Posted on 07/21/2014 2:53:20 PM PDT by matt04
A big local story from this weekend was centered around Market Basket and its employees’ ongoing movement to re-install former CEO Arthur T. Demoulas.
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Why are employees protesting, anyway?
OK, the long answer goes back decades. In the very short-term, Market Basket employees are extremely loyal to the former CEO, Demoulas, who was fired last month and replaced with Jim Gooch and Felicia Thornton. Two other executives were fired at the time, and seven more resigned the next day.
A couple weeks back, employees outright demanded Demoulas be re-instated as CEO. When they didn’t hear an answer by the middle of last week, they issued an ultimatum to the board, saying they needed an answer by 4:30 p.m. Thursday. When they received an answer saying some employees would get a chance to meet with the board in a meeting this week, they said that wasn’t good enough and organized Friday’s rally, which drew more than 2,500 employees and supporters.
Why the loyalty?
Employees at Market Basket receive very strong benefits, including participation in a profit sharing program. They are worried that new leadership wants to operate the company in a way that stresses profits—Market Basket is already profitable, and does billions of dollars in revenue. This could, theoretically, threaten their livelihood. Employees also worry new leadership aims to sell the company; Thornton’s expertise historically has been in mergers and acquisitions. They say they are fighting for the preservation of the company. Moreover, they say it’s also about Demoulas himself, whom they hold in extremely high regard.
It is indeed unusual that management and rank-and-file employees would be participating in a movement together in support of an ousted executive, which might be one reason why employees have resisted the idea of unionizing.
(Excerpt) Read more at boston.com ...
Profits threaten their livelihood??
huh??
In any case, it’s their call. They’re the ones with the money at risk.
Obviously, you're unclear on the process of a hostile takeover, which is all about Other Peoples' Money. There are no "new owners". Executives have zero dollars at risk, except what they plan to steal in the process.
The owners are the stockholders, who are mostly unaware of what is happening. There is usually a board of directors, usually bought off in advance, (or 50% +1), and promised a bit more after their "service" in voting for the executive switch.
The stockholders get the shaft, as can be seen by the empty shelves and empty stores. These are the owners.
The employees get the shaft.
The executives and the directors have ZERO capital at risk. They can liquidate the real estate, split the proceeds as they see fit to vote. These people are NOT owners. They are thieves.
Market Basket is a way better store than Publix.
The battling cousins are grandsons of the founder.
There are a number of businesses where employees aren’t as interchangeable and replaceable as you describe. supermarkets may not be one of them, but this one was so well managed that their employees do make that much of a difference.
Also, the two warring sides are joint owners of the place—the offspring of two brothers who had their battles. One, who was running the place, and the other who apparently (accord to court proceedings) had its share in the business unfairly diminished by the active managing side.
Anyway, all it took was one family member to change sides this year to get the active CEO booted, because she changed from the side of his side of the family.
He’s now trying to arrange a buyout so these battles won’t go on and so it can return to its exceptional management.
The employees are entirely within their rights to battle the change, just as the now-majority ownership can axe them. That’s not in the interest of either the employees or the customers, and if the employees and their customers succeed, it could be sufficiently not in the interest of the “Bad Arthur” ownership for them to settle. All will be well if it can go back to being managed by the “Good Arthur”.
It’s really a very old-fashioned story, in a way.
Yup. The old management made money the old-fashioned way. Common sense and hard work.
My wife works for a competitor-- Shaw's. They're taken over every two years, and the new regime usually decides to cut staff even more, or change to cheaper bags that require double-bagging. When that doesn't bring them riches, they sell to the next investment group.
Not surprisingly, the Market Basket employees aren't interested in this business model.
Why not try something truly radical and dare I say it, Christian, and institute a serious profit-sharing program, like Market Basket?
Not only does profit-sharing benefit the workers, it benefits the owners. Market Basket is the most profitable Supermarket in the Northeast.
Slashing expenses isn't always the answer.
During high school and a few summers while in college (so...1968 - 1972) I worked at the local Winn-Dixie.
I assume it was like this Market Basket in that it was owned by a family (the Davis brothers ) but it was A.D. Davis that was president/CEO/Head Honcho who called the shots and created the customer/employee loyalty.
They were non-Union and determined to stay that way. They always made sure that we baggers/stockers got one nickel more per hour than the boys at Kroger etc.
The Cesar Chavez picketers got tired and gave up trying to "recruit" us.
After AD retired and the worthless kids took over, it was never the same.
All that being said, since grocery store were my first vocation, I have kept a dilettante's interest in them and gauged all the ones I ever shopped. (A&P, H.E.B, Kroger, Albertson's, Safeway, Piggly Wiggly, Harris Teeter and others) But I have never seen a store as bright, clean, organized etc. as the Publix stores that have gone up in the Atlanta area in the last 15 years.
By far the best I have seen.
I'll have to take your word for it...but color me a skeptic.
The Publix I have been to have been clean and bright.
But Market Basket is a combination of just that early Winn-Dixie family environment you describe: employees get paid more with more opportunity to advance, yet prices are better than elsewhere. No unionization and a sense of ownership among the employees. Yet, Market Basket is also close to a Whole Foods/regular supermarket hybrid with the level of its fresh produce, baking, specialty foods, etc.—while also beating regular supermarkets on price.
“Bad Arthur”, whom the employees, customers, and “Good Arthur” are fighting, is that next generation of worthless kids looking to strip the store and cash out.
to equate stock traders with raiders is an error. All raiders deal in stocks but not all those that trade stocks are raiders.
A person that buys up the stock of a public traded company to gain control generally sees a company that is poorly managed and can be made more profitable. It would seem the ousted CEO ran a paternalistic shop that was not well managed and up to par.
Here’s a new story on just how well the workers are treated—and paid: http://www.bostonglobe.com/business/2014/07/24/personal-touch-family-feel-won-workers-loyalty-market-basket-grocery-chain/Y21o2OT2qwr2Dzwf588iHK/story.html
Here’s one on potential suitors. Sounds like “Good Arthur” should have led a buyout in 2010, though cash was harder to scrape up back then:
The way I look at both are bad in their own way. This all started because Arthur T. personally bought some land some future stores were going to located on. He then resold it at a profit to the company. When the woman who had the 2% ownership that balanced everything between the two she flipped and Arthur T. was booted out.
So, he messed up, I hope it was worth it. I don’t see nybody winning here. The employees will all lose their jobs and the chain will eventually fold. If it goes any other way I will be quite shocked.
Artie T. and his father haven’t been angels in total. But Artie T. has been an incredibly talented angel in part, which is more than Artie S. has been. The current clowns they have co-running the joint couldn’t be more pathetic.
I do agree with that. I think nobody wins here. The employees will wind up jobless and the company will go down the drain. Very unfortunate.
If Artie T. wins the company, I can see it coming back at least as good as ever. We’ll see.
PS This story has absolutely transfixed people in the Market Basket region. Artie T. is already a huge folk hero there that conservatives and liberals (there are more of the latter in the area) can rally around. If he gets the company it’ll be a big comeback story as well.
I hope so but I don’t hold out much hope.
Well clearly you were on the wrong side of history. The employees banded together and got the CEO reinstated. Good for them. Management must have been doing something right given that customers and employees were united in opposing what the board wanted. And they won.
They were afraid the “suits” were going to screw up a good thing. Which the suits often do.
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