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View Diary: Private equity-owned Hostess blames striking workers as it liquidates (263 comments)

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  •  Valid points (2+ / 0-)
    Recommended by:
    veuve, ColoTim

    This is the real world, in this case much more so for the workers than for us.

    I agree it's important not to jump on to easy talking points in the context of a more complicated story.

    Money is a harsh mistress, and capitalism is a binary phenomenon - yes/no, on/off, black/white, profit/loss.

    There's a touch of gray here, though - "...(if) the profitability of the company was reduced to unacceptable levels..."

    Unacceptable as determined by whom?

    Quite a contrast to this story, though.

    "Life is a bitch, and then you die. And then you come back." Old Buddhist proverb

    by RubDMC on Fri Nov 16, 2012 at 07:24:51 AM PST

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    •  Unacceptable as determined (4+ / 0-)
      Recommended by:
      RubDMC, catwho, VClib, WillR

      by the investors -- those whose money it is.  

      Part of that is math (comparing the ROI to what ROI you can get elsewhere, while considering other economic factors, such as tax consequences), part of that is a judgment call  on the part of the investors.  

      But a union can look at the financials of a company and make some educated guesses about whether it has a realistic expectation of succeeding.  

      •  Never ask a question... (0+ / 0-)

        ...where the answer isn't already known.

        This story exemplifies the classic investor/worker equation (which too often is a division).

        Or, to put it in more recent familiar terms, takers/makers (in the same order).

        "Life is a bitch, and then you die. And then you come back." Old Buddhist proverb

        by RubDMC on Fri Nov 16, 2012 at 08:19:32 AM PST

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      •  If ROI was all that mattered (7+ / 0-)

        There are whole industries where nobody would invest anything. The return on different products is never equal... if what you say is true, nobody would be making whatever it is they make, because there would always be "some other business" that could produce a higher return.

        Businesses aren't started by accountants, they're started by people with a vision. And to be successful, they're run by someone who can continue that vision, and adapt it as times change.

        Sure, investors can be a key player in many businesses, but when you have investors trying to run a business purely by "looking at the numbers", it's doomed to fail - whatever it is. Good investors know this, and they make sure the business is being run by someone who knows what they're doing. Bad investors run things into the ground, like Hostess.

        Freedom isn't free. So quit whining and pay your taxes.

        by walk2live on Fri Nov 16, 2012 at 08:53:41 AM PST

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        •  walk2live - professional investors are always (0+ / 0-)

          looking for the highest possible return, on a risk adjusted basis. The adjustment for risk is what makes low risk investments attractive, even if the expected return is small. For higher risk investments, like startups, investors are looking for the potential of 5-10 times their invested capital over a 3-5 year period. Buying existing companies, with brand identity and a financial history, is completely different. However, I agree with you that the most successful investors have domain expertise and hire experienced industry managers.  

          "let's talk about that"

          by VClib on Fri Nov 16, 2012 at 01:47:04 PM PST

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          •  Although... (1+ / 0-)
            Recommended by:
            VClib

            ...there are counter examples. IBM, under Lou Gerstner's leadership, shifted gears (focusing more on services and complete solutions than on hardware) and the company was very successful under his leadership. When he joined, there was actually a plan in place to dismantle the company and sell the pieces. While he was CEO, from 1993 to 2002, the stock increased in value about 6x or 7x IIRC.

            What was Lou Gerstner's prior job? Chairman and chief executive officer of RJR Nabisco (and an executive at American Express prior to that). I.e., no experience in managing a computer vendor.

            Good executives are good executives, no matter what they manage. What they don't know, they ask. What others can do, they delegate. Most importantly, good executives (and good managers in general) have an innate understanding of people and pick good people, generally with some background in the industry,  to report to them and execute the vision.

            Management, like sales, is a profession. What is being managed or what is being sold is secondary for those most skilled in the craft.

          •  If you define "professional investors" (0+ / 0-)

            very narrowly, you're probably right. But, there are many ways that money is invested in business. I think it is pretty generous to call the people who've run Hostess into the dirt "professional investors". They're a bunch of screw-ups with money.

            By that logic, no professional investor would ever touch, say.. the airline industry. In aggregate, the industry has barely turned a profit in its history. Yet, we still have companies flying airplanes (Some of them have done well, but in the big picture, it's not a great industry to park your money in). It's a large-risk, low-return bet. So, why does anyone fly a plane?

            If Hostess had been run by a committed group of individuals who had a personal stake in the outcome of the company (say, "the Hostess family" or the employees themselves), there's a much better chance they'd still be making Twinkies & a bunch of people would have good jobs there. Such owners wouldn't constantly be looking for "better returns" (i.e. somewhere else to put their money), they'd be looking at how to make Hostess a better company, because they'd have a personal stake in its success.

            Freedom isn't free. So quit whining and pay your taxes.

            by walk2live on Fri Nov 16, 2012 at 06:49:10 PM PST

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    •  Rec'd for linking to the Bob's Red Mill story. (3+ / 0-)

      Buy from the employee-owned company and make your own, healthier baked goods.

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