. The guys need to believe you’re here as a proper hostage. I think I can get you out to my house, get you a shower, and get back before anyone is the wiser. Can you rise early?”

“I’m usually up by five.”

“I was thinking four.”

“Let’s get some sleep then.”

The plan worked flawlessly. I gave my ski jacket and University stocking cap to a guy about the same size as me who immediately lay down next to the fire barrel and went to sleep. Or appeared to. I left in Randy’s car and, in the darkness, no one saw me. I hoped.

Sally Peters had a hearty breakfast for us when I came out of the shower. She was hospitable and not overly solicitous. She took her cues from Randy and greeted me as her husband’s friend and nothing special. We’d been gone just an hour when I nudged my stand-in awake and took back my coat. At eight o’clock, Erich arrived with my suit and a newspaper. Soon after, Smith and Loveland arrived.

“Ah, good. You have a paper. Did you see the response?”

“It’s like answering a challenge to a duel. ‘The Shoemakers’ Union will arrive at the appointed time and place. They will be accompanied by William Thomas Cyning as agreed upon in the terms of coming to the table. All items of concern will be presented at that time. We wish to thank the management and owners of Covington Shoe Company for agreeing to hear our grievances.’ Are we ready for this?” I looked at my three companions.

“You look like a corporate executive yourself, Liam. No. You look better than most corporate executives. I’d peg you as a Leader at once,” Smith said.

“Thank you, Mr. Smith. We need every advantage we can muster.”

“Shall we head for the board room then?” Randy took a deep breath and nodded. He was obviously nervous, but we were on our way.

“Liam! It’s good to see they kept their word.” Ferguson said as we entered. “Well, conditions have been met. We have all come to the table. Come ahead, boy. We can leave now.”

“Have they really been met, sir? Did you not promise to meet and hear their grievances?”

“Not exactly. We promised to come to the bargaining table. That’s done.”

“Do you generally conduct your business with deception and cheating?”

“You don’t have a comprehension of business, Liam. You need to keep the other side off their stride.”

“Why don’t you show me how it’s done, sir?” Fergie had to know I was goading him but he was far too proud to back down.

“Well, that would be a pleasure. Let’s take our seats and have at this then.” Ferguson sat at the center seat at the table and the two people with him looked surprised but sat as well. I walked around the table and sat opposite Ferguson. “Liam, that chair would be for the negotiator for the union. I can’t be craning my neck to look around the table for him.”

“Yes, sir.” I calmly folded my hands on the table.

“Oh. You?”

“Is this not an appropriate venue for us to continue our discussion?”

“Very cleverly played. Please tell me who the people seated with you are. I assume one at least is from the esteemed Shoemakers’ Union.”

“Yes, sir. On my right is Randy Peters, shoe-laster, drafted by the employees as their union leader. On my left is Alfred Smith, our contract attorney. At the end of the table, our stenographer, Miss Loveland. And your lieutenants?”

“You surprise me at every turn. Very well. On my left is Leland Bennet, our Vice President of Operations. On my right is Arnold Rice, our Corporate Attorney. Now what are these demands the workers are making?”

“Have you not read the letter, sir?”

“No, no. When management brought up the issue, I simply told them to handle it and get rid of the problem.”

“Let us present you with a fresh copy. We have prepared one for each of you.” Smith handed the copies across the table.

“Very professionally done.”

“Our stenographer was kind enough to type copies.”

Ferguson read the paper, becoming more agitated as he read. Finally, he exploded.

“What? You can’t expect me to take this seriously! This is not at all what I was told the asks were. This is way out of line!”

“Would you mind breaking that out a point at a time and telling me what is out of line?”

“A dollar an hour wage increase? That would be a substantial hit on our bottom line. We cannot afford that kind of labor increase.”

“According to the annual report, the company had a net profit of $400 million last year. This represents a $12.5 million increase in expenses—just three percent. Is this what you consider a significant hit?”

“You have misinterpreted the numbers. Last year was an aberrant year. Various factors impacted our profitability that will not be in effect this year. Our net will be drastically reduced.”

“Drastically? Can a company that drops drastically from $400 million in net profit to, say, $100 million even be considered as viable? Is Covington Shoe Company going out of business?”

“No! Nothing like that. We’ll be a hundred million below last year. The shareholders are aware of this,” he said. I needed to be wary. I knew Ferguson was an expert at this and even if he was willing to negotiate with me, he wouldn’t be easily satisfied. It was likely that his ‘drastic’ reduction was no more than the union’s demand.

“And we are asking for only four percent more. Am I correct in computing a $12.5 million impact on $300 million net at four percent?”

“That’s simply too much of an impact on the bottom line. I’m a magnanimous man but I’m dealing with the money of my shareholders. I would have considered the twenty-five cents an hour I heard was originally proposed but this is ridiculous.”

I felt Smith tap my leg and leaned over to the attorney so he could whisper in my ear. “He’ll go higher. It’s a gambit.” I nodded and faced Ferguson.

“My attorney is very fast with math and has given me the numbers. Let me ask, Mr. Ferguson, what is the most valuable asset Covington Shoes has?”

“We have three primary assets. The real estate, including buildings, the machinery, and our raw materials,” Ferguson said.

“And how big a liability do those items become if there are no workers to turn raw materials into shoes using the machinery in these buildings? No one here wants to cost the company its profitability, but assets have a value. Considering that, wouldn’t you think seventy-five cents an hour would be a just compensation for what is really your most valuable asset?” I asked.

“I agree the workforce is valuable but there is a limit to what anyone will pay for an asset.” He paused and scowled at me. I tried not to flinch. “Fifty cents and not a penny more.” I turned to Randy and asked if that was adequate. Randy was struck silent and simply nodded.

“Miss Loveland, please record a fifty-cents per hour increase across the board as our agreement,” I said. Ferguson looked at the secretary.

“Yes, Mr. Cyning.”

The negotiations proceeded. Not everything went as smoothly as I had hoped. The equipment maintenance was approved with little discussion. Ferguson admitted that most of the faulty equipment had been replaced during the strike. He balked, however at improving the break area as simply being something the company did as a kind gesture. I argued that employees who left the building were the most often tardy returning to their stations. After Smith explained what he would sue for should a client become injured on the job and suggesting a dollar value for the gained productive time by keeping employees onsite, Ferguson finally agreed to replace the furniture but no more.

I barely got what the original document asked for in sick leave. “We can’t be paying people to not work,” Ferguson complained. He agreed to one week of vacation and one week of sick leave.

“Now this, you must agree, is simply frivolous. A free pair of shoes every year? That is the equivalent of increasing pay yet again. We have a compensation agreement in place on that.”

“I can see your point,” I agreed. I’d given this a lot of thought and even surveyed a number of strikers about the idea, asking them what shoes they wore to work. “What if this could be set up and have it not cost the company?”

“How can I give away a free pair of shoes and have it not cost anything?”

“When I was behind the picket line the past three days, I had the privilege of talking to many of the people—your employees—who were out there. They are fiercely proud of their work. Covington Shoes. They believe they are the best-made shoes in the world. But as I looked around, I saw that no one was wearing Covington Shoes. I’m wearing Covington Shoes, why aren’t your employees?” I raised one foot above the table to display my new top-of-the-line pair of Covington Shoes. I’d only worn them once to the concert several weeks ago and Erich had seen to it that they were polished like a mirror.

“These are quality shoes. I would frankly expect a Cyning to wear nothing less,” Fergie said. I knew my father wore Covington shoes and that Fergie would know it.

“Quality built by those employees. I asked a worker about why he was wearing Dominion Footwear. Can you imagine striking against Covington Shoes while wearing Dominion Footwear? I asked why and he told me Dominion Footwear was priced thirty percent below Covington shoes. If it weren’t for that, he’d be wearing Covington shoes. Maybe not these top-of-the-line dress shoes, but certainly the casual or work shoes produced here.”

“You can’t possibly suggest we cut our prices by thirty percent. Let’s go back to the scenario where you asked what would happen if a company went from $400 million to $100 million in profit in a year. An outright rebellion of the stockholders! There would be a sell-off of Covington Shoes stock and the price would plunge,” Ferguson practically shouted.

“When a person walks into a shoe store to buy a pair of Covington shoes like I did just a few weeks ago, what was the markup of that pair of shoes? Certainly, Browning’s wasn’t selling them at cost, were they?”

“No, of course not. We sell wholesale. The typical retail margin is forty to forty-five percent.”

“So why not offer a direct sale to employees at wholesale plus ten percent? That would put you at exactly the same price point as Dominion Footwear. For your employees only. You would still be earning more per pair from sales to your employees than from wholesale to retailers.”

“And the next thing we would have is a worker selling shoes to his friends and relatives because he got them at a thirty percent discount.” Ferguson sat back with his arms folded.

“Bravo! Yes! Let’s let that happen!” I struck my hands lightly on the table.

“What?”

“Every pair sold to an employee represents a sale you do not currently have. Not just 6,000 per year, but perhaps a pair for each member of his or her family. Let’s say 24,000 per year. But not only do you have a sale you did not previously have, you also have a ten percent markup over wholesale. It is more profitable to sell to your own employees than to your retailers. Isn’t that worth some consideration? If an enterprising worker starts selling the shoes on the side, perhaps he should be moved into sales and be considered in the Promoter class rather than Dexter. Wouldn’t those sales still be more than what you had before?”

“You’re telling me that giving a discount to my employees for shoes bought direct will increase my bottom line?” Fergie grabbed a pad of paper from his attorney and started scrawling some numbers while we waited. “Damn it, Liam! That’s brilliant. I agree. Miss Loveland, please record our agreement that employees will be able to buy direct from our Covington Shoes company store at ten percent over wholesale. I can’t wait until I tell the board about this. Liam, you should become a Promoter.”

I’d achieved all I was going to. Ferguson was happy with his win. The union would be happy with their win. I needed to walk away, but...

“There is one last thing,” I said with a sigh.

“What? We have covered every point on the workers list of demands. I can’t see what else would be necessary,” Fergie said.