I got around to reading another Buffet letter tonight, this one from 1978. It was pretty pedestrian, but the candor of this sentence jumped out at me.
Frank DeNardo came with us in the spring of 1978 to straighten out National Indemnity’s California Worker’s Compensation business which, up to that point, had been a disaster.
Emphasis added. When’s the last time you heard a corporate leader use a term like “disaster” to describe his own operation? Usually they use a euphemism like “challenges” and/or try to blame it on something external like seasonality, the weather, the economy, whatever.
One other section that stood out was a discussion of their involvement in the textile industry. After laying out the reasons why it’s a tough business, Buffet added this:
We hope we don’t get into too many more businesses with such tough economic characteristics. But, as we have stated before: (1) our textile businesses are very important employers in their communities, (2) management has been straightforward in reporting on problems and energetic in attacking them, (3) labor has been cooperative and understanding in facing our common problems, and (4) the business should average modest cash returns relative to investment. As long as these conditions prevail – and we expect that they will – we intend to continue to support our textile business despite more attractive alternative uses for capital.
Again, emphasis added. I wonder whether Buffet’s attitude re: the importance of companies to their communities has changed over the years?