Business

Corporate Values on Display

By Ryan McGreal
Published February 01, 2007

The Hamilton Spectator's breaking news page reports that Labatt is in negotiations with Lakeport to buy the plucky Hamilton "value segment" brewery. Lakeport CEO Teresa Casciolli was quick to praise the move, highlighting the benefit to shareholders.

Casciolli announced, "The Board and I, as a significant unitholder, believe this is in the best interests of our investors, employees and customers."

I call BS on her latter two considerations. This deal is in the best interest of Lakeport's investors, period.

Labatt, an industry giant with a mature market penetration, gets to scoop up an asset with strong sales and profits in a new market segment, and the Lakeport shareholders get a much better price for their shares than they would on the open market.

It remains to be seen how Labatt would run the Lakeport brand, but we can assume at the least that it will consolidate duplicated functions with its corporate operations, meaning at least some jobs in Hamilton are almost sure to disappear.

Customers will lose access to an independent, local, and accessible company. Lakeport is highly regarded among my beer-drinking friends for its excellent, attentive customer service, but that will likely change under Labatt.

Granted, this will have no or only marginal impact on most customers, but it certainly won't represent an improvement.

All in all, as Casciolli noted, "Labatt's offer represents exceptional value for unitholders and a substantial premium to the recent trading price of our units." And that's pretty much it.

Ryan McGreal, the editor of Raise the Hammer, lives in Hamilton with his family and works as a programmer, writer and consultant. Ryan volunteers with Hamilton Light Rail, a citizen group dedicated to bringing light rail transit to Hamilton. Ryan writes a city affairs column in Hamilton Magazine, and several of his articles have been published in the Hamilton Spectator. He also maintains a personal website and has been known to post passing thoughts on Twitter @RyanMcGreal. Recently, he took the plunge and finally joined Facebook.

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By schmadrian (registered) | Posted February 01, 2007 at 21:36:09

LMAO!

And...?

What's your point? This is business we're talking here.

"Granted, this will have no or only marginal impact on most customers, but it certainly won't represent an improvement." Such as...? What might you have hoped for?

Sometimes the editorial stance on RTH reminds me of 'radical hippy-think' of the 60s. It's admirable in a way, but I'm beginning to wonder what's on the short list of items you won't take umbrage at.

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By jason (registered) | Posted February 01, 2007 at 22:25:50

I'm not sure I care who owns the place, as long as Hamilton doesn't lose another 200 jobs. I've heard rumours that they may hire and expand the Hamilton plant. However, we all (especially those whose livlihood depends on this plant)have to be wary of the real possibility of another closure or layoffs based on history in these types of experiences.

Clearly Schmadrian doesn't know anyone who works there or will be affected.

There's a chance for a good news story in this if Labatt makes this plant a major piece of their company....I guess we'll all wait and see.

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By schmadrian (registered) | Posted February 02, 2007 at 09:40:52

No, I don't know anyone who works there.

Just as I don't know any of the 1,000 that BMO is about to lay off after a record-profit year.

Aside from the environmental upheavals we've seen in the past fifty years, I think one of the other elements of 'How Life Has Changed' has been people's apparent inability to deal with the fact that it is no longer the norm to be able to depend on one job throughout your lifetime as your parents or grandparents could have. That's no longer the world we live in. And I'm constantly amazed at how people all over react to plants closing and businesses moving...as if it's somehow 'unfair' that things have worked out this way.

My personal belief is that the issue is not that 'there is no humanity in the business world', but rather how naive we've become as a society, expecting that businesses will conduct themselves (and therefore their employees) with respect and dignity, putting their shareholders' interests beneath those who have toiled in the plants and offices. Come on! Get serious!

Where did this naiveté come from? When did it engrain our belief system? My suspicion is that the 20th Century ushered in not only a broad-based, acquisational, materialistic free-market, capitalistic system...but also this attitude, the expectation that 'things will always turn out right'.

Utter twaddle. This is about business. It's about the bottom-line. And yes, there are 'some' businesses out there who believe in a humane and caring approach to how they do what they do, cognizant of the effects their decisions have on the community, but that's not the norm and it never will be. That's not the world we live in. That's not the world almost all of us vote for each and every time we spend a dollar in a transaction that's not guaranteed to be grounded in a 'kinder, gentler' capitalistic tradition. And for those who strive for that world, I say 'Poppycock. It's too late. We've gone too far and there's no turning back. In for penny, in for a pound.' (Just as this report shows us that environmentally-wise, there's no 'turning back', either: http://www.thestar.com/News/article/1775... )

Bottom-line: there are no guarantees in Life. Accept this and adapt. Whining never got anyone anywhere. Except into the company of more whiners.

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By Ryan (registered) - website | Posted February 02, 2007 at 10:18:03

How silly and unreasonable we are, expecting the most significant organizations in our civilization to conform to basic mores of decency and civility; or expecting them to be accountable to those who are affected by their decisions; of expecting them to serve us, and not the other way around.

You seem to have accepted that corporations exist to serve their own interests at the expense of the commonwealth, and that this is perfectly okay. I'd like to remind you that corporations exist only at the pleasure of the commonwealth, and that their charters are a dependent function of a public government act.

Are we foolish for believing those corporations should be accountable to the public entity that gave them life and makes the rules under which they operate?

That so many people in our society have simply accepted the idea that corporations are allowed - no, required - to be psychopathic in their dealings with humans is evidence of the triumph of corporate logic over human decency, and raising a stink about this is not "whining" any more than any recognition that injustice should be challenged and opposed.

For more on this, I'd recommend a couple of excellent books:

  • Warren J. Samuels & Arthur S. Miller, eds., Corporations and Society, Greenwood Publishing Group, 1987; and
  • Joel Bakan, The Corporation: The Pathological Pursuit of Profit and Power, Penguin canada, 2004.

Your "in for a penny, in for a pound" nonsense is simply the rationalization of a gambling addict unwilling to admit he's chasing his losses.

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By Rusty (registered) - website | Posted February 02, 2007 at 10:31:41

Hi Scmadrian,

As usual, I don't quite know where to start with your post. There seems to be a huge disconnect between what you think RTH writers are saying, and what we are really saying...

Many of the RTH writers are, or have been, independent business people - myself included. Regardless, I assure you - none of us are quite as 'naive' as you believe. The present day corporate capitalist model is no mystery to any of us. Neither is the fact that this is our 'reality' today. What we refuse to do is lay down and let the worst aspects of this model (and that's all capitalism is - a business model) run our lives.

Of course there is a balance between economic reality and corporate behaviour. I, like you, grew up in Britain, in a climate of Steel strikes and Coal Miner strikes and bread strikes and - lots of strikes! Despite feeling for the folks embroiled in all this (we lived not far from one of the affected Coal mining towns) I realized at the time that there was more than a semblance of economic reality to Thatchers hard-line stance (I'm reading Thatcher's autobiography now in fact).

Nobody at RTH is advocating a nice warm protective bubble of high wages and jobs-for-life for Hamilton's workers. All this post is saying - if you can calm yourself down for a moment and try to understand it - is that Corporate takovers - especially when they involve large firms with no connection to the local town - invariably result in job losses, pay reductions or other negative effects to the local workforce. Often this is due to the necessary consolidation of certain components of the business - it as, as you say 'just business'

Speaking for myself I agree with you that there are some 'wholesome' corporate employers out there. Employers who really care about their employees and the lives their industries affect. But I also feel - strongly - that when a corporation becomes a certain size and when a corporation has no ties to the local community it draws from, there is less incentive and willingness to go beyond the bottom line.

Capitalism is all about the bottom line. It would be truely naive of YOU to believe that corporations are obliged to do anything more than make profits - often at the expense of the environment and with significant social costs.

I once went to a seminar where a CEO scoffed at an audience members question about employee rights.

'Why should I care about that?' he replied, 'I get paid to make the numbers go the right way. And they have. I've been successful'

While it is certainly a reality today that there are no jobs for life and that people should wake up to this fact (and really, I don't think many people need waking up to it) it is also true that rampant capitalism - the model which we are following today - overall - it's not leading us anywhere good. And while we should all do our best to adapt to the cut-throat nature of the business world today we should also refuse to let the speeding train of corporate 'progress' run us right over.

That might sound like whining to you Scmadrian, but to me it's just common sense.

I look forward to your response.

Ben

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By schmadrian (registered) | Posted February 02, 2007 at 10:39:33

First off, please note that nowhere did I say I agreed with the 'ledger philosphy' of big business.

Secondly, I find it hilarious that in these discussions we always seem to come down to an 'us vs them' paradigm. People talk about 'big business' as if it's someone else. A variant of NIMBY. And obviously, this couldn't be farther from the truth. 'Big business' is your father. Your aunt. Your wife's mentor. Everyone.

Thirdly, as for the obligation towards decency, civility and propriety: nice ideals, but really, corporations, businesses... They're merely extensions of the human condition. Think what goes on sucks? Here's one for ya, going down that 'personal responsibility' road: people buying a second car when people in their own communities, people maybe even a few streets over are living in dire straights. People spending tens of thousands for a wedding when there are children in their own country going to bed hungry. People spending$5,000 on Super Bowl tickets- Aw, I'm sure you get my point. So incredibly farkin' easy to point fingers at corps, but really, it's gauche.

Finally: "I'd like to remind you that corporations exist only at the pleasure of the commonwealth, and that their charters are a dependent function of a public government act." Good Lord. I think you need a reality check. Who on earth do you think is going to enforce any sort of revoking of charters...when it's the business concerns that put them there in the first place?

And as for my 'penny and pound' reference, I'm simply pointing out that crying over spilled milk...or the continuing spilling, actually...is a waste of good energy. (Kindasorta like caterwauling about automobiles). Those energies would be better spent coming up with ways to adapt...instead of demonizing those making these heart-breaking business decisions. The enemy, after all, is us.

(Oh, and thanks for the book references, but seriously, you're preaching to the converted.)

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By schmadrian (registered) | Posted February 02, 2007 at 10:44:26

Ben:

And your proposal on how to deal with where we collectively are with this 'rampant capitalism' situation? Understanding that generally, people don't give up something either without a fight...or to land something better. Are you talking about a paradigm shift? Changing the value system in North America wholesale?

Because I believe that we've all been buying into this all along. We may not have been aware that it was going to lead down such a rocky and uncomfortable path, but really; is any of this actually 'surprising'...?

I look forward to your response.

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By Ryan (registered) - website | Posted February 02, 2007 at 11:32:07

"we always seem to come down to an 'us vs them' paradigm"

Please. You're a habitual contrarian, getting enjoyment out of the sheer perversity of contradicting, obstructing, criticizing, and trashing ideas at every turn. You find something to disagree with in just about every post you see, and you never contribute anything constructive to the discussion.

You keep making vague noises about how our energies would be better spent, but you have yet to deliver anything tangible other than a relentless skewering of proposals and statements of principle that you find insufficiently 'realistic'.

So here's my challenge to you: shit or get off the pot. Contribute something. Educate us as to where we should be spending our energy. Come up with some proposals of your own.

Otherwise, your constant sniping will start to resemble old-fashioned trolling, and people will eventually get tired of feeding the troll.

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By w willy (registered) | Posted February 02, 2007 at 13:21:16

Well, I must admit that the loss of local jobs is something we have cause to be concerned about. But beer drinkers more generally who appreciated the value segment providing comparable piss to Molson and Labatt at $10 less a case must also be concerned about this further concentration in the industry. As much as capitalism flaunts competition, successful capitalists know that the key is to escape competition so as to exercise market power. Once Labatt has squeezed the juice out of Lakeport, we'll again face the prospect of buying their piss for silly prices.

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By just sick about this (anonymous) | Posted February 07, 2007 at 20:20:52

Read: Going Local by Michael Shuman...says it all. (It's in the library)

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By g (anonymous) | Posted February 18, 2007 at 15:19:03

the thing is though, even if labatt buys and closes lakeport, the business model is still there and lakeport proved it works. you can make money brewing decent beer locally and with a unionized work force while still selling it at a reasonable price. if you guys care enough about this, start up your own brewery. there is lots of venture capital out there.

and as for big business ruining society: i don't buy it. the consumer who cares nothing for where, how, or by whom the products they purchase are made close plants, gut workforces and reduce job quality for us all. camco shut down because not enough of us cared enough to buy a washer or stove that was built by their neighbour. everyone wants to work and live in canada but not many want to spend ten dollars more on something so that the guy down the street can feed his kids. when consumers start demanding locally made goods corporations will start building factories here. simple economics. but as long as the consumer is more concerened about which one is cheaper or what colour it is we will continue to lose quality jobs. the unions are not the answer, the government is not the answer, the customer is. every time you buy something think about what you are supporting and where your money is going. if everyone does it so much will really change. economic democracy, people, vote with your dollars.

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By Ryan (registered) - website | Posted February 18, 2007 at 19:57:04

G wrote, "even if labatt buys and closes lakeport, the business model is still there and lakeport proved it works."

Unfortunately, the business model is no longer there. Lakeport was an income trust, with different rules on taxation and unitholders rather than shareholders. The Labatt takeover is a predictable result of the government's decision to eliminate the special tax status of trusts.

See this article for more details:

http://www.raisethehammer.org/article/50...

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