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Cheese Coup
In the late eighties, one of my competitors decided to exit the food service portion of the cheese business and concentrate on the retail market even though they were a national company they had a sales and distribution hub in my market of the Pittsburgh area. I was approached by one of their top salesmen for a job; I recognized the opportunity to increase my business and I hired Jack. I did much of the selling myself although I had another salesperson besides Jack. My business was based upon repeat orders and =my customers were very loyal. It’s trite but I provided quality, service, and a good price.
Speaking of price, the cheese industry for the most part is a commodity price industry. The price follows buyers and sellers on the Chicago Commodities Exchange on a weekly basis. Prices theoretically can go up or down upon supply and demand. They rise on tight supply and drop on a glut. Speculation also plays a part but I’ll skip that for now. A 20cent per pound move would be a large swing, 2 to 5 cents would be more normal change when the market is moving. There can be months of no change. I would immediately change my pricing to reflect changes up or down in accordance with the Chicago Market.
When I hired Jack this was all gone over, however, the market was relatively flat so it didn’t make much difference. Jack and I had a commission arraignment based on total sales. Over the years many customers lobbied for one more order at the old price on an advancing market but I rarely did that. I explained that everyone wanted the new price on a falling market and Jack was completely aware of this policy.
Suddenly some sort of disruption caused the market to jump 15 cents a pound. At that time I was selling in the neighborhood of 500,000 lbs a week so the price change was significant. My nine to five was more like 5 am to 9 pm. I noticed that the orders Jack was placing were larger than normal but in the press of things I didn’t discuss it with him. The orders he placed reflected the new price. It was standard to give two weeks credit for payment most customers took an extra week or two to pay. When the orders that Jack placed were paid each deducted the price increase from their bill with a note that the deduction was authorized by Jack. There had been more increases since the first increase. I personally called his customers and found in each case he told them to pay the lower price. He had indicated that he actually set pricing and to ignore whatever I said.
Jack was on the road and I called his answering machine (before cell phones) and told him to come to my office immediately. It took a week for him to show. I confronted him with what he had done and his defense was that was how his last employer did it and they were a national company and I was just a young guy that didn’t know any better. I explained there were to ways to handle this, one I could take the price deductions out of his pay or he could leave and not let the door hit him in the ass. He chose the latter. I learned later that he claimed to be a partner and was going to buy me out. Meanwhile six months later he filed for personal bankruptcy and died never getting another job.
I relate this experience because tomorrow we will all hear a variation of this at the “Impeachment Hoax” on the Hill. I was the owner of my company (and the bank) and someone with no financial stake wanted control. President Trump is the only elected official elected by all the people. A bunch of unelected bureaucrats are trying to take control. A Coup.
Published in General
PHCheese, thank you for a very interesting post on how one aspect of the commodities market functions. I learn something every day here!
I was expecting something like the Parable of the Unrighteous Steward (Luke 16):1-13).
Well, I was going to ask if his name was Monterey Jack, Colby Jack, or Cheddar Jack, but the story had a bit of a down ending that I wasn’t expecting.
I guess I don’t know Jack…
I wish I hadn’t. BTW name change to protect his family and mine.
Prior to the Chicago Exchange for years prices were “fixed” in a smoked filled room in Green Bay Wisconsin by about six large companies.
I suppose that makes the honchos in said smoke filled room the original Cheeseheads?
I looked it up. Smoked cheese is actually a thing.
And a delicious thing, too.
Mmmmm… Smoked cheese…
Especially Smoked Gouda. That is just heavenly.
You’re going to make me clean off my car and run out to the market, aren’t you. Smoked Gouda, mmmm…