Tim Hortons

The various media outlets are all abuzz with the news that Tim Hortons and its now parent company, Burger King, are laying off a significant percentage of its head office employees. The actual number is not clear. While corporate headquarters have announced that they will be letting go 350 staff go (Globe and Mail), at least one employee suggested that up to 40% of the staff would lose their jobs. I would suspect that the final count will never be known in part because some of the positions will be lost through attrition.  The layoffs appear to be a surprise only to the employees. Economists predicted within days of the announced buyout that layoffs would happen (Huff Post). It was the Canadian government, when they approved the sale of the Tim Hortons to a large multinational, who set the percentage of jobs that would be.

It is not that Tim Hortons are broke or even close to bankruptcy. Out of every ten coffees sold in Canada, Tim Hortons sells eight. A year ago the corporation reported that both their revenue and the return on their shares had increase (Huff Post). Staff lost their jobs because 3G Capital, the Brazilian investment firm that owns roughly 70 per cent of the merged company strips their new acquisitions of everything they can to maximizes its profits (Globe and Mail).

But Tim Hortons are not the only profitable company in Canada that have announce layoffs. CIBC have announced that they will "selectively reduce a number of positions," (CBC). CIBC in 2013 made the most money it has ever made in a single year (CBC). In May of last year, the most dominant store in North America, Wal-Mart announced that it was going to lay off 750 head office employees (CBC).

These three companies are not unique. They, like so many of the companies that we appear to rely on, have one thing in common with each other. They are multinational organizations with obligations to their shareholders; obligations that far supersede any sense of loyalty to their employees. These shareholders have created a new definition of the phrase "record year". They demand that every year the company have a record year. That is, every year they must make more money than the year before. If their profits are not up, then the company's share prices will go down and someone will demand the head of the CEO. A record year should mean that the company has had an exceptional year. It should be accepted that not every year can be exceptional; that some years the company will make less profit.  Clearly the three above companies amongst thousands of others have bought into the concept that profits must increase. I suspect that the large institutional investors including insurance companies mutual funds and teacher's pension funds (whose members demand a high return) are part of the problem.

While many, as they line up for their morning coffee, will rightly complain about the 3G Capital's shoddy treatment of Tim Horton's head office staff, nothing will change. People will still demand coffee at the lowest possible price from either Tim Hortons, Starbucks or MacDonald's. How those multinationals achieve those low prices will not concern very many people in those lines for very long. Except of course for those who are now unemployed.

All of the people in that line up for their morning fix of caffeine and who have money invested in mutual funds or have a pension fund should feel just a little but responsible.