Tuesday, July 21, 2015

A&P Goes All Hostess Twinkie

Even in Seattle as a kid  I shopped at A&P, the first supermarket chain in the USA which began to go downhill in the 1970s.  Now it is going into bankruptcy for the second time, following the steps of hostess twinkie,  including blaming the unions.

A regular reader will know this blog honors labor, as any self-employed free-marketer would do, and in fact I've been a teamster and am a B Longshoreman.  (I also busted a longshore local house, so I am not above a bit of mercenary hire).

Blaming the unions for management failure is typical, and useful in liquidating assets while burning the unions.  To be sure when A&P is liquidated almost none of the workers will find similarly paying jobs. This is deflation now.  That is life, but when Burkle bought A&P, the malcredit he used to acquire also covered any A&P pension obligations to the workers.  So the first question is, what is the size and nature of A&P obligations to the employees and retirees.  It goes away, in a bankruptcy, and the liquidation price can go a lot lower.  See Twinkie.

Now Bravo to Stockman for rejecting the "union problem" as the problem leading to bankruptcy.  he demonstrates how poor management and financial shenanigans have led to yet another pension plan being busted.  But in his piece he mentions legacy "vendor agreements" that could not be changed to save A&P.

I wonder: what products, what vendors, what agreements?  Wild guess: the vendors are the "get big or get out" welfare beneficiaries like General Foods, General Mills, Kraft, etc. The products are the 80% of the revenue, 20% of the profits type velveeta cheese and other frankenfoods that one necessarily must be big in which to trade.  The agreements are fine tuned already, and assume ever-inflation, something not the case any more.

If so, are those vendors allowing a customer to go under so they can better serve the stronger few?  For a time?

This would be a good MBA masters thesis.

As an aside, an advertising campaign failed to bring in teh customers.  I wonder how much of that advertising was done online, and what was learned form that component.   Another thesis.

Feel free to forward this by email to three of your friends.


5 comments:

Anonymous said...

MBA's have to do a masters thesis?

John Wiley Spiers said...

I hope so, if not, why call it a master's?

Anonymous said...

MBA's can be either thesis or no-thesis option. I thought most MBA's were just coursework (at least in the US).

http://www.degreeinfo.com/general-distance-learning-discussions/14001-mba-thesis-without.html

John Wiley Spiers said...

To get and MA in education, you have to write a thesis, but you can get an MEd and avoid the work... didn't know you can get the MBA and skip the work...

Education also has the EdD, the educational doctorate, that is take two more classes beyond a MEd and you can list your self as Dr. Whoever.

Credential inflation.

Anonymous said...

I have an M.S. degree in engineering that required a thesis. Many schools also offer a Master of Engineering degree (or M. Eng.) that only requires coursework, but no thesis.

https://en.wikipedia.org/wiki/Master_of_Engineering