WBUR

Market Basket CEOs Give Protesting Workers ‘Final’ Warning

BOSTON — Market Basket is giving what it calls a “final” warning to the hundreds of employees who’ve walked off the job to protest the firing of former CEO Arthur T. Demoulas.

Letters have gone out to a number of administrative, warehouse and distribution workers, warning that they’ll be fired if they don’t return to work by Friday.

Protest organizers say 700 workers received the letter, but a statement from a company spokesperson cited a smaller number.

“Approximately 200 associates who work at headquarters and the distribution centers have failed to report to work, despite several company communications requesting they do so,” the statement read. “The company has not taken any action in response to their absence, but is left with no choice but to make this last request.”

Signed by the company CEOs, the letter sent to employees says if they don’t return to their jobs, the company will consider those jobs abandoned, thereby ending employment.

The company has issued repeated warnings to protesting employees, but says this one will be the last.

Reaction from workers has been mixed. Some consider it just another deadline. But others say this may be their last chance to return without consequences.

Please follow our community rules when engaging in comment discussion on wbur.org.
  • X-Ray

    Maybe those running the company shoud take a lesson from the workers: you running it into the ground; stop it.

  • ex-Democrat

    If they keep this up, they’re going to picketing in the unemployment line.

    • bob

      No they won’t. You can’t collect if you abandon your job.

      • disqus_610343

        If u show up and there are no customers. Then what? If you show up and are then turned away. Then what?
        Is that abandonment? You seriously think they will fire 25,000. That will never happen. The company would have to fold

  • KeithP

    Who is John Galt?
    Stay strong.

    • Argle_Bargle

      Who is Jim Gooch?
      Business cancer.

  • Ryan Hopkins

    Workers should report back on Friday… and then maybe the CEO’s will finally see that it isn’t just their employees that are refusing to come back.

    • Argle_Bargle

      I see what you did there. Very nice.

    • drowsy1234

      exactly…..#youcantfirecustomerswequit

  • Mike

    Some numbers to think about…
    Personally, this crisis does not seem to me like it would increase prices if ATD returns. Remember, even if they only got a 1% profit (which some comments suggest) on $4B sales that’s $40 Million a year. If the 4% discount ends and they go back to a 5% or more margin then that’s $200 Million within a year. On top of this MB owns much of the real estate (IE they collect rent from commercial tenants) and they have other businesses even a country club that they own. Suppliers will typically extend credit, because they want their products to be sold. Plus the whole point of this model is that there has been loyalty and long lasting relationships with suppliers since MB gives them steady business.

    ATD is only buying half the company at roughly $1.75B (this uses the estimated value of the company at $3.5B as some articles suggest), if you look at pretty standard commercial financing terms of 20 years at about 4.5% that’s roughly $133 million a year in payments some of which is tax deductible interest.

    Keep in mind that this assumes ATDs family is putting none of their own money in, financing 100% of the 50.5% stake that they are buying. Interest rates are very low and if a bank wouldn’t lend the money then they could issue bonds. Some shorter term bonds would be much less than 4.5%. The states of MA and NH could also issue municipal bonds if they considered this business vital to the local economy. They do this with airports, colleges, and capital intensive projects. Heck, if he really wanted to ATD could even issue some stock shares and let employees and customers help him buy ASD out.

    So breaking it down this way, instead of making roughly $100 million a year with about half the company, using the 4.5% example above they would make about $67 million a year before tax deductions. Or roughly the same profit but own the whole company until it’s paid off after tax.

    The key to remember here is that MB is not limited to $4B in sales a year (or 5% profit). In 2008 sales were around $3B a year. So if they grew sales to $5B with 5% margins then profits would be about $250 million a year and the payments on debt would still be only $133 million. Now ATDs side makes $118 million before deductions, or at $6B they make $167 million a year. The key to this is to grow MB even more. Build a few mega stores in a densely populated state like RI and they would crush S &S there and make plenty of profit to keep some for shareholders, keep prices low, and treat employees right while easily covering payments.

    The only thing I can thing of holding the whole deal up is either that ASD is asking ATD to use personal assets as collateral beyond just the business. Or they want a much higher interest rate, no ability to pre-pay or re-finance the debt without a penalty, or a term shorter than 20 years. Only other possibility is that ATD is just very risk averse.

    Even if the terms aren’t great for financing just buy the company and re-finance the debt later.

    Heck, I’d love to buy MB stock but I doubt that I’d ever get a chance to own Some of the equity. I worked at MB part-time for 4 years in HS and college, I’ve shopped there since I was a kid and I love the lower prices. I can’t wait for everything to get back to normal.

  • Argle_Bargle

    Market Basket crisis goes international with feature in The Guardian:
    http://www.theguardian.com/money/2014/aug/14/market-basket-arthur-millions-investing-protests

    I wasn’t aware of the Fanny/Freddy investment, which was boneheaded for a handful of reasons, but it doesn’t change much on the ground, also for several reasons. The Guardian’s “intern business reporter” uses poor judgment in seeing an “imploding” company: 2010 figures show $3.0bn in sales. A blunder with the employees’ retirement plan had exactly zero impact on sales and could have been repaired in due course, as was the case for many after the skullduggery that caused the 2008 crash.

Most Popular