This evening, I posted a comment on Ministry of Truth’s diary announcing he will be traveling, thanks to Kossacks who donated frequent flier miles, to #Occupations other cities. I suggested he also try to visit smaller towns whose industrial base was destroyed years or even years ago. This elicited a few comments providing a few examples of towns that have been devastated by the closing or down-sizing of companies and plants. Maybe we can get a list going here of companies and plants you know in your local area that have been shut down--hopefully with details of why--as testimony showing how the rapacious greed of Wall Street has disrupted and even destroyed the livelihoods and lives of working Americans, their families, and their communities.
Thinking of it as giving the finher to Herman Cain and the 53 percenters by showing them that, yes, Wall Street's pirate capitalism is to blame if you can;t find a job.
For example, Quicklund wrote that about his
old hometown, Waukegan. It's the former home of Johnson Motors/OMC the once-famous outboard engine company. Ironically (for me) OMC labels are today slapped on products made outside Kenosha. US Steel, Johns-Manville, and many smaller facilities are gone. I think I have heard that Abbott Labs is going to close their original manufacturing plant/Corp HQ site in North Chicago. That will leave US Gypsum as about the only legacy industry in the area.
Frank in WA wrote that Hoquiam in the bay of Grays Harbor in the state of Washington just lost
Grays Harbor paper which produced a 100% recycled office paper product with 100% renewable energy. It's a shame that a manufacturing company producing a responsible paper product couldn't make a go of it.
I spent five hours last night giving informal economics classes at #Occupy Raleigh. I was dismayed by how many Occupiers lack of knowledge of how the real economy functions, and how it has been asset stripped and looted by the banking and financial system over the past three decades. But I was heartened that there were a number of people familiar with these problems, and by the eagerness with which many people asked questions and tried to improve their understanding.
One of the most pernicious economic falsehoods is that America’s industries were ravages because they were unable to compete with cheaper labor overseas, so the problem that needs to be solved is how to get American workers to accept less money and benefits. But what I was writing about back in the 1980s was how corporate raiders and financial manipulators were destroying companies by overloading them with debt, outright financial looting, and plain mismanagement. The “consultancy” and “investment” company Mitt Romney headed, Bain Capital, was notorious for plundering companies it had taken control of. For example, KB Toys, which Bain took over in 2000, soon after Romney left to manage to 2000 Winter Olympic, was forced by Bain to borrow $67 million to pay KB Toy executives (who were now Bain executives) $31 million in bonuses PLUS pay $85 million in dividends to Bain. Two years later after this plundering by Romney’s firm, KB Toys filed for bankruptcy.
In his 2009 book, The Buyout of America: How Private Equity Will Cause the Next Great Credit Crisis, New York Post business reporter Josh Kosman notes (page 106):
Fourteen of the largest American private-equity firms had more than 40 percent of the North American companies they bought from 2002 until September 2006 borrow money to pay them dividends…. Mitt Romney was a pioneer of this strategy. His private equity firm, Bain Capital, was the largest PE (private-equity) firm to make a serious portion of its money not from selling companies or listing them on the stock exchange, but rather by collecting distributions and dividends, which in this context is the exact opposite of reinvesting in a company. Bain Capital is notorious for its failure to plow profits back into its businesses.
(Funny note: the Wikipedia entry for Romney cites Outboard Marine Corporation (OMC, see quoted comment above about Johnson Motors/OMC in Waukegan, Illinois), as a Bain “success.”)
This is not a new problem – Wall Street and the financial system have been looting America for decades. For example, look at what really happened to the U.S. footwear industry in the 1980s. Was it really killed off by cheap foreign imports? NO, it was destroyed by the financial manipulations of pirate capitalists like Mitt Romney.
Here is what actually happened to one leading American shoe manufacturer, Florsheim, in the 1980s. And it has nothing to do with foreign competition and cheap overseas labor. This is from the nine-part series America: What Went Wrong published by the Philadelphia Inquirer in October 1991. Researched and written by Inquirer reporters Donald Bartlett and James Steele, the series generated the largest ever response in the Inquirer’s history – over 20,000 requests for reprints and extra copies, leading to the publication a few months later of the series in book form. Bartlett and Steele cast an unblinking eye on the financial manipulations that were remaking the American economy – at the time, celebrated in the pages of the Wall Street Journal, business school lecture halls, and $1,000 a plate political fund raisers as "unleashing the creative spirit" of American entrepreneurs. This is just one of the dozens of actual case studies Bartlett and Steele brought attention to:
Interco, Inc., a once-successful Fortune 500 conglomerate whose products included some of the best-known names in American retailing - Converse sneakers, London Fog raincoats, Ethan Allen furniture, Florsheim shoes. In that year the investment banking firm Wasserstein Perella & Co. set out to reorganize St. Louis-based Interco, a company with scores of plants operating in the United States and abroad.
Interco could trace its origins back more than 150 years. It was one of the country's largest industrial employers, with 54,000 workers. It had annual sales of $3.3 billion. It had paid dividends continuously since 1913.
In the summer of 1988, a pair of corporate raiders out of Washington, D.C., brothers Steven M. and Mitchell P. Rales, targeted Interco for takeover, offering to buy the company for $64 a share, or $2.4 billion. To fend off the Raleses, Interco's management turned to Wasserstein Perella, which came up with a plan valued at $76 a share. Interco obviously did not have that kind of cash lying around. So the plan called for the company to borrow $2.9 billion.
The financial plan was the sort that Wall Street embraced with great enthusiasm. Supporters of corporate restructurings insisted that debt was a positive force, imposing discipline on corporate managers and forcing them to keep a tight rein on costs. Said Michael C. Jensen, a professor at the Harvard Business School, who was one of the academic community's most vocal supporters of corporate restructurings, "The benefits of debt in motivating managers and their organizations to be efficient have largely been ignored."
As it turned out, Interco failed to be a textbook model for the wonders of corporate debt. Instead of encouraging efficiency, it compelled management to make short-term decisions that harmed the long-run interests of the corporation and its employees. Within two weeks of taking on the debt, Interco closed two Florsheim shoe plants - and sold the real estate. Interco announced that the shutdowns would save more than $2 million. That was just enough to pay the interest on the company's new mountain of debt for five days.
At the Florsheim plant in Paducah, Kentucky, 375 employees lost their jobs. At the Florsheim plant in Hermann, 265 employees were thrown out of work. None was offered a job at another plant.
So how about it, my fellow Kossacks? If you know the details, however sketchy, of how and why a plant or company or business was shuttered and closed near you, because of the financial manipulations of Wall Street’s pirates and usurers, please note the story here.
Hopefully, it will become accurate ammunition for the growing #Occupy movement to use in its fight against Wall Street and high finance.