14A032 Striking for the Boss by Jim Davies, 8/10/2014    


I regularly shop at Market Basket, a North-East firm with 71 supermarkets and nearly $5 billion in sales. They have good quality and highly competitive prices. But last month, something extraordinary happened in the firm: the staff, which has no Union, struck - because the CEO had been fired by the Board. The shelves emptied; sales almost stopped. Labor was withdrawn in the warehouse, so stores ran out of supply.

Staff in the stores showed up for work, often circulating petitions for customers to sign, requesting that the popular ex-CEO, Mr Arthur T DeMoulas, be reinstated. 100,000 did, including me. There was little work for store staff to do, so I chatted with a few and made a small website for their possible benefit. Events move fast, so it falls out of date quickly, but I did take the chance to discourage any move to get help from government, as you'll see. I also ended up suggesting they return to work so as to honor their contract.

The background is briefly described by the online Supermarket News. There's a history of hostility between two branches of the owning DeMoulas family; that of Arthur S DeMoulas, and that of his cousin Arthur T, named above. Following the switch in 2013 of Raphaele DeMoulas Evans from T's side to S's, S now runs the firm and fired T.

Ever since Karl Marx did his benighted work, employees have been persuaded to regard management as the enemy, the exploiter. Even among the leaders of this strike, there are some who use thuggish, neo-Marxist language like "corporate greed" when referring to the Arthus S side, and that was readily echoed by PBS' resident Socialist economist (forgive the oxymoron) Paul Solman, when the story was told on the News Hour on August 8th. But the 25,000 staff members seem united in their devotion to Arthur T as a "beloved CEO" - their words - on account of his untiring efforts to keep a personal contact with as many of them as possible, to share profits, and to favor them when anomalies arise. In the short term such enlightened management may seem to endanger profits, but he has purchased an astonishing degree of loyalty whose value is almost priceless - as the current dispute shows. At the same time, the firm makes a very respectable 5% profit on sales and had built a $500M cash reserve.

Hence, history is being written and Marx is being stood on his head; MB employees are out on strike not against the boss, but for him. Yes, of course there is self-interest involved, as there should be; but there is no doubt they like him a great deal as a man, and are protesting his shabby treatment. I've been wondering what this portends for the coming zero government society.

The so-called "right to strike" is a scam. What is usually meant by it, but seldom stated plainly, is the right to strike without legal consequences; to break a contract with impunity, because government so decrees. So when government is no more, that right will evaporate with it - and very good riddance. What will remain will be very similar, I think, to what is operating right now in the Market Basket dispute.

The few hundred on strike in the MB warehouse are at risk. The Board, under Arthur S's control, is reportedly now firing them for failing to honor their contracts. It's hardly rational to do that, for it means having to find and train replacements in a big hurry, with people who promise not to protest the Board's choice of CEO; it will be amazing if that takes less than ten weeks, during which time the Company will continue to lose about $70 million every week. That would gobble up a full year's net profit in less than a month, and therefore slash its value in any sale. Further, it would do nothing to satisfy the other >24,000 employees who would, then, make up a disgruntled work force. Again, unattractive to any buyer. But sometimes, hatred trumps rational self-interest.

Market Basket was not broken, so should not have been fixed. The fact that the Arthur S faction went ahead and fixed it anyway means its actions were not based on reason but on the basis of a silly family squabble; that its unstated motto was "It's not business. It's just personal." If a company acts in such an irrational way in the coming ZGS, it will suffer consequences in the marketplace. That's the way it ought to be.

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