December, 2002

Employee letter

When I read the newspaper reports of the huge loss suffered by Wajax in the 3rd Quarter I was disgusted but not surprised. As a shareholder as well as an employee I have become accustomed to the results of the company’s mismanagement over the last several years. With every quarterly loss comes another lame excuse from management, and the board of directors seems to be far out of touch with what is really happening.

Here are some questions that should have been or should now be asked:

Why did they insist on proceeding with the J.D.Edwards’ ERP computer system? It was common knowledge that, from coast to coast, regional management for the principal businesses did not support nor believe in the project but were coerced into going along with it. The many unwilling participants and disillusioned consultants should have been clues that this ill-conceived and disastrously expensive venture was doomed from the early stages, yet more and more money continued to be thrown at it. Now some $20 million (before tax) has been written off – and who knows whether the remnants of the system are being carried on the books at an inflated value?

What is the rationale for the organization of the mobile equipment business? The Ontario region is consistently profitable while the Quebec region is profit-challenged. Why then is Ontario run by Quebec management, which should be focusing on solving the Quebec problem instead of covering up the issue by taking absentee-management credit for Ontario’s profitable performance?

With all the publicity given to the ENRON and WORLDCOM scandals, why has Wajax not disclosed in its financial statements the impending lawsuit against it for the recovery of the $16 million pension fund surplus, believed to be the rightful property of its employees and former employees? This is something the shareholders have a right to know!

Has Wajax notified its auditors of the imminent lawsuit?

It’s time for some intelligent direction to come from the Board. Instead of blindly accepting whatever plan the latest-and-greatest C.E.O. dreams up, the directors must get more involved and/or recruit other directors who have hands-on knowledge of the principal businesses, namely Mobile Equipment and the Diesel Engine business. Maybe then the Company can return to its former ethical and profitable state.
 

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