Thursday, November 17, 2016

The 700 Club and Chômage Technique

So today, I got a bit of a French language primer on a wonderfully malleable expression - chômage technique.  Simply put, a "technical layoff". 

This phrase was brought to my attention in discussing the current situation brewing at Richemont - most specifically with Vacheron and Piaget.  As is already known Richemont intends to let 211 people go.  That is at least the latest number that is being bandied about, so depending on whether or not you took the over or the under you might have won the office pool on this one.

The union officials (UNIA) had a less than 100% successful meeting with the employee representatives from Piaget and Vacheron.  Rather than going gently into that good night, over 700 of the potentially impacted employees have pushed back, not accepting the restructuring plan put forward by the very people who guided their brands in the shit that they are currently in.

If your French is good, here is an article from the Tribune deGeneve for some background.  Otherwise call on St. Google for a translation ; ) Tribune deGeneve

I am not privy to all of the details, nor am I even remotely an expert on US labor law and policies let alone those that govern Switzerland, but as it has been explained to me, the best case scenario for some of these folks is a massive reduction in their working hours and even with their under / unemployment benefits they will be making 30% less than what they normally would.  So it looks like little Heidi is not going to be getting those new skis for Christmas.  I kid a little, but try to imagine making 30% less than what you do now.  And these are not the people making hundreds of thousands of CHF per year.  These are normal working moms and dads with kids, mortgages, lives.  These folks are never on the red carpet, flying to Hong Kong, Beverly Hills or Paris for glamorous events.  They come into work at 6:30 in the AM, they work hard, and then to go home to take care of their families.  They are not worried about how to arrange a watch/car partnership with an exotic car company so that they can have an even nicer Italian or German sports coupe.  They are setting aside money to repair their SEAT, Fiat or Peugeot.  Or as another colleague described it to me, at the top it is champagne and filet mignon, and for these folks losing their jobs it's going to be a lot of potatoes and (if they are lucky) a bit of raclette to go with it.  I know that life is, by its very nature, not fair.  But this only serves to illustrate that accountability is not really a "shared" idea.

So at a time where Messrs. Lambert and Kern are getting job upgrades, and other young executives are moving into even higher profile / higher paying roles at Richemont, it seems that the people picking up the tab for what most other industries would consider a failure of management and leadership are the little guys and girls doing the actual work.

It's sort of a messed up message:

We have multi million dollar marketing and advertising budgets, we spend lavishly, our leadership continues to be promoted even though our sales are declining each month.  But don't worry, we have the solution!  We will make cuts to the people who actually make our products.

I would like to leave you with some words from one of my favorite commentators on the watch industry - Gordon Gekko.  This is from Wall Street, and this is his famous speech at the shareholder's meeting of Teldar Paper.  It is fiction, of course, but is something that maybe some brave shareholder should be saying at the next Richemont shareholder's meeting.

Well, ladies and gentlemen, we're not here to indulge in fantasy, but in political and economic reality. America, America has become a second-rate power. Its trade deficit and its fiscal deficit are at nightmare proportions. Now, in the days of the free market, when our country was a top industrial power, there was accountability to the stockholder. The Carnegies, the Mellons, the men that built this great industrial empire, made sure of it because it was their money at stake. Today, management has no stake in the company!

All together, these men sitting up here [Teldar management] own less than 3 percent of the company. And where does Mr. Cromwell put his million-dollar salary? Not in Teldar stock; he owns less than 1 percent.

And you are all being royally screwed over by these, these bureaucrats, with their steak lunches, their hunting and fishing trips, their corporate jets and golden parachutes.

Teldar Paper, Mr. Cromwell, Teldar Paper has 33 different vice presidents, each earning over 200 thousand dollars a year. Now, I have spent the last two months analyzing what all these guys do, and I still can't figure it out. One thing I do know is that our paper company lost 110 million dollars last year, and I'll bet that half of that was spent in all the paperwork going back and forth between all these vice presidents.

So Mr. Rupert, in the very highly unlikely event that you might ever read this, maybe it's time to hold senior leadership accountable.  Richemont's watch division didn't get to this place overnight.  And it wasn't the people who are now losing their jobs that got the brands to where they are.  These are people following the directives of their managers and directors.  They may not be sexy, and they certainly don't get written about often enough, but they are your real assets.

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