MEC Is Dead

Sep 16, 2020 | Norm Reynolds | 4 comments

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Mountain Equipment Coop(MEC) is dead—the remains are being sold to a Los Angeles-based private investment firm. The coop, which was at one time the heart of Canada’s outdoor equipment sales serving over 5.4 million members has been sold to Kingswood Capital Management without the slightest membership consultation—which should surprise no one who has followed the MEC board as it has drifted evermore wholly into the control of a small clique of board members whose vision has not deviated beyond how to control board membership rather than focusing on how to serve coop members.

Many are now suggesting that it wasn’t inevitable that Canada’s premier consumer coop would be sold off to an American investment firm. Seattle’s Recreational Equipment Incorporated—an American recreation equipment coop much like MEC–encountered similar troubles but was able to turn their financial outlook around with an active program to reengage its members by featuring new products and services like outdoor focused adventure travel, member dividends ( $129 million in 2018), the sale of used and damaged goods.

Given its $500 million dollar per year business and the large geographic distribution of its outlets MEC could have consolidated its efforts into more compact sales centres and focused its sales on the more profitable and outdoor consumer driven lines. But that would have taken the kind of flexibility and vision that the board effectively ruled out with its vigilantly defended, cliquish vision of board membership.

If there is anything to be gained from this (I would call it tragic) turn of fortune for MEC it is that,it once again, points to the failing of boards where membership on the board is determined less by the desires of the membership than by the incestuous desire of sitting board members to see more of their own kind on the board and exclude from membership those whose views may include broader horizons. New candidates (never more than the number of vacant seats on the board) who were deemed chummy enough for the board were labeled as “Recommended” and had their names placed at the top of the board election ballot.

All this vote rigging is justified by the claim that only the sitting board knows the skills needed on the board. The tragic irony is that what the board needs (needed) was diversity. It is an all too common failing for boards of large organizations to think that what the board needs is skills in running the organization. Almost without exception boards that try to run large organizations fail and the organizations they oversee fail with them. Never has there been a clearer/sadder example of this all too common failing of boards than in this tragic collapse of MEC—an organization that should have been Canada’s shining example of the value of cooperative endeavors.

Boards, to be effective in the long term, need to be diverse and need to understand the proper role of the board which is to set the values, the projected membership of the organization and the services it will provide to whom. Boards that try to run the organization rather than describing the ends it wishes to accomplish for whom and how the board will monitor the accomplishments of those hired to accomplish the organizational ends fail.

I have seen it over and over again: Boards that seek to ensure a cliquishness among board members and try to run the organization rather than govern it and speak for the values that the organization is designated to serve fail as the MEC board has so utterly failed.

I have seen this in our local Coastal Community Credit Union CCCU where the board regularly puts out a list of board candidates with a MEC styled “recommended” designation for the insiders. It is why the CCCU has so little to say about things like ethical investing and has closed down its Social Responsibility Committee. The governing clique has so reduced the diversity on the board that those values simply never come up at a board meeting.

The CBC is today reporting that staff, a former director and long time members of MEC are suggesting that the MEC board has been “surreptitiously fixing elections since 2012” with dire consequences for the well being of MEC.

While this sounds sinister it is an all too common practice for boards to try to limit elected board members to a coterie of individuals selected by the board to fit in with the preselected board agenda. Few boards know how to learn from diversity within the board membership. With MEC this clannishness extended to denying some candidates from even being on the election ballot. Others were allowed on the ballot but only the inner circle came “recommended” by the board. Those outsiders who managed to get on the ballot were put at the bottom of the list while the insiders were put at the top of the list.

In a pre-election email, the MEC board had the audacity to claim that “Our recommended candidates have financial, organizational turnaround, and strategic retail leadership experience because MEC would benefit from this type of professional background, experience and network.” Well, today’s announcement that MEC has been sold off to the American financiers is poignant comment on that misguided claim!

Imagine for a dark moment that you went into a voting booth at a federal election and found that the Liberal Party had instructed Elections Canada to put a “Recommended’ sticker beside the names of all the Liberal candidates! Yikes, given Trudeau’s track record on ethics lately…

To cap off how far off the mark the incestuous elections at MEC have taken the board, it has decided to completely dismantle the Coop without even the pretense of consulting with the membership. How could such a significant part of BC’s development be sold off to the Americans without a whisper of consultation with members? And! The Board claims in a recent news release that selling off the coop to the American investment firm was done to “ensure a thriving future” for the Canadian retailer. To be momentarily crass: it seems the MEC board can’t say shit without spitting out a mouthful of it.

Norm Reynolds

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You are warmly invited to join in CV Conversations which will be more—conversational; represent a diversity of perspectives on topics of interest to Comox Valley residents. We don’t know how this will turn out—It’s and experiment! We’re going to make up the rules as we go and we thoroughly hope that others will want to join the conversations and contribute new ideas as to how the conversations can evolve.

If you are interested in being part of CV Conversations for one issue or for all posts or have some thoughts on how this conversational blog could be even more relevant/interesting send me a note at nreynolds at shaw.ca. We, the founding members of CV Conversations, see this as a natural progression for a participator centred local community website.

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4 Comments

  1. tony

    In some countries a co-op belongs to its members. It cannot be sold without a vote by all the members. What does Canadian law says about this? Or was this legally not actually a co-op, just a name?

    Successful Canadian companies almost always end up being sold to foreign interests. Why can’t we nurture local business that are leaders in their field? Are we destined to always remain a colony politically, economically and environmentally?

    I will not be shopping at MEC from now on.

    Reply
  2. don Castleden

    COOPERATIVE ASSOCIATION ACT OF BC

    Division 2 — Substantial Disposition of Association’s Undertaking

    No pledge or disposition of association’s undertaking without consent
    71 (1)Unless the association’s rules otherwise provide, an association, unless authorized to do so by a special resolution of the members, must not secure the repayment of money borrowed by the association by means of a charge on the whole or substantially the whole of the undertaking of the association.

    (2)An association must not dispose of the whole or substantially the whole of the undertaking of the association unless

    (a)the disposition is authorized by a special resolution of the members, and

    (b)if there are outstanding investment shares in the association of one or more classes, the investment shareholders of each class of investment shares approve the disposition by a separate resolution.

    Reply
  3. tom Pater

    Thanks, Norm. Yes, a dark day — but as you recognize the co-op has been moving from its roots for at least a decade. As a member since the ’70s in Vancouver, I’ve known the store’s best days and good work, including responsible, ethical purchasing and the many grants provided to community environmental initiatives. And then it got big and commercial and unfocused, abandoning its core.

    COVID was the final blow but of course the financial and management issues aren’t new. The current board, rather than being chastened, will assume that they just didn’t (or couldn’t) do enough to make it a big, modern, corporate machine.

    Reply
    • don Castleden

      Don Castleden

      Thanks for your article Norm. I joined the co-op back in the late 70’s when living in Terrace and the co-op was certainly the premier outfitting store. I am amazed that the Board hasn’t had to consult with the membership and wonder just what are the rules for co-ops in BC. I think there has to be some regulations under a BC act authorizing how co-ops are run and how they have to report to their membership. At the federal level, the government can intervene and block the sale of a vital interest to companies outside Canada if it is the national interest. Preserving the largest co-op in Canada might just fit that criteria.

      Reply

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