SURVEYOR'S NOTEBOOK

Negotiations in Five Short Stories, Part One

By Rik van Hemmen

Note: The Waterpomptang family is fictitious and occasionally a Waterpomptang story appears on the M&O website. Some say their adventures resemble real events, but that is just a coincidence.

 

It was early morning at Watt & Fulton’s office above the BuyLo Packy in Red Bank. Willem was finishing his pork roll and egg sandwich when Will came bounding up the stairs.

“Hi Will, what brings you here?” Will is Willem’s eldest child. He was raised as an engineer, but after a career in offshore oil he became a corporate lawyer. Nobody really knew what he did as a lawyer, but he spent a lot of time in Switzerland.

“I am meeting Marina for lunch, but figured I’d use the office to do some correspondence rather than travel into the city this morning”

“Lunch with Marina on a weekday? That has to relate to business.”

“Yes, I will be entering a rather complex negotiation process next week, and wanted to run some ideas by Marina since she is much more current with negotiation tactics and game theory.”

“If you really want to learn about negotiations, stop by with Opa after lunch and ask him to brief you on negotiation tactics with his five stories”

“Opa? Negotiations?”

“Trust me, he has the goods. Nothing makes you a better negotiator than dealing with Greek shipowners and Dutch shipyard estimators. You know what they say about the Dutch. The trouble with the Dutch …”

“is giving too little, and asking too much” Will finished, waving Willem off, as he walked towards the conference room.

After a relatively long lunch, Marina and Will walked down the red bank at Molly Pitcher and found Opa on Froetjers. The engine hatch was open, and apparently Wim was improving perfection on his engine.

“Opa, Pa tells us you have to tell us negotiation stories” Marina told Opa’s 230 pound rump.

Willem pulled his head out of the bilges and while the redness was fading from his bald skull, a big grin appeared on his face. “My kids! Marina, Will, so good to see you, and at the same time no less! Come aboard. Negotiation stories?”

“Yes, the five.”

“Oh, the five, the negotiation basics.”

“This will take a while. Will, please make some coffee while I close up on the engine.”

The coffee was made, poured black in three cups and everybody found a comfortable spot in the cockpit.

Wim began:

Back in Rotterdam, in 1968, I switched jobs from Holland America Line to the US Salvage Association. Holland America Line was white shoe and had very close working relationships with various Dutch yards. We had very few supplier disputes and, if there was a dispute, it was generally settled at very high levels at the Royal Maas Yacht Club and I was never involved. But when I joined USSA as a Hull & Machinery surveyor I entered a whole new world. Instead of pleasant and cooperative relations, too often shipowners and shipyards went in for a fight, and I was supposed to sort out, as the underwriter representatives, whether I had to support one or the other.

I received relatively little guidance and sort of had to figure negotiation things out by myself. However, I had a front row seat, and could watch the cat come out of the tree and learn.

So here is Story One:

In the first week I show up at a bill settlement and the Owner and shipyard are not agreeing. The shipowner is going over every item with a finetooth comb, and there is one $5,000 item and the Owner complains it is $200 too high. The ship yard estimator says: “What do you base that on” and the Owner says: “I just know”. The shipyard estimator says: “but it is only $200 on a $5,000 item?

And the Owner looks up from the cost listing and says: “You only call it $200, but you will no longer say that if you change it into nickels, put it in a bag and hang it from your private parts with fish hooks!”

Marina smiled: “Oh, I see, Utility Theory”

Wim shrugged: “I have no idea as to what you are referring to, but in my career, I have used that story quite a number of times to provide context in a negotiation. Most of all, what I found was that when things got hot and heavy, a story tended to reset the sides to some extent and opened the door to a little progress. But let me go on to Story Two.”

Not too long after Story One, I went into a negotiation with another shipowner. We sat down, and right away the ship owner asked the estimator for some aspirin. Naturally the estimator wanted to keep the ship owner happy and told his secretary to rush out and get some aspirin for the ship owner. After a few minutes the secretary came in with a small box of aspirin and a glass of water. The ship owner took out three aspirins and pushed them across the table to the estimator together with the glass of water and said: “Take these”. The estimator looked at the aspirins and the glass of water and stammered: “But I don’t have a headache”, and the ship owner answered “Not yet, but you will, once I am through with you”

Will and Marina laughed.

“So are we always supposed to be tough in negotiations?” Will asked.

“Far from it, but sometimes it helps to come in with a certain posture and this really rattled the estimator. In negotiations you always have to come in prepared, and should have as many arrows in your quiver as you can. In this case, the Owner created an arrow out of thin air. It was clever and unexpected and that can put any recipient on their back foot. I never used that tactic, but I cannot escape the fact it was clever and, most of all, it taught me not to get rattled by anything the other side brings up. If they resort to theatrics on the other side, chances are they do not have a lot of fire power. So next comes Story Three”

One day I was having lunch with a very experienced port engineer. After lunch we were going to settle a bill at a shipyard the port engineer had used many times. We knew the shipyard estimator very well and the port engineer had done dozens of jobs with that yard. Over the years negotiations became little more than a formality because the charges were always reasonable. However, this time the port engineer suggested that we should play a joke on the shipyard estimator.

He suggested that, no matter what the shipyard’s estimate for the repair work would be, we would act very indignant and say that the price was outrageous and would never pay more than half the yard offered.

So after lunch, we met in the estimator’s office and were given a copy of the estimate for the work that was to be performed. We studied the estimate and we saw that the amount was quite reasonable; as a matter of fact; it was even low. But a joke is a joke, and we both frowned and the port engineer looked at the estimator and said “I have never seen an outrageous estimate like this! There is no way I am going to pay more than half!”

I vigorously assented, and the estimator looked from the port engineer to me, and from me to the port engineer. He looked down at his paper and after a second said: “OK, we’ll do it for half the price”.

We both laughed, and then we explained we pulled a trick on him. The estimator sort of laughed too, and we agreed on the original price.

We walked out and were laughing about how we played a great trick on the estimator. But then we started to worry. If the estimator reduced the price so quickly did that mean that he had been overcharging us for all these years?

Pause for thought, but then it dawned on us that the estimator had taken the job at a loss to keep his good customer happy. It was a matter of perception, while it had been a joke for the port engineer and me, this was serious business to the estimator. To the estimator the port engineer had looked very upset and I had supported his outrage. The last thing the estimator wanted was an unhappy good customer, so he had immediately agreed to the very low price.

“Cool! An Axelrod iterated Prisoners Dilemma strategy before Axelrod even ran the experiment” Marina chimed in.

Wim nodded, “I actually know what you are talking about here, since Willem said the same thing when I told him this story, and if I remember correctly, it had something to do with Tit for Tat. Story Four is short and simple.”

“Too often there is a gap between best and final offers on both sides. Willem also told me that best and final offers should be called BAFO’s, so this old engineer will try to be cool and call it that. Anyway, if BAFO’s don’t meet, there is no agreed price and trouble starts. Weirdly, too often there is a practical solution but it takes a bit of a leap of faith. If both BAFO’s are reasonable in their own right, and there is a mutual benefit for getting the job done, it is remarkable how often it is possible to split the difference. All it takes is a bit of courage on one side to suggest it, and both Willem and I have had dozens of cases where it resolved the problem. What I really enjoy is that, if you trust the other side, you can even agree not to reveal that you split the difference and simply state you agreed on the price without further comment. Your clients on both sides will love you for it. On the flip side, if you tell your client you split the difference they might second guess you.”

“Is that ethical to keep it a secret?” Will asked.

“Ethical! Asked by a lawyer?! Rotzooi!” Wim said loud enough to cause a seagull on one of the boat slip piles to take flight.

“I am an engineer, we create reasonable solutions, if the other side’s point of view is reasonable and my own point of view is reasonable, the midpoint solution is inherently reasonable and therefore ethical. To reveal how sausage was made helps no one. In the vast majority of cases, splitting the difference in negotiations saves many multiples of the cost of not agreeing anyway. Willem tells me that is called BATNA.”

Marina nodded in agreement, impressed with Opa’s vocabulary.

Wim went on, “As Willem often says: Negotiations are just another communications exercise. Though Willem hardly responds to emotions in communications anyway, there is no more reason to be emotional about negotiations than there is to be emotional about sausage making.”

“Well as long as it is vegetarian sausage I don’t care either”, Marina laughed.

“Food! Truus will be here in a few minutes. I planned to take her for dinner at the restaurant here so I could have a Jack Rose, but if one of you will be designated driver, we can take Froetjers to the Shrewsbury River Yacht Club. Your grandmother will love to see you two and over drinks I will tell you story five, which is a little longer.”

To be continued.

 

Characters:

Wim (Willem Fokko) Waterpomptang, originally a blacksmith, but became a Chief Engineer in the Dutch Merchant Marine (this would be Hoofdscheepswerktuigkundige Waterpomptang) and mostly sailed to the Great Lakes and the Mediterranean. No fan of the English, but loved the Scots. Referred to as Oudopa by his descendents. Passed away in 1992.

Wim Waterpomptang, President Emeritus, Watt & Fulton, Ship Surveyors and Engineers

Started as a sailing engineer at Holland America Line and then started to work for an American Ship surveying company in Rotterdam.

Transferred to the United States with his family just before the Bicentennial.

Joined Watt & Fulton in 1980 and bought the company with his son, Willem, in 1993.

Owns a 28 foot Olson Sea Skiff named “Froetjers” and drives a 1993 Dodge K car. Hates cars. Keeps his boat at the Molly Pitcher.

Nicknamed “Bolle” by his old friends (Means “round one”). Called Pa by his kids and Opa by his grandchildren.

Any stranger he meets he calls “My Friend”. Anytime somebody says something that makes no sense he says: Rotzooi! (A not too rude word for mess, mix-up or confusion)

Loves his wife Truus and bacon, hates to travel. Drinks Lairds and cold beer. Is distrustful of people that eat porridge and oatmeal for breakfast. Hates melted cheese.

Willem (Willem Fokko) Waterpomptang President Watt & Fulton, Wim’s son

Sails and iceboats. Aerospace and Ocean engineer and Professional Engineer. Is somewhat autistic and sometimes has trouble figuring out what people mean. Helped by his partners and office staff in maintaining human contact.  Nicknamed “Dutch Uncle” due to his inability to behave tactfully. Married to Anne Gardiner, fortunately of Scottish descent.

Marina (Marina Gretchen) Waterpomptang. Economist and Environmental Scientist with a Masters degree in System Engineering from Columbia.

Daughter of Willem. Works for the company as an independent consultant. Travels the world and does weird things, sometimes for W&F.

Will (Willem James) Waterpomptang

Son of Willem. Mysterious Character. Also an engineer but now works as a lawyer in mysterious acquisitions and deals. Married to Shruti a big data engineer from India.

Polara (Polara Ruth) Waterpomptang

Daughter of Willem, marine biologist, artist and environmental activist.

Watt & Fulton, an ancient ship surveying and engineering company, founded by descendants of James Watt and Robert Fulton and world renown for dealing with the thornier maritime issues.

The company used to be based in New York City, but moved to Red Bank, NJ after the Whitehall Club closed.

­­Today W&F is located across the railroad station above a packy store in the Mexican section of town.