Friday, March 11, 2011

Wisconsin Legislature, A Bunch of Cheeseheads

Suppose you're a supplier to a conglomerate, with a contract for product or services. In many contracts, there's a clause regarding termination for cause. The cause is usually a failure to perform. You negotiated your contract with the ABC subsidiary in good faith. You may have given up some pricing or payment terms in lieu of a multi-year agreement. A new CEO is appointed in the conglomerate. He voids all supplier contracts because the conglomerate is losing money. He's decided that his corporation will no longer enter into any long-term agreements. Everything will be on PO-by-PO, or spot buy, basis. He has just voided any pricing, or protections you have that would allow you to sue/arbitrate for payments. Wouldn't you take action, at least to voice your concerns?

I would at least suggest that the current contract is in force until it expires and then it can be renegotiated.

I'm not necessarily pro-union. I'm pro-justice, pro-integrity and pro-adulthood. If a contract or agreement is negotiated between adults without coercion, then it should be honored even if it's silly or contains an inherent aspect that will create the demise of one party or the other. (For example, penion benefits and healthcare for retirees have created an enormous, but foreseeable, burden on US-based auto makers. I've seen similar, smaller scale contracts that people have made and after a few years, they have figured out that they're now in a contractual "corner" they never intended--like awarding commissions to people who didn't do anything to get the business for the company but it's in their territory. However, it's there, in writing, and no expiration on the agreement or timetable for renegotiation.) Losing money is not a cause for changing the contract unless the other party is willing to re-negotiate in the interest of maintaining some long-term business.

In Wisconsin, I've heard that the teachers' union and other public employee unions knew that, at some point, they would be contributing more towards their pension plan and their health care. That's not the issue from their perspective that's created their protests. What is the problem is that the state legislature is nullifying their collective bargaining agreements earlier this week.

That seems to be a cheesehead move by the legislature. I like Wisconsin, and I like the people (I have relatives there too). However, this group of Wisconsinites seem to be doing the wrong thing, even if it appears to be for the right reasons from their perspective.

Ok, that's my curmudgeonly opinion. I don't like what the Wisconsin legislature did because I wouldn't like it if the conglomerate's CEO would cancel my long-term agreement with his subsidiary without his paying some sort of penalty.

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