July 10, 2011
Attention: Finning Executive Board
I have been with Finning longer than many of its employees and our members have been alive. I have seen the same mistakes made over and over. I have seen many of the same old ideas redressed as new. I still have my hat from over 25 years ago which highlights the “No Risk Repairs” which we offered then. I have to wonder which executive got the bonus for coming up with our “Customer Service Commitment”. Essentially the same thing with a different name.
For the entire time I have been with Finning one thing hasn’t changed. Finning sells, services and supports some of the best equipment out there and has the best worldwide support partner in this venture – Caterpillar. What has changed over the years is how the business is run. I encourage each and every one of you to go to the Finning Website and read at least the first few paragraphs on the “History of Finning”. I never met Earl B. Finning. I have met customers who still have machines that he sold to their fathers. I have to believe that while Earl B. Finning would be really impressed with the size and level of profitability that Finning has reached, I doubt that he would be happy with the way the company has become segmented. Mr. Finning had loyal employees who did not want to let him down. Recently we have lost a retiree / long term employee who put his heart and soul into Finning and at the time of his passing, not one Finning manager made the effort to show up for the service. To hear numerous references about how much Finning was part of his life and his family’s life during the eulogy for this man after close to 40 years of service, I was proud to be a member as I was beside other members showing and offering support to the families touched by the loss of this man. To see not one representative of management cast a shadow over the service which did not go unnoticed.
It was during the days that Vin Sood was in charge that I joined the company. I last saw him when he came into the office the Saturday the day before he passed. Since then the number of times that I have seen an executive in on a weekend have been few and far between. Back then we received our Christmas turkeys. (I guess they would have to be called festival birds or some other silly thing today.) In addition there was more of a sense of family and caring then. Finning today has issues retaining employees and can’t seem to see or doesn’t want to see why this is so. In today’s investment climate there is a perception that shareholders are only interested in what you did last quarter and management is only interested in looking at each employee and asking “what have you done for me lately”.
For the “Gearheads” out there, if you take a 3208 set up to put out 210 HP and let it go to work for you it will likely provide decades of loyal service provided that you treat it right by giving it the care and attention that it requires. If you take the same 3208, jack it up and ask it to put out 425 HP in the end you will likely invest much more than you would gain in performance. You may have a few productive periods (quarters), but in my opinion it is rather short sighted to do this. To take a pension plan that rewards you with a strong component for years of service and replace it with a plan that makes it easier than ever, once an employee has become vested, to jump ship to a competitor who offers a newer service truck or a dollar an hour more without losing a dime and to then question why it is hard to retain employees is another sign of clouded management thinking. Actually it is much more than clouded thinking. To change a pension plan to presumably better fix those costs at the expense of retaining employees shows a clear sign that you have more fear of your investors than you have faith in your company’s future.
It is the “Bonehead” style of management which may create short term up ticks in reported earnings that will ultimately bite Finning in the rear. For the most part I have little faith in the management team and not much more for the Finning (Canada) executives. Unfortunately it sure feels they have little faith in us. From where I sit the biggest difference is I believe that we should have faith in our management in order to have a constructive relationship. For this to happen they have to step up and show that they value and believe in us.
Funny thing though, unless I am mistaken, Finning has only ever had one unprofitable year. That would have been last year. While there were some years that the return to shareholders wasn’t much, until last year an annual loss had never before been reported. That loss was not as a result of the wage increases paid in Alberta, it was as a result of the disposition of an unprofitable business unit in the UK. It didn’t get much press and I tip my hat to Mike Waites for the positive spin on the year’s events. Guess what!? Our shareholders didn’t bail! I can only assume that they had faith in the basic underlying business that Finning operates. You see, today Finning is not much more than the sum of its People, its customers and its dealership agreement with Caterpillar. If any one of these are neglected the business will suffer. If these three components flourish, everyone including our shareholders win (many of us are shareholders too!). Finning sold most of its real estate years ago and now rents and leases most of its facilities in Canada. Finning owns inventory not much more.
If Finning settles with us and gives us a couple of points more what is the downside? Will the shareholders bail? Likely not and even if they did we win again in that we will pick up some cheap shares in a company of which we know the value. Can’t retain/attract employees? This should be less of a problem too, better wages means Finning is more attractive to employees. Set a precedent for our industry? Great news… perhaps our competitors can’t afford to match it! If they don’t they have a harder time attracting employees and if they do I can assure you will it affect them more than it would Finning.
In the end money is just one component of an employer / employee relationship. It is time for Finning to put its money where its mouth is… or in this case maybe put its money where its mouth should be. To explain, Finning Execs are not listening to /communicating with its employees and is for the most part only communicating with inexperienced and over promoted middle and senior management who are more yes men (and women) than anything else. As an example I present Lawson. Even Lawson promotes the slogan “Simpler is Better”. Go back and read the hype two years ago about how you wouldn’t have to remember all the codes of DBS. We are now buried in everything from OIS100 to MMS800 with hundreds of codes in between…. E I E I O. Finning didn’t listen before “Go Live” and as a result will suffer through much for a long time.
Until someone comes up with a way to put a clause in a collective agreement which ensures quality caring management interested in retaining loyal employees by treating them right and with respect all we can hit them for is slightly better language and more money. Finning showing some effort in ensuring the former would put less emphasis on the later. So far I haven’t seen it.
I am voting no!