Last week, a story from my neck of the woods, northern New England, captured the national news and imagination of folks across America. A regional, family-owned chain of grocery stores, Market Basket, had been in the grip of a family battle for control, resulting in losses of millions of dollars in revenue, employee generated strikes and people weighing in from all sides: the street, the air waves, print and online. In June, long-time CEO Arthur T. Demoulas was fired by his board of directors led by his cousin Arthur S. Demoulas. Many employees went on strike or joined store boycotts protesting the firing of the man who has led the company for decades.
For six weeks, many of the 25,000 non-union workers created picket lines, refused to enter stores and refused to stock shelves, forgoing paychecks and risking being fired. Their actions left 71 stores throughout Massachusett and southern New Hampshire without product to sell, costing the company millions of dollars. Apparently the Demoulas cousin rivalry had been ongoing for years. Employees sided with "Artie T" whom they say knew the name of every employee in every store, regularly visited the stores and treated them all "like family". It's been a heartwarming story to watch in this age of corporate indifference.
Workers said the new leadership would destroy the culture of Market Basket, where employees could often earn greater pay and benefits than at other grocery stores. Customers worried that prices would be increased if profit became a greater focus. wmur.com 8/29/14Cynic that I am, I can only hope and pray the means by which Artie T used to buy out his cousin for $1.5 BILLION dollars will not result in the very thing the employees feared to begin with, the destruction of their culture.
But the deal requires Artie T. to raise $550 million in the private equity and commercial markets, mortgage Market Basket real estate, and invest a huge piece of his personal wealth. Market Basket will be a debt-laden enterprise that will have a tough time making payments while also keeping good wages and benefits for associates, fair deals with suppliers, and low prices for customers. Something in the traditional success formula will change. BU Today 9/02/14Demoulas borrowed from private equity firm The Blackstone Group.
It all begins with something called private equity, a vast pool of money managed by very tough-minded business-school types. The banker who gave you your mortgage is a teddy bear compared to these guys. nhpr.org 8/29/14Yes. If there's any lagging, they're going to want their pound of flesh. the easiest way to cut costs is...cut employees, early retirement, eliminate pension, lower or freeze wages, increase hours & work...you know the drill. Let's just hope it doesn't come to pass for these loyal employees who've already sacrificed much.
To be continued.