Why America's First National Supermarket Chain Just Filed For Bankruptcy, Again

Tyler Durden's picture

Back in December 2010, we were "stunned" when we learned that in a what was a clear case of a supermarket chain unable to pass through costs to consumers, the Great Atlantic & Pacific Company ("Great Atlantic", "A&P" or the "Debtors"), which in 1936 became the first national supermarket chain in the US, would file for bankruptcy adding that "it is ironic that instead of passing through costs supermarkets are instead opting out to default". Although perhaps even back then it was clear to A&P that the capacity of US consumer to shoulder higher prices is far worse than what the mainstream media would lead everyone to believe.

Fast forward to last night, when less than five years after its first Chapter 11 filing (and three years after emerging from a bankruptcy in March 2012 as a privately-held company part owned by Ron Burkle's Yucaipa with a clean balance sheet including $490 million in new debt and equity financing), overnight Great Atlantic, which controls such supermarket brand names as A&P, Waldbaum’s, SuperFresh, Pathmark, Food Basics, The Food Emporium, Best Cellars, and A&P Liquors - filed for repeat bankruptcy, or as it is better known in restructuring folklore, Chapter 22.

So what happened in the intervening 5 years that caused the company which employes 28,500 workers (93% of whom are members of one of twelve local unions and who are employed by A&P under some 35 separate collective bargaining agreements) to deteriorate so badly that it burned through all of its post (first) petition cash and redefault?

In one word: unions.

 Because just like in the case of comparable Chapter 22 (and subsequently liquidation) case of Twinkies maker Hostess, so A&P is blaming the unwillingness of its biggest cost center, its employees, to negotiate their way out of what will be an event in which at least half the company's employees will be laid off.

Here is the full story, as narrated by Christopher W. McGarry, Great Atlantic's Chief Restructuring Officer:

[Great Atlantic is] one of the nation’s oldest leading supermarket and food retailers, operating approximately 300 supermarkets, beer, wine, and liquor stores, combination food and drug stores, and limited assortment food stores across six Northeastern states. The Debtors’ primary retail operations consist of supermarkets operated under a variety of wellknown trade names, or “banners,” including A&P, Waldbaum’s, SuperFresh, Pathmark, Food Basics, The Food Emporium, Best Cellars, and A&P Liquors. The Debtors currently employ approximately 28,500 employees, over 90% of whom are members of one of twelve local unions whose members are employed by the Debtors under the authority of 35 separate collective bargaining agreements (collectively, the “CBAs”). As of February 28, 2015, the Debtors reported total assets of approximately $1.6 billion and total liabilities of approximately $2.3 billion.

 

 

A&P was founded in 1859. By 1878, The Great Atlantic & Pacific Tea Company (A&P)—originally referred to as The Great American Tea Company—had grown to 70 stores. A&P introduced the nation’s first “supermarket”—a 28,125 square foot store in Braddock, Pennsylvania—in 1936 and, by the 1940s, operated at nearly 16,000 locations. The Tengelmann Group of West Germany’s purchase A&P in 1979 precipitated an expansion effort that led to the acquisition of, among others, a number of Stop & Shops in New Jersey, the Kohl’s chain in Wisconsin, and Shopwell. Due to a series of operational and financial obstacles, including high labor costs and fast-changing trends within the grocery industry, by 2006 A&P had reduced its footprint to just over 400.

 

In 2008, A&P acquired its largest competitor, Pathmark Stores, Inc., in an effort to continue expanding its brand portfolio and, in doing so, became the largest supermarket chain in the New York City area. A&P continued to experience significant liquidity pressures on account of burdensome supplier contracts, overwhelming labor costs, and other significant legacy obligations. Moreover, A&P had become highly leveraged and was unable to operate as a profitable company.

Did we mention this is the second Great Atlantic bankruptcy in under five years? Yes, we did.

This is the Debtors’ second bankruptcy in just five years. A&P previously filed the 2010 Cases seeking to achieve an operational and financial restructuring. The 2010 Cases were difficult and challenging. Unfortunately, despite best efforts and the infusion of more than $500 million in new capital in the 2010 Cases, A&P did not achieve nearly as much as was needed to turn around its business and sustain profitability. For example, during the 2010 Cases, A&P decided against closing approximately 50-60 underperforming stores in their supermarket portfolio in favor of preserving the jobs in those stores. Instead, A&P pursued a financial restructuring and negotiated a reduction in labor and vendor costs to attempt to return these stores to profitability. Those efforts have failed. Similarly, A&P did not seek to address its multi-employer pension and certain other significant legacy obligations. These obligations have been a drain on the Company for the entire post-emergence period. From February 2014 through February 2015, A&P lost more than $300 million.

Which was more than half of the total exit funding Great Atlantic obtained as part of its first bankruptcy process.  And now comes the blame:

In addition to their weak performance, the Debtors’ businesses remain plagued by other limitations that have prevented them from operating in an efficient and profitable manner. Among other things, most of the Debtors’ CBAs contain “bumping” provisions that require A&P to conduct layoffs by seniority, i.e., by terminating junior union members before more senior members. Bumping provisions also have an inter-store component: upon the closing of a store, terminated union employees are permitted to take the job of a more junior employee at another store (resulting in the most junior employee at that store losing his or her job). As a result, the closing of one store results in increased salaries—the same high salaries that may have in part precipitated the store closing—being transferred to another (possibly profitable) store. In fact, the Debtors have continued to operate certain stores that regularly operate at a loss because continuing to operate such stores at a loss is less costly to A&P than the bumping costs (combined with other “legacy” costs) that would be triggered by closing such stores.

It's not just the unions: A&P takes at least some blame for being unable to properly invest CapEx into growth, instead squandering its cash on unresolved cash drains: look for this excuse to be prevalents during the mass bankruptcies to follow in the next few years when hundreds of companies which are buying back stock now will lament loudly they did not invest in their own future instead.

The Debtors’ deteriorating financial condition has also been compounded by the fact that, since emerging from the 2010 Cases, their unsustainable cost structure has prevented them from investing sufficiently in their businesses at a pivotal time in the competitive grocery industry, when their peers were investing heavily in new stores and existing store remodels, robust pricing initiatives, and were introducing technological advances and other initiatives to customize and improve the consumer experience. For example, under its plan of reorganization in the 2010 Cases, A&P was projected to invest over $500 million in capital improvements during the ensuing 5-year period. Since emergence, due to insufficient capital and declining operations, among other things, the Debtors have been able to deploy capex at scarcely more than half that rate. As a result, many of the Debtors’ stores have remained outdated and/or underinvested, making it difficult to attract and retain new customers during a crucial time of rebranding and rebuilding

And then, once the market realized A&P was in dire straits, it didn't take long for the "JCPenney effect" to materialize and for suppliers to tighten vendor terms, draining the company of even more cash:

In addition to the historical pressures on their liquidity, as news of the Debtors’ continued financial challenges recently began to permeate throughout the market, a number of the Debtors’ suppliers and vendors began contacting management and demanding changes in payment and credit terms. Certain of the Debtors’ vendors have negotiated reduction in trade terms while others have demanded that the Debtors pay cash in advance as a condition for further deliveries. Although the Debtors have been working diligently with their advisors to resolve open vendor issues and avoid supply chain interruption, the actions taken by these vendors have further diminished the Debtors’ cash position by approximately $24 million in the weeks prior to the Commencement Date. Furthermore, on July 14, 2015, C&S Wholesale Grocers, Inc. (“C&S”) – the Debtors’ primary supplier of approximately 65% of all goods – issued a notice of default for non-payment of the $17 million deferred paymen.

The end result of this escalation of bad management decision and intransigent labor unions: "cash burn rates averaging $14.5 million during the first four periods of Fiscal Year 2015"  which gave the company no choice but "to commence these Chapter 11 Cases as the only viable alternative to avoid a fire sale liquidation of the company."

But why not try to do what the company tried in 2010 with its first bankruptcy, and get it right this time? Here is what happened the last time A&P bet on a post-bankruptcy existence:

Upon emergence from the 2010 Cases, the Debtors had $93.3 million of cash on their balance sheet and were prepared to invest in the growth of their business. In an effort to distance their businesses from the specter of bankruptcy, the Debtors designed and implemented an integrated marketing campaign intended to show customers that they had successfully emerged from bankruptcy and were prepared to move forward by offering highquality, localized products and enhanced services. The campaign entailed temporary price reductions and promotional advertising of the same through print, television, and radio. The Debtors’ investments did not, however, achieve the desired returns. Although the Debtors’ strategy drew more customers to their stores, such efforts were at the expense of margin income and the Debtors were not building productive, long-lasting relationships with their customers.

 

The Debtors’ thwarted attempts to attract and retain a new customer base compounded with their lingering legacy obligations drove down sales throughout many of their stores and negatively impacted their bottom line. During the first six months of fiscal year 2012, the Debtors were losing approximately $28 million per month. In an effort to turnaround their businesses, the Debtors’ management team launched a business strategy intended to restore stability and offset increasing post-restructuring liquidity pressures by scaling back the temporary price reductions they had implemented in certain of their stores because such reductions were showing diminishing marginal returns, setting up better controls over cash management, and monetizing a number of their real estate assets. Over a period of six to ten months, the Debtors generated over $200 million in asset sales, including sale leasebacks, while only relinquishing a handful of stores. The proceeds from these sales were used largely to pay down debt, while also giving the businesses with a slim liquidity buffer.

 

The Debtors’ business strategy showed signs of success and, by the end of fiscal year 2013, the Debtors had $192 million in cash, EBITDA was in the range of $121 million, and four-wall EBITDA was approximately $228 million. Still, due to the increasing competitive nature of the industry, during the same year, sales were down by 7.6% when compared to the prior year.

And this was during a period when the US economy was allegedly growing like gangbusters. Still, Yucaipa did not enjoy the prospect of losing its entire investment and pushed the company to sell itself. That did not work out:

After stabilizing their businesses during fiscal year 2013, the Debtors’ private equity owners began to evaluate potential strategic alternatives and, in Spring 2013, the Debtors retained Credit Suisse AG (“Credit Suisse”) to review such alternatives, including a possible going concern sale of the company. Credit Suisse initiated contact with a number of potential buyers and financial sponsors and marketed an equity-based sale of the company. Although the Credit Suisse marketing process garnered meaningful interest in the Debtors’ assets, the Debtors did not receive a viable offer for the stock of the company. The Debtors and their advisors ultimately determined that selling assets in smaller or one-off sales was not the best way to maximize recoveries and protect the interest of stakeholders, including their thousands of employees. Accordingly, plans to sell the Debtors’ businesses were placed in a state of suspension.

Right, they were concerned about the thousands of employees, sure.

In any event, then came the endgame, right at a time when the US recovery had never been stronger if one listens to the propaganda media:

The Debtors continued to suffer declining revenues. The Debtors showed a net loss of $305 million in Fiscal Year 2014, compared with a net loss of $68 million in Fiscal Year 2013. The Debtors generated a negative EBIT of -1.9% of sales or $105 million in Fiscal Year 2014, compared to a positive EBIT of 1.1% of sales, or $62 million, in Fiscal Year 2013. In 2014, the Debtors experienced a sales decline of approximately 6% when compared with 2013, and the trend continued into 2015.

 

The Debtors determined that they may continue to lose up to $10 to 12 million in cash per period during 2015. Additionally, the recent tightening of vendor terms has adversely affected working capital by approximately $24 million. Those situations  would make them unable to maintain sufficient liquidity to meet the minimum cash requirements during 2015. Based on preliminary projections, the Debtors expected EBITDA of approximately $40 to $50 million in the 52 weeks ending February 29, 2016 (“Fiscal Year 2015”). With maintenance capital expenditures (approximately $35 million), higher cash contributions for workers’ compensation payments than expense (approximately $17 million), pension contributions greater than the actuarially-calculated book expenses (approximately $17 million), the tightening of accounts payables terms (approximately $24 million) and an eroding sales base, the company projected it would be unable to satisfy the $38 million in interest and principal due during Fiscal Year 2015.

So here is the CRO's summary of the two key factors that precipitated Great Atlantic's second, and final, bankruptcy. Chief among them: labor unions:

  • Inflexible Collective Bargaining Agreements [aka Unions]. In addition to mandating direct labor costs, the CBAs contain a variety of different work rules that have functioned to hamstring the Debtors’ operations. For example, as stated above, most of the CBAs contain “bumping” provisions that require the Debtors to hire employees from a closed store  location at a different nearby store and replace less senior employees at such store. Because any healthy store in close proximity to a store that is closing must take on the increased costs of retaining more senior level employees, “bumping” costs make it difficult and, in some cases, financially impractical, to close unprofitable stores notwithstanding that such stores continue to strain the Debtors’ balance sheet. For instance, one of the Debtors’ stores in Hackensack, New Jersey loses approximately $4 million per year but, under the applicable CBA, closing that store would require the Debtors to “bump” certain senior employees to a number of nearby stores— increasing labor costs by around $1.5 million per year. Preliminary analysis conducted by the Debtors’ advisors indicates that closing Initial Closing Stores alone could generate bumping costs as high as almost $14.8 million—making it more efficient to keep these stores open, absent relief from such provisions pursuant to the MA& Strategy.
  • Crippling Legacy Costs. Historically, the Debtors’ legacy costs have not been aligned with the operating reality of their  businesses. The Debtor’ labor-related costs make up 17.75% of sales while the total merchandising income before any warehousing/transportation and operating expenses is 35.48% of sales.

And then there was the usual red herring excuse:

  • Competitive Industry. The Debtors also continue to face competitive pressure within the supermarket industry. For the reasons set forth herein, upon emerging from the 2010 Cases, the Debtors had a diminished capacity to invest in long-term  capital projects. Thus, as the Debtors’ competitors realized new technology platforms, remodeled and enhanced their stores, and implemented localization strategies geared toward tailoring each store to specific neighborhood needs, the Debtors have not been able to invest in creating an operational distinction between their various “banners” and tailor stores to customer needs.

Which brings us to what happens next to Great Atlantic, which instead of simply throwing more good money after bad and hoping for a different outcome this time, is filing bankruptcy to break all existing labor union collective bargaining agreements (CBAs). Briefly, the company had conducted a pre-petition asset sale process and found that the best it can do is find buyers for just 120 stores, which employ 12,500 employees, for an aggregate purchase price of almost $600 million as part of a Stalking Horse process.

In other words, one failed acquisition and one failed bankruptcy later, A&P is about to go from 300 supermarkets to at most 120, and over 15,000 workers or well over half of the work force is about to be laid off.

The irony is that if it wasn't for unions, it would be something else, like loading up on massive amounts of debt to repay Yucaipa's equity investment, which would then be unsustainable once rates rose and once interest expense became so high it soaked up all the company's cash flow (a harbinger of what is coming for the rest of US corporations who have rushed to issued trillions in debt just to pay their shareholders).

And, sure enough, the Union wasted no time in responding: The United Food and Commercial Workers Union, which represents A&P’s 30,000 employees, called on the company and any potential buyers to “do what is right” for the membership.

“As difficult as this bankruptcy process is, our message to A&P is a simple one. For the sake of the men and women of A&P, now is the time for A&P and any potential buyers to focus on doing what is right for our hard-working members and their families,” the union said.

 

“Our hard-working members are not just employees — they are the heart and soul of these stores. They are committed to their success and determined to make them even stronger. We look forward to working with any company that will do what is right by our members and their families.”

 

Addressing the members themselves, the union said, “We understand the uncertainty and concern that this bankruptcy announcement brings. We want our members and their families to know we are here to help in every way we can.”

 

The UFCW also said it expects A&P “to stay in business during this bankruptcy process and honor its responsibilities to its employees … The UFCW and UFCW local unions will work hard to ensure that the process for selling stores protects our members’ jobs, working conditions and benefits.

 

“We will also hold A&P to its commitments to involve UFCW in the sales process [and] protect union contracts and these good jobs.”

Good luck.

In conclusion, one can't help but wonder if current events that are taking place behind the non-GAAP facade of America's public companies, what is going on at A&P is far more indicative of the true state of the economy, an economy where due to both legacy constraints, bad management and, naturally, a deteriorating economy for all but the top 1%, the best that companies can do is support at most half their employees... after filing for bankruptcy of course.

Full A&P affidavit below

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Fukushima Fricassee's picture
Fukushima Fricassee (not verified) Jul 20, 2015 2:20 PM

Fuck all unions, they only benifit government and uqualified bastards , redundant.

Jumbotron's picture

Fuck the CEO past and present and middle management past and present.

You wouldn't need Unions if these cocksuckers took care of their employees.  They don't.  They didn't back in the day when unions were born.  They're SURE AS HELL are not now in the Fascistic Crony Capitalist Age we are living in.

 

Not saying Unions are good.  But when you rub your dick long enough without lube, you're going to get a blister.  Natural course of events.  Unions are the natural consequence of Corrupt Crony Capitalism.  Always is, always will be.

Tyler Durden's picture

Here is a useful observation of unionized vs non-unionized wage growth:

And some thoughts from Crispin Odey:

"What is interesting is how differently private sector wages are growing in America for unionised labour forces and non-unionised.  This suggests that there is huge value in being in a union at the moment, and that non-union private sector workers in the US do not appreciate the negotiating leverage they have with companies. With unemployment falling almost every month at the moment, and currently sitting at 5.6%, there is a risk of a sharp catch-up in this ‘underpaid’ dynamic."

This explains why corporations can't wait to shed CBAs (even if this means filing bankruptcy) as these clearly prevent them from sending even more cash to controlling shareholders.

James_Cole's picture

The irony is that if it wasn't for unions, it would be something else, like loading up on massive amounts of debt to repay Yucaipa's equity investment, which would then be unsustainable once rates rose and once interest expense became so high it soaked up all the company's cash flow

Er.. that’s not irony. Inability to cover interest in the face of falling sales is literally the reason they are filing for bankruptcy, as the article makes plainly obvious.

In 2014, the Debtors experienced a sales decline of approximately 6% when compared with 2013, and the trend continued into 2015.
The Debtors determined that they may continue to lose up to $10 to 12 million in cash per period during 2015. Additionally, the recent tightening of vendor terms has adversely affected working capital by approximately $24 million. Those situations  would make them unable to maintain sufficient liquidity to meet the minimum cash requirements during 2015. Based on preliminary projections, the Debtors expected EBITDA of approximately $40 to $50 million in the 52 weeks ending February 29, 2016 (“Fiscal Year 2015”). With maintenance capital expenditures (approximately $35 million), higher cash contributions for workers’ compensation payments than expense (approximately $17 million), pension contributions greater than the actuarially-calculated book expenses (approximately $17 million), the tightening of accounts payables terms (approximately $24 million) and an eroding sales base, the company projected it would be unable to satisfy the $38 million in interest and principal due during Fiscal Year 2015.

Even without the evil union workers they wouldn't be able to continue to operate. Good excuse to get rid of the workforce though!

Publicus's picture

Union is the solution, the problem is the race to the bottom.

RaceToTheBottom's picture

Hey, only my wife can call me the problem

mophead's picture

It's the unions - It's the CEOs - No wait, it's the Mexicans!

Hilarious shit. Guess what, I've read every comment (now 3 pages) and no one has mentioned INFLATION. Not being able to pass higher prices onto the customer (stated in the article) and the Union's unwillingness to accept lower wages is more than likely what did it.

Thousands of Union workers losing their jobs? You can thank the Federal Reserve and Keynesian Economics. Long live The Bernanke!

James_Cole's picture

Thousands of Union workers losing their jobs? You can thank the Federal Reserve and Keynesian Economics. Long live The Bernanke!

Fool me once..

FROM 2010:

http://blogs.wsj.com/deals/2010/12/13/everything-you-need-to-know-about-...

$1.4 billion

The amount A&P paid to buy 141 Pathmark stores in late 2007. That deal, for which A&P took on $475 million in debt, proved to be the beginning of the end for a solvent company.

It listed assets of $2.5 billion and debt of $3.2 billion yesterday in a Chapter 11 filing in U.S. Bankruptcy Court in White Plains, New York.

73

The number of “dark store” leases –- shuttered store locations that A&P hasn’t  been able to sublease -– that the company is trying to dump as part of the bankruptcy filing. The net rental expense for the dark stores is slated to be $77 million for 2011.

0%

The share of A&P’s goods provided by C&S Wholesale Grocers Inc. A&P’s inability to negotiate pricing concessions from C&S played a role in its decision to file for Chapter 11 protection, according to a person familiar with the situation.

http://www.bloomberg.com/news/articles/2010-12-12/a-p-grocery-store-owne...

A bankruptcy is needed to bring costs into line with market reality and shed obligations that include $147 million in pension funding and more than $232 million in liabilities for leases the company doesn’t need and hasn’t been able to escape.

“The combination of falling revenues, a leveraged balance sheet, legacy costs, and unfavorable supply relationships could not be fixed outside of Chapter 11,” Brace said.

Union agreements, including pensions and health care obligations also put the company at a competitive disadvantage and “are unsustainable at existing levels,” he added.

A&P secured $800 million in debtor-in-possession financing from JPMorgan Chase & Co. and will have immediate access to a $187 million loan and $200 million in letters of credit, allowing it to keep stores open, according to the filing.

Buckaroo Banzai's picture

Gee whiz, which is it?? Corrupt union leadership? Or greedy, self-interested management?? I'm so confused.

Oh wait. I'm not confused. THEY BOTH WORK HAND IN HAND TO LOOT THE COMPANY, AND BUST IT OUT. Leaving shareholders, bond holders, and employees holding the bag.

Leopold B. Scotch's picture

Crony capitalism benefits by limited labor options.  In that, the looting enabled, encouraged and participated in by the  government-bankster nexus and their crony partners is the problem and explains Tylers chart above where the non-unionized bear the brunt.  The Unionized are, however, party to the Crony looting, since whatever they gain is merely government enabled at the expense of both the consumer and the free flow of labor / quality employees being able to market their efforts to the higest bidder.

But this is such a multifaceted circle jerk of corruption I can understand how its easier to simply say unions are good and non-union gets screwed.  Reality is this is just a ton of Kubuki theatre attempting to appear more sophisticated than the dog-eat-dog desperation in Greece, where everyone trys to carve out their own corrupt piece of the pie since the system has pitted us all against eachother as the most elite of the elite confiscate massive amounts of wealth through their highest frauds.

 

Let's not forget, the fastest growing demographics of the 1% are in Washington D.C. followed by the hub communities of Wall Street.  Looting pays.   Massive looting pays massively. Indeed.

jerry_theking_lawler's picture

True, True. But you are still not to the 'root cause' yet....dig further.

I will tell you here, the root cause is a small elite group trying to control the world through .gov/.fed and other organizations. Get rid of this group and institute a truly small government and you will have growth beyond belief.

Super Hans's picture

You too? Oh, I forgot she is now gone and I get to keep the properties...

 

Sh

Chris88's picture

Please explain how a solution is an extortion racket whose primary goal is to restrict the supply of labor, which causes unemployment?  

James_Cole's picture

Revenue is driven by demand, employment follows revenue (hopefully).

Unions naturally have an incentive to increase the supply of labour, not diminish it. The more members they have, the more their members pull in = the more money they pull in.

Unionized rates:

https://richardbrenneman.files.wordpress.com/2011/01/blog-31-january-lab...

GDP:

https://upload.wikimedia.org/wikipedia/commons/1/10/US_GDP_per_capita.PNG

Employment to pop:

https://rwer.files.wordpress.com/2011/02/us-employment-to-population-rat...

Median income adjusted historical:

http://www.mybudget360.com/wp-content/uploads/2012/03/median-household-i...

Income strat:

https://figures.boundless.com/5852/raw/ncome-share-281913-2008-29.svg

But go on pretending the unions are causing these problems..

Oldwood's picture

"Unions naturally have an incentive to increase the supply of labour, not diminish it. The more members they have, the more their members pull in = the more money they pull in."

Exactly, which is why they resist innovation or work efficiency. You have obviously never worked in a union. They resist anything that actually gets the job done, for exactly your stated reasons....to increase the number of employees required to get the job done.

Granted there are lots of problems for this company to overcome and unions are one piece of it, but to somehow put a positive spin on the union motivations is laughable.

James_Cole's picture

Exactly, which is why they resist innovation or work efficiency. You have obviously have never worked in a union. They resist anything that actually gets the job done, for exactly your stated reasons....to increase the number of employees required to get the job done.

There are obvious pros and cons to workers unions, this would be a potential con, though there are ways to avoid such a potential problem. Germany makes great cars and are very efficient at doing this, yet the autoworkers are almost all unionized. How to square this circle? Unions are brought into the upper levels of corporate hierarchy.

A Chinese wall between management and labour ensures inefficiencies - unionized or not - a problem which seems to persist among much of corporate usa. When management functions as a blind dictatorship loaded up on OPM you get decisons like the above story or this one: https://en.wikipedia.org/wiki/Target_Canada

Good luck blaming unions for this clusterfuck of bad MBA ideas:

Unlike Walmart's entry to Canada with the acquisition of the Woolco stores in 1994, Zellers employees were not retained by Target nor Walmart, and they had to re-apply for their position to continue working in their same locations. Target Canada stated that former Zellers workers were guaranteed an interview though not a job, however the United Food and Commercial Workers of Canada complained that many Zellers employees were not hired including those with long years of service.

Target projected for its Canadian operations to bring in ten percent of its profits by 2017. However, experts suggested that it wanted too much and too quickly from Canadians, while underestimating domestic competition.

Target confirmed the list of its locations in July 2012. The chain finalized its 127 stores to open in 2013.Of this total, 125 were converted former Zellers stores

On January 15, 2015, Target Canada announced that it had filed for bankruptcy and that it would close all 133 of its Canadian stores.

The subsidiary was projected to only make a profit by 2021; by 2015, Target had lost $2.1 billion.

Oldwood's picture

Unionism goes hand in hand with socialism and socialism is a perfectly functional system, as most any system is, if adhered to voluntarily. This voluntary submission is dependent upon common goals which typically are much more acceptable if the population is fairly cohesive and non combative. What most of the world lives with and increasingly in these socialist havens, is changing and less than harmonious demographics. Unions can be successful with management when their goal is the success of the business because they all believe they will share in that success. The changing demographics are making that impossible. Unions and corporate masters alike care nothing of their businesses success and only their own....they will happily burn it to the ground to ensure their success. Multiracial, multicultural, multi everything creates an unfocused and largely self destructive society. We have African Americans opposed to Mexican Americans and they opposed the Asian Americans, Muslim Americans, homosexual Americans, all fighting for dominance. Each perception of winning is not in their own success but the loss or failure of another. They compete not to out perform but to diminish the others. Unions that are organized to advance themselves without regard to the costs to others are as destructive as the same thing done by a corporation. There is no conscience to any of their actions and at best they are based on personal greed but unfortunately many are simple revenge.

 

 

NoPension's picture

Dad usually worked for himself. He was about 42, and took a job at a company making electrical insulators. Those big ones you see on power lines.
One of the recurring jobs was to replace bearings in a screw auger. Multiple bearings up the line. It involved a chain over the steel rafters, a chain hoist, about 3 men, 8 hours to do two. Dad did this once. Then he disappeared for a whole day in the fully equipped machine shop, and custom built a jig with screw jacks. It allowed one man to replace a bearing in an hour, no debris falling from the rafters, and very safe.

He is lucky those fat fucking lazy bastard Union fucks did not kill him.

He quit, and that was the last time in a union shop.

Next week, I'll tell you about the flat rate mechanic that went to work for a local
government repair shop, union of course.

Fuck unions. Blackmail for dumb lazy fuckers.
Didn't star that way. The pendulum swings.

Leopold B. Scotch's picture

Crony capitalism benefits by limited labor options.  In that, the looting enabled, encouraged and participated in by the  government-bankster nexus and their crony partners is the problem and explains Tylers chart above where the non-unionized bear the brunt.  The Unionized are, however, party to the Crony looting, since whatever they gain is merely government enabled at the expense of both the consumer and the free flow of labor / quality employees being able to market their efforts to the higest bidder.

But this is such a multifaceted circle jerk of corruption I can understand how its easier to simply say unions are good and non-union gets screwed.  Reality is this is just a ton of Kubuki theatre attempting to appear more sophisticated than the dog-eat-dog desperation in Greece, where everyone trys to carve out their own corrupt piece of the pie since the system has pitted us all against eachother as the most elite of the elite confiscate massive amounts of wealth through their highest frauds.

 

Let's not forget, the fastest growing demographics of the 1% are in Washington D.C. followed by the hub communities of Wall Street.  Looting pays.   Massive looting pays massively.

 

BLOTTO's picture

Strength in numbers > Divide and Conquer

.

No?

Lost My Shorts's picture

The problem with both union haters and union worshipers is they tend not to consider the actual details of the union contract.  One side hates unions even if the contract is reasonable; the other worships unions as something divine even when their behavior is destructive.

In this case, if the union's worst offense is to protect jobs by seniority, it doesn't seem so bad. Everyone here hates immigrants and immigration, but when a union takes some steps to protect the jobs of middle-aged Americans, y'all hate that too.  The alternative is to continuously get rid of employees at mid-career and replace them with either newly graduated philosophy majors or cheap immigrants, legal or otherwise.

Also, I swear I read on ZH before about overcapacity in the retail sector.  Certainly it's true where I live -- new supermarkets constantly pop up down the street from old ones; frequent mergers between chains and firesales or closing of old locations; etc.  If there is over-capacity someone's gotta lose.  It might not mark a systemic problem if someone loses in a situation where someone's gotta lose.

Fukushima Fricassee's picture
Fukushima Fricassee (not verified) Lost My Shorts Jul 20, 2015 8:04 PM

I only hate unions that accept tax dollars extracted from me at gun point to bail them out. Yes correct any fucking union.

Oldwood's picture

I have no problem with collective bargaining. I do have a problem with anyone saying I must employ them and i must pay them the wage they demand. If I can't force them to work for me, they shouldn't be able to force me to employ them. Anyone has the right to ask or even demand anything they want from me and I should have the right to say NO. That's not the way it works though, is it? Instead, if their demands are not met they simply shut their employer down.

Privately held business can easily analyze their numbers and if they can't make the union demands work, they simply shut it down. No point is losing money. With corporations, those left with the decisions on contracts will not ultimately have to live with the results. they can create debt and hide the losses until they are long gone and then one day everyone wakes up, looks around and discovers they are toast.

Like what we see in taxpayer funded union jobs, those who accept these contracts seldom are the ones who have to pay the costs when they all come due. This is why entitlements have become so important as ALL of their costs fall into the future...someone else's future.

Jumbotron's picture

That graph Tyler only shows what the private sector should be getting for their work.  What pisses people off is the Unions get the fair wage.  The living wage.....if Crony Capitalism paid what it should.

But between illegal aliens and the Fascist Corp. / Gov. revolving door, not to mention Wage and Labor Arbitrage with China, the middle class gets screwed.

Are the Unions corrupt?  Damn straight and damn skippy.  Any more than Corp. / Gov. ?    HELL NO !!

Pick your poison.  But whose paycheck would you rather have now?

Dixie Flatline's picture
Dixie Flatline (not verified) Jumbotron Jul 20, 2015 3:42 PM

Fair wage?  Living wage?  Terms with meaning only to those who wield them as a cudgel for their own ends.

"Fair" is a word that should be abandoned past kindergarten.  Anyone who uses it past that stage of development should be punched full in the mouth.

Jumbotron's picture

Fuck you and your Ayn Rand bullshit. 

Fair is fair play.  Follow rules that are made in good conscience and fairly upheld for all.  Rule of Law.  But good Law.  Made by fair minded and good people.  Accountable people.

You and your law of the jungle.  No fairness.  No ethics.  No morality.  That breeds the Tyranny we have now.  Which reinforces your warped sense of thinking. 

Fuck you.  Live in the jungle then and die. 

Arnold's picture

I admit I would be lost in the EBT jungle.

Dixie Flatline's picture
Dixie Flatline (not verified) Jumbotron Jul 20, 2015 4:37 PM

There are no metrics to measure "fairness", it is a construct of your mind, yet YOU want to FORCE your idea of FAIRNESS on the rest of us.

What is happening right now in America is "Fairness" being forced on us by our philosopher kings, the self proclaimed ELITE.  You just think if you were in charge it would be BETTER.

Whatever.

Jumbotron's picture

Then you need to apply the same fix our forefather's did nearly 250 years ago.

But we're a nation of chickenshits.  More guns and more people than all of the services combined.  Yet we cower behind our keyboards on ZeroHedge and in the fucking voting booth.

Yeah....you're right asshole......WHATEVER.

Oldwood's picture

Fairness is the cause that drive all collectivists to demand redistribution. Unfortunately markets exist over any period of time so wages, fair or not that cannot be sustained by the market, fail. It probably appears a significant mystery that private union employment has been on a decline for decades....or is it just all of the evil business cronies. Look at small business. Very little cronyism there. How many of those are unionized? Ultimately the only industries with any amount of unionization are those who monopolize their markets, and even then, over any length of time they can't compete. The problem with unions is the same as the problem with big corporations and that is scale and corruption. Those playing one side or another of this game believe the answer is simply more power (which is the mother's milk of corruption) over their competition. If one notes, the one thing unions and large corporations strive for is NO competition. They have but one goal and that is monopoly, and unions are one of the few that are exempted from anti trust laws. When they get what they wish for it usually ends them.

Fukushima Fricassee's picture
Fukushima Fricassee (not verified) Dixie Flatline Jul 20, 2015 8:49 PM

Fairness , mother fucker is every man takes care of his own and the ones that cannot are supported by the church/community . Government does not help anyone,  government is responsible for billions of murders.

Chris88's picture

Jumbotron:

 

Everything you advocate involves sticking a gun in my face.  How about fuck you and your free shit mentality?  Hands out of my wallet, parasite.

Jumbotron's picture

What a fucking idiot.  NO, IT DOES NOT INVOLVE STICKING A GUN TO YOUR FACE.

It means sticking YOUR GUN and MY GUN and EVERYONE'S GUN IN THE FACES OF BOTH THE REPUBLICANS AND DEMOCRATS FACES WHO SOLD US DOWN THE RIVER BETWEEN THE FUCKING BANKERS, THEIR CRONY CEO FRIENDS AND THE FUCKING WAGE SLAVE LABOR OVERSEAS AND DOWN SOUTH IN COCAINE LAND !!!

 

What a fucking idiot you are.  CHRIST ALMIGHTY....YOUR FUCKING FOREFATHERS DID THAT NEARLY 250 YEARS SO YOU COULD BE FREE ENOUGHT TO SAY THAT STUPID SHIT  !!!

Fukushima Fricassee's picture
Fukushima Fricassee (not verified) Jumbotron Jul 20, 2015 8:14 PM

Get busy mother fucker.

Oldwood's picture

Like it or not, Americans have had a choice if they bought Sony or Magnavox and they chose Sony, and Magnavox was a union manufacturer. Americans voted to lose their jobs by buying foreign made goods and cheap imported illegal labor.

Sure, absolutely, our politicians and business owners made it an easy choice. But either we are stupid sheep that deserve being treated as such, or we take responsibility for our choices.

Very few are forced to borrow money for a new car or home (or just more crap), but we watch them all claim abuse when their debts are demanded to be paid.

So exactly WHO are you going to stick your gun in the face of??? The people doing stupid self destructive things are those who enable them, because there is a seemingly endless supply of both as history transparently illustrates.

James_Cole's picture

Very few are forced to borrow money for a new car or home (or just more crap), but we watch them all claim abuse when their debts are demanded to be paid.

Yes, but what about those who make poor choices in lending the money (profiting handsomely I should add)? Rarely hear about them! Yet, mysteriously when shit goes sideways the lenders tend to always get bailed out as a matter of course and soon after continue to issue credit just as recklessly as before.

Oldwood's picture

All bad choices will be reconciled. We have evolved law that provides certain rights to lenders and as they are loaning the money, its their rules to make. Those who borrow...or beg, naturally have much fewer rights than those who voluntarily lend. Bad choices have been made on all sides and while lending laws have become much more progressive (at least we don't have official debt servitude or debtor prison) lenders can't get blood from a stone and will take their losses. The problem is encapsulated in credit cards where those costs of loan default are levered upon debtors who do manage to pay their bills in the form of higher interest. To suggest that lenders take their losses makes as much sense as suggesting that government shortfalls onloy require higher taxes on the rich. As we are the customers, all costs will be borne by us. Lenders dont lose. The thing we should be concerned about is WHY there is so much debt, not about finding more humane ways of dealing with default. Doing so only ensures even more will find themselves in debt when we should be looking at fundamental causes for lousey jobs or none at all. We need self awareness, not more governance. We need to be informed of the risks and allow consequences provide a tactile education. Granting more power to elite to protect us like livestock will only produce more livestock...which suites the elite perfectly. It only reinforces their biases toward us that have been growing since their inception of social security when they publicly stated that only THEY could ensure our old age security as we were not CAPABLE. We either are or are not CAPABLE. If not then we should save our breath complaining about freedom. Cattle have none.

Bobbyrib's picture

I don't think people bought Sony over Magnavox necessarily because it was cheaper, Japanese companies in general make better electronics and automobiles. I would say people's preference to Honda or Toyota over Ford is because American cars are engineered like dogshit. Sony probably made better TV's.

The Japanese have an interesting culture. They will work themselves to death for the benefit of the company/country.

Oldwood's picture

So you buy shitty American products or lose your job.

I heard all of these arguments back in the seventies. Everybody screaming about job loss and how Japan was kicking our ass, while they went out and bought Toyotas. People actually working in US car plants buying imports. And then screaming like mad when their job was eliminated. Japan relied heavily on automation which enhanced quality and profits while America unions fought automation. Our actions have costs, and they always make sense in the short run. There is a reason why the devils contract comes payable at death and not at time of signing. People who want to live as though their choices have no longer term costs are committing suicide for themselves and their children. The road to hell is paved with good intentions and you will probably make the trip in a Toyota getting great mileage. Enjoy it while it lasts. The credit bubble that allowed our self destructive idiocy has all but come to an end.

Bobbyrib's picture

IMHO, even if they automated the American made cars process more the cars would still end up like shit because they are poorly designed.

garcam123's picture

I agree 1000% Civilization embraces  the concept of "fair".  It requires an understanding and an intent to do good in transactions with others through honesty.

Fairness has been raped, buttfucked, shit on and skewed by this trash that calls itself conservetive when, in fact they are, on the whole, menial, uneducated, lying, cheating bible-thumping, criminal  vermine slime that uses nice clothes and pretty words to hide their sickenning greed.

The American people hate your fucking guts Demopublican filth.  America needs a clean slate and to get rid of this scum that calls itself government. NO one drop of Honor there anymore.  No wonder the WORLD HATES US!  It's not really US they hate, it's you they hate along with the rest of freedom loving Americans.

You NSA should be dropped into a cess pool where you ALL FUCKING BELONG YOU STINKING PIECES OF SHIT! 

There needs to be, in my view, wholesale arrest of the US CONgress and charges of treason when the dirty deals are all uncovered.  They are like rats hiding from the light.

FUCKING TRAITOROUS TRASH!

Co-opted the Rule of Law into the RULE OF THE murderous gang with the guns.  Fuck you!

 

 

Oldwood's picture

You mean after thousands of years we suddenly discovered that people seek out and deliberately take advantage of the weak and simple minded. Who could have thought such a thing!

The funny thing is that it is ALWAYS fairness that is the common theme of EVERY tyrant who seeks to gather the damaged weak and simple minded under their banner and convert them into their army of madness.

Any thinking person understands that the only sustainable, non violent, FAIR existence is one where our population IS NOT majority weak and simple minded people. If we can not learn, teach, demonstrate the values and standards that sustain a fair world, a world where each is intelligent enough to be their own keeper, and not require FORCE to act in their own interest, then we are fucked for all time. We cannot create ANY form of government that uses force and collective power that will not corrupt and self destruct.

Dixie Flatline's picture
Dixie Flatline (not verified) garcam123 Jul 21, 2015 7:27 AM

Incredible confession of ignorance offered freely, no less.

Arnold's picture

Union guys get laid off too, probably quicker, in slowing manufacturing and production at any rate.

Hostess is an extreme, but perfect, example.

No chance of recovery for the brothers there.

RichardParker's picture

On top of the higher wages, quite a few unions enjoy Obamacare exemptions via decree from our beloved leader.

Ward cleaver's picture

What about all these PE pricks who get the firms to issue debt and then pay themselves dividends? The .01%ers get theirs no matter what while the rest of you debate union vs non union choices. Fing pathetic

Arnold's picture

If by CBA you are referring to Cost Benefit Analysis, there is an irrelevant group that has put that antique on the shelf, next to realistic ROI.

J'accuse le MBA

Paveway IV's picture

Isn't A&P backed by Puerto Rico Aqueduct bonds?

Cramer said A&P was good as gold, so I put all my retirement money into them.

It's MY money and I want it NOW.

ted41776's picture

its the recovery, stupid