Wall Street Journal Opinion Page April 17/18 2010
Wednesday, April 21st, 2010WSJ Opinion Page April 17/18 2010
by: Geoff Ficke
I read with great interest the opinion piece written by the Pres. of the AFL-CIO, Richard Trumka, decrying the growth of private equity funds. As leader of the country’s largest industrial union I would think he could have identified much stronger examples of hedge funds causing ” default, resulting in massive job losses and further pressure on our fragile economy”.
Each of the six specific companies Mr. Trumka cited as examples of private equity hubris and mismanagement were either retailers or retail vendors. Any observer, possessing any historical perspective can cite dozens of such companies that, because of changing tastes or demographics, enjoyed a period of success, plateaued and then declined and expired without any financial manipulations from shadow financiers (Montgomery Ward, Alexander’s, Value City, Bonwit Teller, Faberge, etc.)
Indeed, the three retailers mentioned (Linens & Things, KB Toys and Mervyn’s) by Mr. Trumka were always second banana’s in their sales channels and probably should have been put out of their misery long ago. They could not compete on price, selection and service.
I would propose that the AFL-CIO and the now unemployed workers at Simmons Bedding Company should have taken the exact path that the pirate hedge funds undertook. Put their capital, both financial and labor at risk. Pool their resources, rationalize their work rules, wages and benefits and buy the Company from bankruptcy. Certainly this would be a better use of the massive capital resources that unions control than continuing to dump millions of dollars into supporting the Democratic Party. The choice was workers or policitians. The AFL-CIO usually chooses poorly.
