Once again, I prefer my version of financial terms over those of the Weaver Street corporate office, which entertained us 'low-skilled' workers to another installment of financial literacy in the most recent issue of our Market Messenger. So ...
'Retained Earnings' = the bloody pay raises we LSWSW's should have got out of the $475,000 profit we LSWSW's earned for The Weave in 2010, but which the corporate office kindly retained.
'Negative Retained Earnings' = future pay raises and patronage dividends which we LSWSW's will earn, but which the corporate office will retain to dump down the massive negative black holes called DEBT and FOOD HOUSE OPERATIONAL COSTS and MARKETING.
Now, am I retaining a certain negativity here, earned out of my loss in the recent Board Election? No. I am a firm believer in the principle that you run the best argument you can. If you lose, you drop it, and move on.
The central tenet of my 2010 election campaign was that we needed to address the tremendous imbalance in the financial state of WSM, not by asking workers to work 15% harder in 2011, but by finding other ways to reduce the huge debt, the operational costs of the Food House (I really would like to know about that flour hopper) and the burgeoning cottage industry that has become our Marketing and Merchandising effort (all these signs, all the time, really?).
That argument did not find favor with the body of the worker-owner electorate, as it is currently constituted. So, I move on. Indeed, when I was discussing with Ruffin Slater (WSM General Manager) a week ago those figures that appear in this week's Market Messenger, I specifically avoided re-running my election themes.
Those figures (including the ones he did not include in the current Market Messenger) showed that we would only be in a position to offer larger pay raises and a patronage dividend in 2011 if we make the full 15% sales increase. If we make only a 10% sales increase, then WSM will make an overall loss for 2011. Bye bye meaningful pay raises. Bye bye patronage dividend.
I could have argued with Ruffin (again) that we could avoid such a fragile scenario if we spent the year thoroughly reviewing Food House costs and Marketing expenditure, and exploring other means of dramatically reducing or re-capitalizing our debt.
But I didn't run those arguments. Because they had not found favor in the Board Election. Instead, I focused on sharing with Ruffin ideas about how better to explain the figures to us workers, and how to find more respectful ways of enrolling us in achieving the sales increase of 15%.
I also took the opportunity of encouraging him to reduce worker-ownership to $200, and to look upon a Workers' Committee with a favorable eye.
I wouldn't call any of that retained negativity.
So, why this Note? Because I feel we LSWSW's deserve to know the whole financial picture (isn't that authentic financial literacy, after all?), and because I feel we all need to know what is at stake (a 10% sales increase in 2011 won't cut it), so that we are not caught unawares at the end of 2011 if we don't make that 15% sales increase.
Again, that hardly makes this Note negative in any way.
Now, it's not going to be easy to make that 15% sales increase. The majority of economic forecasters are still talking about a new economic downturn in 2011. The thinking is that, if Thanksgiving and Christmas sales are lackluster, then businesses may retrench in 2011 (for which read lay off workers), demand in the economy will go down, and high-end retail industries (er ... WSM qualifies) will get hurt come Spring 2011.
I hope the forecasters are wrong.
In addition, notwithstanding the co-op wide 9% sales increase reported by Ruffin for the first financial quarter of 2010-2011 (July-September 2010), the weekly co-op wide sales increase since the end of September has been settling downwards towards 7-8%. Check the weekly co-op wide sales figures posted in your unit.
Again, I'm not being negative. The exhortation with which I leave you is this: we chose in this last Board Election not to make our co-op more financially sustainable by reducing debt and unnecessary expenditure. Those of you who were voting worker-owners chose instead (for the rest of us) to make up the financial gap by putting all our efforts into the 15% sales increase.
So, it behooves us all. if we want to see more staff, more pay and a non-retained patronage dividend (!) in 2011, to bust ass and make that 15% sales increase.
So endeth Geoff's Weavernomics Lesson #2 ...
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