Eric La Flèche
he has skin in the game , since 1991
metro will not go bankrupt, despite the unions best efforts
Longshoreman Strike
- Thread starter Darts
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metro will not go bankrupt, despite the unions best efforts
Did Eric start Metro? No. Did he invest anything to start the business? Given that he started in 1991 as a General Manager aka employee, I think it's fair to say that he invested nothing other his time like all other employees. If your definition of having skin in the game is length of service then it should also apply for front-line workers.
How can you be so sure that Metro won't go bankrupt? It's just as capacle of failing like Miracle Mart before it. The retail and competitive landscape has changed a lot since then, but that doens't mean that Metro is immune to going bankrupt.
As with all business, Metro has faced many ups and downs. During those downturns, did he take a pay cut as CEO and employee?
he will have a significant stock / option position , & as CEO he has responsibilities you can not begin to comprehend
he has plenty of skin in the game
Metro is the most efficient grocer of the three publicly traded grocers in Canada
it has a long history of growing operating earnings ( >10% CAGR) and dividends (>13% CAGR)
operating earnings and cash flow cover dividends by a wide margin
it also has a history of successful M&A activity, responsible debt management (BBB credit rating - investment grade) and strict operating cost control
it has withstood the entrance of Walmart & Target into its market and continues to grow
This is a very well managed business providing consumer staples .... people have to eat even in a recession
Metros probability of bankruptcy has to be one of the very lowest of all Canadian publicly trade companies
i do not know, however I doubt that he has, neither has the union
FYI Metro has not had a FY operating loss in the last 20 years ,(even in 2008 / 2020 recessions) likely a much longer period
again employee compensation is determined by the relative value added
part time high school students are capable of stocking shelves and fulfilling the cashiers responsibilities
that should give you an indication of the relative value added
if unionized employees want a claim on profits they should request equity ie ESOP (Employee Stock Option Purchase) plans in lieu of some proportion of cash compensation
Management would be trilled to have all of its employees have some 'skin in the game"
unions have traditionally and foolishly opted for cash instead
cant say for sure what this specific unions position on ESOP is
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Who should society care about, some millionaire CEO or thousands of 'essential workers'?
When people speak of greedy CEO's, they don't think of William Doyle who walked away from a $40mm (more less) payday by turning down a takeover of Potash Corp. because it wasn't in the best interest of the company or province. After the takeover failed, the stock of Potash did drop but later recovered.
William Doyle (businessman) - Wikipedia
William Doyle (businessman) - Wikipedia
For the curious who may be following this and think the anti-Union types are right: there's plenty of evidence, from actual economists, that they're not.
Wage-push inflation is minimal. A 10% increase in minimum wage results in 0.36% inflation (https://www.investopedia.com/ask/answers/052815/does-raising-minimum-wage-increase-inflation.asp). All wages could be tied to inflation and we would not see skyrocketing inflation despite them saying we would. They'll tell you to go study economics, but wage-push inflation, the idea that raising wages causes inflation, has been getting debunked since it was first seriously considered in the 60s. And wage-push spiral, the idea that wages tied to inflation will cause runaway hyperinflation, has been theorized, but never observed and is not really considered a concern by any modern, serious economist.
"Yet, on further inspection, assertions of a wage-price spiral run afoul of basic economics." Omg! Basic economics???
But I've been told I don't understand that!
www.aier.org
"The idea that higher wages can cause inflation is simply bad economics. It is part of the same discredited Keynesian analysis that tells us that government budget deficits create economic growth and that increased saving reduces it. As a wise graduate school professor of mine once told me, to ignore changes in money supply when trying to explain inflation is the equivalent of ignoring the eruption of Mount Vesuvius when trying to explain the destruction of Pompeii."
"Many conservatives have responded by arguing that this will push wages and prices in turn. Many economists, notably Albert Rees as early as the 1960s, have shown this is not the case. "
www.aier.org
Even right-leaning economists are saying workers should be allowed to capitalize on the market conditions the same way businesses have been.
"That is why in recent weeks Tim Congdon, the monetarist, has allied with left‐wingers, such as Grace Blakeley, to dismiss Johnson and Bailey’s calls for wage restraint as “wicked.” To urge the working classes to bargain against their interests in the face of macroeconomic mismanagement is not just a losing proposition, but a mistake that could create a clamour for bad policy."
"All this is not to say that overly aggressive union or worker pay demands in the face of inflation cannot be dangerous from a macroeconomic perspective. The risks they bring, however, are unemployment and job dislocation, not inflation."
Interestingly enough, there's also this from this same article:
"Blakeley and others err for the same reason in blaming “greedy corporations” and price mark‐ups for inflation. Even if some businesses “exploit” the confusion of inflationary periods by jacking up prices, in the absence of higher spending, they cannot themselves raise aggregate prices."
If wages aren't going up, where is the excess spending coming from? Recall the first article I quoted: "To ignore changes in money supply when trying to explain inflation is the equivalent of ignoring the eruption of Mount Vesuvius when trying to explain the destruction of Pompeii." As I've been saying, there are 2 drivers behind the inflation we're seeing today: corporate greed AND government spending. The "even if" from the quote above applies because there is higher spending.
But if that article says greedy corporations can't really be to blame, what makes me so sure?
Studies from independent bodies say so. Example: the IMF analysis in Europe.
"Rising corporate profits account for almost half the increase in Europe’s inflation over the past two years as companies increased prices by more than spiking costs of imported energy. Now that workers are pushing for pay rises to recoup lost purchasing power, companies may have to accept a smaller profit share if inflation is to remain on track to reach the European Central Bank’s 2-percent target in 2025, as projected in our most recent World Economic Outlook."
And oh look, they also agree workers should be paid out of these record profits.
www.imf.org
The ECB President is on board too.
"Corporate profits were the biggest factor driving up prices last year and will be again in 2023 unless businesses are forced to absorb rising wage bills, the head of the European Central Bank has said."
www.theguardian.com
More think tanks agree.
"Contrary to the arguments of the Prime Minister and the Governor of the Bank of England that wage restraint is needed to keep inflation down, the report argues that profit restraint is required."
www.common-wealth.co.uk
It's not just in Europe though. The IMF spoke about global economic outlooks and said "But the increase doesn't present a risk because the corporate sector has been sitting on pretty comfortable margins. Businesses' revenues have risen faster than costs, and so margins have room to absorb rising labor costs."
www.google.com
Sounds eerily like what I've been saying. Maybe the head of the IMF also should go study economics.
How about the Economics Policy Institute? It's based on the US. They say the biggest myth is wages are driving inflation. They say the 2nd biggest myth is that corporate greed isn't to blame.
"Myth #1: Workers’ wage growth is driving inflation. Nominal wage growth—while faster relative to the recent past—has lagged far behind inflation, meaning that labor costs have been dampening, not amplifying, inflationary pressures all along."
"Myth #2: Corporate profits are not contributing to inflation. In fact, fatter corporate profit margins have driven over half of the increase in prices in the nonfinancial corporate sector between the second quarter of 2020 and the end of 2021. This is not normal. From 1979 to 2019, profits only contributed about 11% to price growth. Ignoring the role of profits makes inflation analyses a lot weaker."
www.epi.org
This is the reality: economics is not an exact science and we're still learning about it. But what we do know is that wage push spirals have been theorized about but never observed, and multiple studies have found that increasing wages for the lower-income earners across the board strengthens the economy.
I actually like the Forbes takeaway. They summarize it themselves like this: "To turn into something scary, the wage-price spiral needs a little help. Specifically, it needs companies to raise prices by more than the amount necessary to cover their costs." If corporations need to increase prices more than is required to cover the increased labour costs, is it even the wages causing the inflation anymore, or just more "cost pull inflation"? I'd argue the latter; and call it "corporate greed".
https://www.forbes.com/sites/forbes...yth-of-the-wage-price-spiral/?sh=718ac6ca7d80
Corporations should make money. That's what they exist for. Executives should get raises and bonuses. But the rank and file employees shouldn't be left behind either. The Board has a fiduciary duty to the shareholders, yes. But they should also have a moral duty to their employees and society as whole. This isn't how things have been since about the 60s, as people here are quick to point out, and I'm not trying to claim that is how things work. I'm saying that is how they SHOULD work. And economics isn't necessarily against that viewpoint unless all you care about is investors and corporate profits rather than caring about your fellow human beings.
But maybe the Terbites are right... Maybe all these economists and economic think tanks also don't understand basic economics.
Wage-push inflation is minimal. A 10% increase in minimum wage results in 0.36% inflation (https://www.investopedia.com/ask/answers/052815/does-raising-minimum-wage-increase-inflation.asp). All wages could be tied to inflation and we would not see skyrocketing inflation despite them saying we would. They'll tell you to go study economics, but wage-push inflation, the idea that raising wages causes inflation, has been getting debunked since it was first seriously considered in the 60s. And wage-push spiral, the idea that wages tied to inflation will cause runaway hyperinflation, has been theorized, but never observed and is not really considered a concern by any modern, serious economist.
"Yet, on further inspection, assertions of a wage-price spiral run afoul of basic economics." Omg! Basic economics???
But I've been told I don't understand that!
There's No Such Thing as a Wage-Price Spiral | AIER
"The recent uptick in inflation is worrying, and the Fed needs to get a handle on the situation before higher inflation expectations become entrenched. ...
www.aier.org
"The idea that higher wages can cause inflation is simply bad economics. It is part of the same discredited Keynesian analysis that tells us that government budget deficits create economic growth and that increased saving reduces it. As a wise graduate school professor of mine once told me, to ignore changes in money supply when trying to explain inflation is the equivalent of ignoring the eruption of Mount Vesuvius when trying to explain the destruction of Pompeii."
"Many conservatives have responded by arguing that this will push wages and prices in turn. Many economists, notably Albert Rees as early as the 1960s, have shown this is not the case. "
There Is No Such Thing As Wage-Driven Inflation | The Daily Economy
"Friedman’s pouncing on Heller has, unfortunately, had no effect on American journalists. News shows and economic commentators still repeat variants of ...
www.aier.org
Even right-leaning economists are saying workers should be allowed to capitalize on the market conditions the same way businesses have been.
"That is why in recent weeks Tim Congdon, the monetarist, has allied with left‐wingers, such as Grace Blakeley, to dismiss Johnson and Bailey’s calls for wage restraint as “wicked.” To urge the working classes to bargain against their interests in the face of macroeconomic mismanagement is not just a losing proposition, but a mistake that could create a clamour for bad policy."
"All this is not to say that overly aggressive union or worker pay demands in the face of inflation cannot be dangerous from a macroeconomic perspective. The risks they bring, however, are unemployment and job dislocation, not inflation."
Interestingly enough, there's also this from this same article:
"Blakeley and others err for the same reason in blaming “greedy corporations” and price mark‐ups for inflation. Even if some businesses “exploit” the confusion of inflationary periods by jacking up prices, in the absence of higher spending, they cannot themselves raise aggregate prices."
If wages aren't going up, where is the excess spending coming from? Recall the first article I quoted: "To ignore changes in money supply when trying to explain inflation is the equivalent of ignoring the eruption of Mount Vesuvius when trying to explain the destruction of Pompeii." As I've been saying, there are 2 drivers behind the inflation we're seeing today: corporate greed AND government spending. The "even if" from the quote above applies because there is higher spending.
But if that article says greedy corporations can't really be to blame, what makes me so sure?
Studies from independent bodies say so. Example: the IMF analysis in Europe.
"Rising corporate profits account for almost half the increase in Europe’s inflation over the past two years as companies increased prices by more than spiking costs of imported energy. Now that workers are pushing for pay rises to recoup lost purchasing power, companies may have to accept a smaller profit share if inflation is to remain on track to reach the European Central Bank’s 2-percent target in 2025, as projected in our most recent World Economic Outlook."
And oh look, they also agree workers should be paid out of these record profits.
Europe’s Inflation Outlook Depends on How Corporate Profits Absorb Wage Gains
Higher prices so far mostly reflect increases in profits and import costs, but labor costs are picking up
The ECB President is on board too.
"Corporate profits were the biggest factor driving up prices last year and will be again in 2023 unless businesses are forced to absorb rising wage bills, the head of the European Central Bank has said."
Corporate profits drove up prices last year, says ECB president
Christine Lagarde says without a shift in corporate behaviour, interest rates will need to stay higher for longer
www.theguardian.com
More think tanks agree.
"Contrary to the arguments of the Prime Minister and the Governor of the Bank of England that wage restraint is needed to keep inflation down, the report argues that profit restraint is required."
Prices and Profits after the Pandemic
How rising profits could be stoking inflation.
www.common-wealth.co.uk
It's not just in Europe though. The IMF spoke about global economic outlooks and said "But the increase doesn't present a risk because the corporate sector has been sitting on pretty comfortable margins. Businesses' revenues have risen faster than costs, and so margins have room to absorb rising labor costs."
Economists and policymakers were fretting about a wage-price spiral. Not any more
Higher wages haven't produced a 1970s-style wage-price spiral. In fact, some economists say wages can and should continue to rise.
www.google.com
Sounds eerily like what I've been saying. Maybe the head of the IMF also should go study economics.
How about the Economics Policy Institute? It's based on the US. They say the biggest myth is wages are driving inflation. They say the 2nd biggest myth is that corporate greed isn't to blame.
"Myth #1: Workers’ wage growth is driving inflation. Nominal wage growth—while faster relative to the recent past—has lagged far behind inflation, meaning that labor costs have been dampening, not amplifying, inflationary pressures all along."
"Myth #2: Corporate profits are not contributing to inflation. In fact, fatter corporate profit margins have driven over half of the increase in prices in the nonfinancial corporate sector between the second quarter of 2020 and the end of 2021. This is not normal. From 1979 to 2019, profits only contributed about 11% to price growth. Ignoring the role of profits makes inflation analyses a lot weaker."
Debunking 5 top inflation myths
The labor market is largely strong right now, but inflation continues to be a pressing economic concern. The reasons for escalating inflation are hotly debated, but some theories gaining traction have not been grounded in the data. EPI research sets the record straight on the causes of...
www.epi.org
This is the reality: economics is not an exact science and we're still learning about it. But what we do know is that wage push spirals have been theorized about but never observed, and multiple studies have found that increasing wages for the lower-income earners across the board strengthens the economy.
I actually like the Forbes takeaway. They summarize it themselves like this: "To turn into something scary, the wage-price spiral needs a little help. Specifically, it needs companies to raise prices by more than the amount necessary to cover their costs." If corporations need to increase prices more than is required to cover the increased labour costs, is it even the wages causing the inflation anymore, or just more "cost pull inflation"? I'd argue the latter; and call it "corporate greed".
https://www.forbes.com/sites/forbes...yth-of-the-wage-price-spiral/?sh=718ac6ca7d80
Corporations should make money. That's what they exist for. Executives should get raises and bonuses. But the rank and file employees shouldn't be left behind either. The Board has a fiduciary duty to the shareholders, yes. But they should also have a moral duty to their employees and society as whole. This isn't how things have been since about the 60s, as people here are quick to point out, and I'm not trying to claim that is how things work. I'm saying that is how they SHOULD work. And economics isn't necessarily against that viewpoint unless all you care about is investors and corporate profits rather than caring about your fellow human beings.
But maybe the Terbites are right... Maybe all these economists and economic think tanks also don't understand basic economics.
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I grant you that I can't comprehend the responsibilities that a CEO has. Maybe you're a or know a CEO and can enlighten us? Why is stock options the only way someone has skin in the game?
No doubt it's a very efficient company and very unlikely to to fail, but it's always a possibility. Everything you listed can change under new leadership / ownership.
If Darts idea is that employees should take a pay cut when the company is losing money, then why doesn't it apply to the CEO who is also an employee? Metro probably tells it's employees that they're "part of a family" like so many other business do. Then why does it look like the patriarch living under a different set of rules than everyone else?
A stock option plan is just one of the ways that workers would have more skin in the game. I'm sure there are others too, but it depends on a lot of internal issues. Maybe some changes need to be made in the corporate culture, but I'm not sure what that would look like in the grocery business. The problem of course is that they have a lot of part-time workers. So are stock options approrpriate for them?
I've seen several Unions put stock options in their contact proposals and it doesn't usually go over well. I'm in aviation and it certainly hasn't been well recieved by companies here. The only place that had it was WestJet and it went away with the acquisition by ONEX. It was a popular proposal in the wake of the two-tiered pension that was forced first on Air Canada pilots in binding arbitration and then trickled down through the entire industry. To offset the pension benefits, a few Unions were proposing an employee share purchase plan but the corporations had no interest in entertaining that.
Maybe in other industries it's more popular. It's worth noting though that for front-line workers, who traditionally have lower pay, like $16-17/hr Metro workers, it's irrelevant. They need money, not stocks. If we ever get back to he original topic of this thread, the Longshoreman, it might be a reasonable proposal given their salaries, except that the Port of Vancouver isn't publically traded.
Trudeau the Elder.
"Trudeau was forced to rethink all of the options and when he introduced the Anti-Inflation Act in Parliament it contained wage and price controls for various segments of the economy."
Wage and Price Controls (canadahistory.ca)
"Trudeau was forced to rethink all of the options and when he introduced the Anti-Inflation Act in Parliament it contained wage and price controls for various segments of the economy."
Wage and Price Controls (canadahistory.ca)
it is a 24/7 job
every day you are bombarded with complex issues & you have to make decisive determinations on the actions required and whom to communicate with
in addition you have to be critically evaluating managers, supply chains , operations, markets, internal controls and your brand in the market
All the while you need to develop a plan to grow the company and then ensure the people, money and other resources are in place to execute the plan
and there is always unexpected issues that arise, ie suppliers who do not meet obligations, pandemic, rising costs of borrowing, ridiculous labor demands etc
it is also a huge amount of time away from your family
not many guys/ gals have the drive/ skill set / passion required
successful companies have good governance / risk management via their boards of directors
they very rarely approve of radical changes in strategic direction which could endanger the companies long term viability
a misstep is possible, however it would be tough to break this business model
the biggest risk would be a huge M&A deal like Sobeys did with Safeway
Sobeys overpaid and Safeway was a mess, it has taken many years to fix
unions do not take paycuts
they would rather eat their children
maybe some changes need to be made with union leadership
why are part-time workers paying union dues?
if you want a claim on company profits , you need equity in the company
it is that simple
that is the essence of capitalism
the left leaning think tanks do notBut maybe the Terbites are right... Maybe all these economists and economic think tanks also don't understand basic economics.
i noticed you quoted the guardian where ideology trumps fact on a daily basis
Someone once added up all the airline profits dating back to the wright bros
the sum was negative
the airline business' model is not a good one
massive leverage ie long term debt is required
operating costs fuel are very volatile
huge regulations
huge liabilities when something goes wrong
demand is not consistent
I would not touch an airline stock with a 10 foot pole
not one that carries passengers
cargo? perhaps
this is money & it does not include the dividend
most ESOP programs have company matching a certain portion of contributions to the plan eg 50%
unless the stock price declines by 1/3 it is free money
And dollar cost averaging helps to mitigate such declines
I will not disagree working part time for $16- $17/ hr would be tough to live on.
however the reality is one should not expect any standard of living if one has not acquired in demand skills
no one will pay well because you have a pulse
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Granted that the CEO has all the responsibilities you listed and also creating and implementing the strategic vision. On the other hand, he doesn't do that all by himself. He does need to ensure the people are in place to execute the plan, which includes workers.
Sobeys also spent tens of millions in the early 2000s trying to put in SAP for inventory management. They canned that project, but tried again a few years later.
Most people are not going to take a pay cut. It's a good will gesture (even if it's a token one) when the leadership team is willing to take one.
Yes, maybe they do need better leaders. On the other hand, where are these people going to come from?
I can't answer that question.
As with everything, the devil is in the details when it comes to stock option plans.
odd how a union is not required to implementing a strategic plan
the workers in this case are non-skilled & can be replaced
management prefers not to do that, however it all comes down to compensation for the value provided, not compensating to ensure a std of living
Metro appears to have managed its supply chain / inventory properly
sure, their call to do this, however some turn arounds may not succeed & really good CEOs have multiple opportunities
do the union leaders work for Metro?
if they think along the same lines as mouse dick and believe employees are entitled to a claim on profits, they are doomed to failure
part-time employees paying union dues is abusive
The Guardian directly quoting the ECB Chairman. Who happens to be a conservative politician.
Your mental gymnastics are astounding. The location of the quote didn't matter, only who said it! And it was a conservative politician! So if I link to CNN quoting Donald Trump, you're going to say it's a left-leaning quote? Trump becomes a liberal anytime he's quoted by CNN? And you think the IMF is left-leaning? They almost triggered a civil war in Greece with their demands for austerity. Left-leaning??? The best part is I predicted you'd try to claim bias so I threw in some zingers, and you didn't even bother to check?!
AIER I quoted twice. AIER!!!
Does it not sound familiar to you? What if I told you they're based in Great Barrington? Does that ring a bell? It should... They're so far right!!! They deny climate change and spread COVID misinformation. They're literally the source of the Great Barrington Declaration. You don't get more right-wing than them. Their biggest partner is the Conservative and Libertarian Atlas Network! The Cato Institute has lobbied in support of lower (and even abolishing!) taxes, less government involvement in business, opposed Obamacare and all socialized health care, and have a huge list of government agencies (Social Security, TSA, etc) they think should be privatized. Left-leaning? Are you serious???
The John Locke article author was Dr. Roy Cordato. He's a climate change dernier! Left-leaning?
Ph.D. in Economics, btw. But I'm sure you know more about "economics 101" than he does. Also quoted is Pierre Olivier-Gourinchas, IMF's chief economist. Gonna tell him he doesn't know basic economics too? And left-leaning???
What was the argument you guys used again? Was it that I was left-leaning? Oh no, that's right, it was that I didn't know basic economics. But now that actual economists are saying the same thing I did, you've got to switch your attacks.
Did you really think I would be stupid enough to only quote left-leaning sources? And did you think I was a moron and wouldn't quote people with advanced degrees in economics?
When you tell a guy he doesn't understand basic economics and he then quotes people with PhDs in economics, you're going to need more than "one of your links of the Guardian." It's a direct quote! From a right-leaning politician!!! And to say they were all "left-leaning"? How did you not look them up first before you opened your mouth? You didn't think for one second I knew the anti-Union crowd would latch on to it if I only quoted left-leaning, pro-Union sources? Really??? Man, you must feel so stupid now realizing that you assumed I was an idiot who wouldn't predict that and make sure I didn't fall into that trap. I can't believe you don't even check and just assumed. One of the economists I cited is a regular on Fox News! I'll leave it to you to figure out which one. Left-leaning, ha!Omg. My belly hurts from laughing so much. Seriously. Thanks for the laugh and for proving that you have no idea what you're talking about.
If anyone wasn't sure if you were a troll or not, they sure are now.
thousands of essential workers aren't treated unfairly in this situation...they're paid above minimum wage, most are paid above their competitors employees...there's nothing here but their union flexing to look good. there's a reason this isn't a country wide strike....
How are they being treated fairly if they are working full time but can't afford housing and food?
A pay raise below inflation when profits are up so much they increased the dividend 10% and executive bonuses 13.7% is indeed not being treated fairly. And as I've shown above, people with PhDs in economics think businesses should be paying higher wages out of these profits and those wages won't increase inflation. But don't worry, the pro-business crowd will quickly tell us those economists need to study economics 101 and have no idea what CEOs deal with... Even though some of those economists have been CEOs.
And then they won't be about to explain their position but won't admit that and instead just tell us it's too complicated to understand. 