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Friday, August 29, 2014

After victory, what’s next for Market Basket

Telegraph Editorial

The decades-long Demoulas family feud over control of the Market Basket grocery store chain is over. For thousands of employees and customers affected by the de facto closing of more than 70 stores in New Hampshire and Maine, the good guys won.

For years, cousins Arthur T. Demoulas and Arthur S. Demoulas fought for control of the company. Arthur S. appeared to win earlier this year when he gained control of the board of directors and ousted Arthur T. as CEO. ...

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The decades-long Demoulas family feud over control of the Market Basket grocery store chain is over. For thousands of employees and customers affected by the de facto closing of more than 70 stores in New Hampshire and Maine, the good guys won.

For years, cousins Arthur T. Demoulas and Arthur S. Demoulas fought for control of the company. Arthur S. appeared to win earlier this year when he gained control of the board of directors and ousted Arthur T. as CEO.

That act set in motion a series of events that will be studied for years to come as one of the most amazing labor-management confrontations in U.S. history. The country has never witnessed anything quite like it before and is unlikely to see anything like it again.

With Arthur T. booted out, hundreds of crucial Market Basket workers walked out, demanding his reinstatement. They refused to deliver products from the company’s warehouses to the stores. They hung pictures of Arthur T. in store windows and stood along streets with “Save Market Basket” signs. They urged drivers to honk in solidarity as they drove by. They organized protests where thousands of people rallied at company headquarters and demanded, “Bring back Artie T.”

The breadth and depth of workers’ commitment to Arthur T. caught company management off-guard, and the newly installed executives appeared perplexed and paralyzed over what to do. At least three times they instructed employees to go back to work or face termination. Each time, their directive was ignored without consequences.

Management’s incompetence further emboldened employees and prompted politicians to take up Arthur T.’s cause. For his part, Artie T. skillfully allowed workers to do his bidding; they painted him as someone just slightly less than a second coming of Mahatma Gandhi. In the public relations war, management didn’t have a chance, or a clue. On one side was the benevolent patriarch committed to the well-being of his workers and to providing high-quality products to customers at reasonable prices. On the other side was a bunch of money-grubbing, tin-eared, mean-spirited plutocrats.

At least that was the narrative.

In the end, it came down to the simple fact that management could not get products on store shelves. Never-ending photographs of empty produce and meat aisles kept many shoppers away. Other loyal Market Basket customers boycotted the stores in support of workers. Parking lots that were once packed became asphalt deserts, and bustling stores were ghost towns. With the business hemorrhaging tens of millions of dollars a week, management was left with the choice of buckling under or going under.

The answer came Wednesday night, when the company announced it had accepted Arthur T.’s $1.5 billion bid to buy out the rival family faction. Arthur T. and his management team are now in charge of daily operations and the dethroned management will stay on until the deal is closed – a process that is likely to take several months.

The big question now is how long will it take Market Basket to return to normal, and what will that normal be? Not only does the company face enormous economic challenges caused by six-plus weeks of virtually no cash flow and a long list of unpaid suppliers and other vendors, but it’s now a company saddled with $1.5 billion in debt.

For all his compassion, Arthur T. is also known as guy who doesn’t like to take orders. As Amy Schmidt, Economics and Business Department chair at Saint Anselm College, observed, “Now he’s going to have to answer to his creditors. He’s not used to having to deal with that.”

In all of this, one thing is certain: Market Basket employees have total faith in Arthur T.

Time will tell if they are right.