The Partnership

The Consumer


4.1 The Partnershipís store is light, airy and bigger than I expected with several reading areas, a cafeteria, and a trade literature section. I observed the large range of goods available, the obvious efficiency, and opened a conversation with one of the consumers: "I would not have thought that a Christian partnership would be so consumer oriented?"

4.2 "We keep materials in perspective," she began. "It is as important to us to know how to spend money as it is to know how to earn it. This store is more than an average store: the partners are attempting to divert the majority of their consumer spending through this place everything from motor cars to clothes pegs. Itís a centre of practical education too, especially if youíre buying a Partnership product. If serious problems are raised, such as a design or manufacturing fault in a product, the resources of The Partnership can be called upon for assistance. Sometimes we have even had the designers of a Partnership product come here to discuss the qualities of a product with a consumer."

4.3 "Look at these," she invited. "They are reports on our products from various laboratories, including our own. Staff here has the skill to read critically these reports and to explain the essentials to consumers at the point of sale: very different from the self-serve store with its robot packers! Thereís a human aspect to this place: itís designed to function as a place where the commodity needs of a person can be determined and met. Itís quiet. If someone wants an audio-visual on one of the products, headsets are used to avoid disturbing others."

4.4 "Do you use this facility as a demand producer when youíre shaping the Ďneedsí of consumers?" I asked.

4.5 "Iím sorry, you misunderstand," she replied. "Very often our people come here for an appliance and they have not taken the time to inform themselves as to what is available on the market. They often come with a need - in some cases they have not even seen a product to satisfy that need. These cases can be very interesting to our designers since they can indicate a product that needs to be designed. Usually, however, the consumer can come to the store and have a need met with a commodity appropriate in cost and quality. Can you see the underlying principles involved here?"

4.6 "No," I replied frankly. "All I see is a well-run store that looks and sounds a little different to other stores."

4.7 "Yes, it is a well-run store - but itís much more than that. Look, you spend a lot of time making money donít you? Here we put some Christian perspective into the spending of money. Consumerism is rejected here. We try to discover and satisfy a need. We donít try to manufacture a want. The store is an integral part of the plant. Look at the bulk sales section over there for clothes washing liquid, flour, honey, breakfast cereals, etcetera: the partners have developed space-saving modular plastic refillable containers that fit the dispensing equipment and have dishwasher-proof labels. Itís all very economical, convenient and satisfying. The Partnership buys in bulk at the best cost/quality ratio possible and sells to the partners at cost. Costs include staff expenses, communication and other normal running costs. We do not operate on the refund system that most co-operative retail stores use where the refund is proportional to the spending of each member: we own the store, itís on our land, and we are far more loyal. Itís therefore not appropriate to use the refund idea in The Partnershipís store."

4.8 "If the market price is greater than The Partnershipís cost price, what do you sell at?" I asked.

4.9 "Itís easy to see that you are having trouble absorbing the fundamental aspects of this part of the enterprise," said the consumer. "This store is a private facility for the partners and their wives, husbands and children. The general public is not welcome or invited. There are retail stores for the public and we do not want them crowding our facilities. We donít have any surveillance equipment to prevent shoplifting because we have no need of it if we only serve ourselves. Sometimes our costs for a particular commodity are very low. Flour, for example, sometimes comes via our farm at virtually no cost to the partners in a good season - but any surplus is still sold on the open market at the ruling price. The Partnership always sells at cost to the partners, and at the ruling market price to outsiders."

4.10 "We donít rely on ever expanding markets for stability and prosperity. Our base market is the partners, and they are almost static in number. True, splinter groups do cause an expansion in our markets, but all together the increase in demand is only about the size of the general population increase. In general, The Partnership produces for use and its products are designed for ease of maintenance - this is in stark contrast to the products of other manufacturers that are produced merely for exchange. Look at the products here for example: Partnership products come generally without packaging - we want the product, not the garbage; they are designed for function and beauty to attract discriminating buyers, not to create a transitory want in the mind of an impulse buyer."

4.11 "The way to think of this facility," she said, "is to consider it as a public service, the way a public service ought to run, where the partners are the public. Note that nothing is subsidised: each commodity sells to the partners at cost, that is at the price the store has to pay for it, including all staff costs and overheads - this is exactly what should happen with a public service so that the real cost is paid by the consumer. A subsidy would mean that the consumer of a non-subsidised commodity would be paying the partner who buys a subsidised commodity, and this the partners believe would be inequitable. This rule of not subsidising anything means that the selling price is a true indication of the relative costs of production of at least The Partnershipís products. If the rule applied outside, it would mean that consumers would be basing their buying decisions on the true costs of production. The most efficiently produced product would be the cheapest provided that they are all produced in countries with similar wage and social structures, leading therefore to a better use of resources."

4.12 "You should know that The Partnership provided the total capital for this store, like the way governments should pay for a public enterprises. This is important since there is the question of return on capital to be considered. This store sells at cost to the partners and it has been decided to exclude from these costs any interest on the invested capital (since the partners have contributed the capital), rather than increasing prices to pay The Partnership a return on the invested capital or paying a refund to the consumers proportional to their purchases. If we paid a refund to the partners, it would be included in their income and they would have to pay tax on it, but if they simply save the money by lowering the price then this saving cannot be taxed which is an example of the general truth that money saved can never be taxed."

4.13 "What happens if the selling price falls below the cost of production?" I asked. "This cannot happen since the partners have agreed to pay the cost of production," replied the consumer. "If you mean the selling price outside, then that is a different matter. We are price takers to the outside: we cannot expect to influence by our small production the general price level of a commodity. In essence we regard the outside market as an export market, and we always sell for the ruling price. If we have a surplus of a perishable commodity, then we sell at the ruling price irrespective of the cost of production - production and sales of these commodities are strictly governed."

4.14 "Just to complete the line of thought on public enterprise," continued the consumer, "we take the view that this facility, and by direct analogy a public enterprise, should have no obligation on it to return a profit since the capital has already been contributed by the owners receiving the goods and services. What has to be done is to set selling prices to covers costs."

4.15 I was trying to take in all that the consumer was saying - and she was right, I was having trouble absorbing it all. The thought crossed my mind that this lady was no average consumer with her grasp of the private manufacturing sector, its motivation and operation, so I asked: "You seem to identify with The Partnership as much as any of the partners Iíve met so far. Are you a partner?"

4.16 "No, Iím not a partner," she replied, "but youíre right in observing my identification with The Partnership!"

4.17 "How then do you know so much about this place?" I asked. "My husband is a partner," she replied, "and wives of partners, or husbands of partners, are welcomed into The Partnership almost as if they were partners. So are our children. I often joke that I have all the advantages of The Partnership: I can shop here, I can holiday at The Partnershipís farm, I can attend the social functions, and now that I know the partners I am as welcome as one of them to call on The Partnershipís resources - and I donít even have to work. I attend The Partnership courses on consumer education - I like to be aware of the ramifications of my buying decisions, and my children look forward to being with other partnersí children in their kindergarten when I attend these courses. Making a living is only a part of a full and balanced life: provided income is adequate and secure, labour input only has to be as necessary to maintain this adequacy and security."

4.18 "You mentioned the educational aspect of this place earlier, perhaps you could elaborate?" I asked.

4.19 "Relative to our approach to education, outsiders still have a barbaric system - and I say this from the perspective of a mother and consumer of education both from within and outside this partnership."

4.20 "The State education system coaches a child along, teaches the child enough to wade a little in calm waters, and then throws the child out into the competitive job market to sink or swim. Usually the only support the child gets from then on is from parents. The State system doesnít seek to teach children how to get along with one another, how to co-operate, or how to make anyone happy including themselves. Education here is aimed at specific educational gaps in the State system - we complement the State system. For example, many sensitive political issues are deleted from the Stateís syllabus and virtually suppressed by lack of information and discussion - these areas are often precisely those in which one or more partners has a keen interest, and they may pass on their knowledge via a seminar or short course. The Partnershipís courses on such topics as party politics, social awareness, industrial history, co-operative behaviour and the functional and moral basis of Christian partnerships are well worth attending."

4.21 "While Iím praising The Partnership, Iíll include a few words on price justification. I believe the Government should have the power to force sellers to justify their prices according to their costs of production. The Partnership has for years stood ready to accept this responsibility for its production, but there are many high profit areas of business that refuse to accept the principle that selling prices be fairly related to manufacturing costs, and so far they have had sufficient power to maintain their position irrespective of the justice of the matter. Production costs are still closely guarded secrets in industry. The Government must eventually face the task of collating all the necessary data on production costs in order to justly rule on prices, and it must come to accept that to leave this data solely in the hands of private manufacturers leaves it without authority in this vital area. Weíre proud of our products and the low manufacturing costs we have achieved. The sooner the rest of industry follows our lead, the better it will be for consumers like me!"

4.22 "Two questions remain," I said. "If advertising is low on The Partnershipís priority list, how does it disseminate information on its products? Secondly, if The Partnership insists on selling direct to the end consumer as a matter of principle, who does the selling?"

4.23 "All the partners sell," answered the consumer. "Very similar to the now illegal pyramid sales structure of the twentieth century, but without the pyramid. The public know that every partner sells Partnership products and they come to them as trusted advisors. An overall index is kept of the selling time averaged by the partners on each product, so that the partners can be equitably given Partnership time credits for goods sold - and this index is also the basis for paying those whose main contribution is selling."

4.24 "Advertising is mainly word of mouth. The partners take the view that they are in business for life, and hence they have a lifetime to tell people about Partnership products. Quick sales and short-term profits are not so important when seen from this perspective, are they? The partners see Ďadvertisingí differently to other manufacturers - they see it as the dissemination of factual information, and Partnership products have excellent data sheets freely available to consumers whereas many competitive producers have become so afraid of industrial copiers that their literature has degenerated to glossy pornographic leaflets. We are not afraid of honest price and or quality competition."

Go to next chapter.

From The Partnership, by Graeme Doel.

Converted to HTML by Simon Grant, 2003.