NACE layoffs symptom of deeper problem, critics say

WINDOW ROCK, May 29, 2008

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aying they expect slower than usual sales this summer, officials of the Navajo Arts and Crafts Enterprise began laying off employees last week.

But some insiders say there's more to it than a slow economy.

NACE officials have declined to talk publicly about the layoffs but employees at the enterprise said at least 10 employees got a pink slip last week. Indications are that more may be cut in the future.

In a memo to one of those laid off, Rena Tom, NACE human resources manager, wrote: "As you have heard, NACE is experiencing slow sales volumes as most companies are throughout the United States.

"While most companies are closing doors and/or shutting down their operations, NACE is able to keep stores open but must be financially responsible and reduce the workforce," she wrote.

"NACE is anticipating slower than projected sales this summer due to the rising cost of gasoline substantially affecting our summer tourist traffic ... Due to the current state of the economy and these lower sales volumes, unfortunately, your position is being eliminated," she wrote.

A lot has been written in the press in recent months, both nationally and locally, about the effects of high gas prices on tourism. Many surveys indicate that American families will vacation close to home this summer in what are being termed "staycations."

Hotel and restaurant owners in Gallup also say they expect a slow summer and many aren't hiring as much extra help as usual.

Some NACE employees, however, allege that the tribal enterprise is using the economic downturn to cloak the real cause of the layoffs, which they attribute to a pattern of financial mismanagement.

They spoke on condition of confidentiality, saying their supervisors had threatened to fire anyone caught talking to the press.

Several employees charge that NACE officials have in some cases manipulated the balance sheet, such as deferring payment of some debts in order to give the appearance of profit at year's end.

The enterprise has been in turmoil off and on for years, beginning when Elliott Mott took over as general manager in 2001. His reign, which ended two years ago, was punctuated by employee grievance cases alleging mistreatment.

Mott was replaced in 2006 by NACE's current manager, Sean Henisa, whose arrival was applauded as the start of a turnaround. Shortly after he came aboard, employees said they enjoyed coming to work again for the first time in years.

Henisa inaugurated a number of changes that won praise from employees. But after several months, some of his changes came under criticism.

One of these was his decision several months ago to fire the manager of the Cameron, Ariz., store. The new manager is the daughter of a NACE board member and had no prior experience running an arts and crafts store.

Store employees said the original manager was removed when she objected to some of Henisa's changes. NACE officials claimed that the former manager did not report low inventories and restocking needs, while she said the reason some products ran short was that NACE headquarters fell behind in paying the suppliers.

Henisa did not return repeated phone calls from the Navajo Times seeking an interview for this story.

In recent weeks, Henisa has issued memos to employees warning them of possible layoffs or reductions in pay, copies of which were obtained by the Times.

On May 20, Henisa wrote a memo suspending all leave and vacation for NACE workers until further notice. On the same day, he wrote a memo clamping down on spending at all levels of the company, saying that in future all expenditures must be approved by NACE financial officials.

Four days before, Elijah Muskett, NACE project manager, issued a memo saying employees would no longer be allowed to purchase store items through an installment plan using payroll deductions.

"A lot of the employees are scared," one long-time employee said, adding that salaries already are low and many employees have a hard time making ends meet.

Many have been forced to borrow money from payday loan companies in order to pay all of their bills, another employee said.

Some inside NACE have considered going public with their concerns, and talking to council delegates or the media, but they were warned by Henisa and their supervisors that anyone who talked to anyone outside the company would risk losing his or her job.

The critics say blame for the company's problems rests squarely on Henisa, and that the board of directors seems clueless about the size of the problems.

"The board probably has no idea of just how serious the financial problems are here," one employee said. "They just believe anything Henisa tells them."

One reason for this, another employee said, is that Henisa has gone out of his way to cultivate the board, providing members with special deals on craft items and other favors.

There have also been accusations that Henisa is taking advantage of employees by requiring them to do work around his house on company time, including cleaning and even laundry duties.

When he was hired, Henisa said his contract contained a provision that NACE would supply him with a residence. He did not mention that it would include housekeeping.

The Navajo Times has been seeking an interview with Henisa or Sue Foster, another top NACE official, for the past two months but has received no response.

When informed that the paper planned to publish a report on the employee complaints, the person answering the phone at headquarters checked with her supervisors and then said that company officials had no comment except to say that they felt running the story at this time is "premature" and "irresponsible."