Monday, September 1, 2014

Is Worker Ownership a Way Forward?

By Gar Alperovittz - The Market Basket situation is indeed, as many commentators have remarked, nearly unprecedented in the annals of American labor relations: When have we ever seen so many workers protest so vigorously for, rather than against, their boss! (For those new to the story, the New England supermarket chain has been wracked by massive employee protests, organized without any union involvement, after a faction of the family that owns the chain took control and ousted extremely popular CEO Arthur T. Demoulas. The mobilization in support of the former chief executive has resulted in nearly empty shelves and the mobilization of angry communities of formerly happy customers.)

But beneath the surface of the singular job action, in which workers and community have banded together to demand the reinstatement of the former CEO, the conflict in New England points toward something much more fundamental: the need to build institutions that can sustain the kind of community- and worker-friendly business leadership that earned “good brother” Arthur T. such incredible loyalty.

Happily, such institutions already exist, here in the United States. While undoubtedly not perfect as a form of workplace democracy, the Employee Stock Ownership Plan (ESOP) offers a proven template for making the interest workers have in a thriving business part of the discussions about a company’s future. As Market Basket demonstrates, lovable CEOs who treat their workers well are wonderful – until someone else takes their place. With millions of Boomer bosses set to retire in the coming years, a transition to employee ownership – with the attendant tax breaks it offers to business owners – is an attractive and sensible option that allows a culture of community and sense of mission to outlast changes in the person sitting in the chief executive’s chair. And selling to your employees doesn’t mean immediately handing over the reins: As examples like the employee-owned brewery New Belgium or the publishing house Chelsea Green show, a transition to employee ownership can keep the leadership that built a company’s culture in place, while simultaneously laying the groundwork to maintain that culture for the long haul by rooting ownership in the company itself.

Interestingly, regional supermarket chains like Market Basket seem particularly well suited for this kind of democratized ownership: The National Center For Employee Ownership estimates that at least 300,000 American supermarket workers are also owners of their workplaces. Take Boise-based WinCo Foods, for instance: Its nearly 15,000 employee-owners enjoy generous health-care benefits, high wages and a large stake in the company as retirement savings, with the company itself able to operate so effectively and efficiently that it beats Walmart on prices – something much appreciated by the communities the business serves. On the leading edge of food cooperative development, such mutually beneficial relationships between fairly treated workers and satisfied communities of consumers are being taken a step further and made explicit in so-called “multi-stakeholder cooperatives,” like Weaver Street Market in North Carolina, where 185 workers and 18,000 consumers democratically co-own a chain of groceries with more than $30 million in annual sales.

With approximately 6 million more worker-owners than private-sector union members in the United States today, this kind of democratized ownership is not a marginal or niche approach. While unions are an excellent tool to protect workers from the abuses of bad bosses, it’s less clear how well-suited they are to protecting good bosses from the abuses of stock owners with no long term stake in the future of the community. Indeed, many unions seem to be recognizing that they need to be ready to help workers on both fronts: UFCW, for instance, recently negotiated the conversion of the Homeland grocery stores in Texas and Oklahoma to 100 percent employee ownership, with a significant seat at the table for the company’s 15,000 employees in the management of the business and with the union’s involvement guaranteeing that the deal was a good one for the workers. If such democratized ownership and workplace co-determination is possible in some of the reddest of the red states, surely it’s possible in New England!

Ultimately, whether or not an ESOP conversion makes sense in the current no-holds-barred battle raging around Market Basket is difficult to say from a distance – the situation may have changed significantly before this piece even appears. But there can be no doubt that in the long term, an employee-owned company would provide a much better solution for the workers and larger community than the current mess.

—> Gar Alperovitz has had a distinguished career as a historian, political economist, activist, writer, and government official. He is currently the Lionel R. Bauman Professor of Political Economy at the University of Maryland and is a former Fellow of Kings College, Cambridge University; Harvard’s Institute of Politics; the Institute for Policy Studies; and a Guest Scholar at the Brookings Institution.


In 1916, Greek immigrants Athanasios (“Arthur”) and Efrosini Demoulas opened a grocery store in Lowell, Massachusetts, specializing in fresh lamb. In 1954, they sold their store to two of their six children, Telemachus (“Mike”) and George Demoulas. Within 15 years, the two brothers had transformed their parents’ “mom and pop”-style store into a more modern supermarket chain consisting of 15 stores.

George Demoulas died of a heart attack in 1971 while vacationing in Greece, making Mike the sole head of the DeMoulas supermarket chain. Although each brother had promised to provide for the other’s family in the event of his death, a lawsuit filed in 1990 by the heirs of George Demoulas claimed that Mike had defrauded them out of all but 8% of company stock by moving assets into shell companies, such as ‘Market Basket Inc.’ and ‘Seabrook Sales Inc.’ and claiming that these were separate companies from DeMoulas itself. The ensuing legal cases threatened to require the sale of the chain, most likely to Royal Ahold’s Stop & Shop. In 1994, Judge Maria Lopez ruled that Mike Demoulas had defrauded George’s family out of nearly $500 million, transferring 51% of Demoulas’ stock to George’s family.

Mike Demoulas died in 2003 at age 82 and is buried in Andover, Massachusetts. In March 2006, Boston Magazine rated George’s son, Arthur S. Demoulas, as Boston’s eighth wealthiest person, with assets of $1.6 billion. He was not listed in the Forbes 2008 edition. In early 2008, the board of directors elected Arthur T. Demoulas president of the corporation.

A separate company controlled by the Mike DeMoulas side of the family operated the Lee Drug chain from 1983 until it was sold to Walgreens in 1990; these stores were usually located in the same shopping center as a DeMoulas/Market Basket. The chain’s corporate relationship to Mike DeMoulas’s family interest in DeMoulas/Market Basket was cited in the 1990s litigation.

Market Basket today

Though the chain is often called DeMoulas, all of its stores now operate under the Market Basket name (the last of which, No. 6 in Salem, New Hampshire changed in spring 2010). Market Basket supermarkets are usually in shopping centers with other stores, often properties owned by the company through its real-estate arm, Retail Management and Development, Inc. Only two stores in the chain’s history—number 38, in Plaistow, New Hampshire (there were two in Plaistow, NH that were close to each other on Route 125. Now there’s one) and number 11 in Andover, Massachusetts—have ever closed, although stores have closed in order to relocate to larger locations.

Modern improvements

Market Basket has started adding Market’s Kitchen to some of its existing stores and most of its new stores. Market’s Kitchen offers submarine sandwiches, panini, rotisserie chickens, salads, and fried foods, as well as pre-made family-style meals. Many new stores also feature a dedicated seafood department that makes fresh sushi daily. Self checkouts do not exist in any store.
Unlike other grocery store chains in New England, Market Basket typically does not feature pharmacies within its stores, although in many cases, pharmacy chains such as Rite Aid are located in shopping plazas adjoining Market Basket stores.

New stores

Throughout the past five years, Market Basket has been opening about four or five new stores annually, while re-locating some stores to newly constructed or renovated buildings.

In April 2008, with the opening of then its newest store in Reading, MA (#60) Market Basket has invested in opening 5 New locations, is in the process of building new stores to replace smaller , older, and outdated stores and it has also renovated and updated equipment in stores that where built within the last 15 years.

On June 10, 2009, Market Basket replaced its Chelsea, Massachusetts, store with a new building built on part of the DeMoulas-owned Mystic Mall. The New Bedford, Massachusetts (#65) store had its grand opening on Wednesday, October 6, 2010. On December 12, 2010, next door to their previous store, the Burlington, Massachusetts (#24) Market Basket opened their new store, 3 times the size of their previous store. The 108,000-square-foot (10,000 m2) brand new Londonderry, New Hampshire (#42) Market Basket celebrated its grand opening on June 5, 2011.

On June 26, 2011, a new building opened for store No. 2 Lowell, Massachusetts on Bridge Street and is the 3rd Market Basket to have been built on that site.

Hooksett, New Hampshire (#66) celebrated its grand opening on September 21, 2011.

On April 24th, 2012, Market Basket celebrated the grand opening of its newest store in Manchester, New Hampshire (#67),

On March 25, 2012, Haverhill, Massachusetts (#9) moved to a newly-constructed building, closing its former location.

New buildings are currently under construction in Bourne, Massachusetts.  Bedford, New Hampshire planned opening in the fall of 2013,  Brockton, Massachusetts,West Bridgewater, Massachusetts, and Hudson, Massachusetts  are future locations currently planned to be constructed in 2012.

While Market Basket has stores near the borders of Rhode Island, Vermont, and Maine, no expansion into these states has yet been announced.

From about 1990 through late August 2014, the company was the center of a controversy over ownership and leadership, which culminated in protests receiving international media attention. On August 27, 2014, an agreement was reached between its feuding owners to sell the 50.5% stake of the company owned by the family of Arthur S. Demoulas to his cousin Arthur T. Demoulas for $1.5 billion.

Market Basket in Texas and Louisiana not affiliated with stores in New England

(PR) - The Market Basket name has appeared in recent news reports both locally and national regarding turmoil within the management chain of stores located in New England. However, none of these stories relate to the Texas or Louisiana Market Basket stores. “We have fielded numerous questions on social media as well as through email, and we believe it is important to clear up any confusion,” states Chuck Barbee, Director of Advertising.

DeMoulas Market Baskets are located in Massachusetts and New Hampshire, and are owned by the Demoulas family. Recently, there has been internal discord at the senior leadership level. The coverage of this has led to some questions regarding which Market Baskets it relates to.

Market Baskets in Texas and Louisiana remain independently-owned by the Thompson family. “Family is important to us at Market Basket, and we consider our associates and customers part of our extended family,” states Skylar Thompson, President. “I’m saddened to hear about the strife within the DeMoulas family and hope they are able to reach a speedy resolution for the sake of their associates and customers.”

Since 1995 the Thompson family has the official registered trademark of the name Market Basket. Only Texas and Louisiana stores owned by the Thompson family are permitted to use the registered trademark symbol with the Market Basket name.

Our goal in Market Basket stores in Southeast Texas, Southwest Louisiana and West Central Louisiana is to provide an extraordinary food shopping experience to our valued customers with the highest standards of freshness, cleanliness, convenience, quality, variety and service beyond expectations. We strive every day to improve and enhance the quality of life in the communities we serve. It’s Who We Are.

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