Kerry Candaele, a producer for Brave New Films, is
currently interviewing workers laid off as a result of private equity
takeovers for BNF's second short documentary in its "War on Greed"
series at www.warongreed.org.
Rockford, Illinois, as a city, is a bit player in our national drama.
The city did, for a few years in the mid 1940s, host The Peaches, a
perennial champion of the All American Girls Professional Baseball
League, the team on which Madonna and Tom Hanks went through their
antics in A League of Their Own (remember "There's no crying in
baseball")? But in general America's kleig lights are focused
elsewhere, on celebrity cities and celebrities themselves, where our
journalists tag along after the money and the mayhem.
But Rockford deserves a second look this holiday season, as 137 men
and women walk a picket line in sub-zero weather, locked out by the
Accuride/Gunite Corporation recently sold by the private equity firm
Kolhberg Kravis Roberts & Co. (KKR), whose CEO, Henry Kravis, is the
subject of Brave New Films' new War On Greed
video series.
In our brave new world of high finance, private equity firms have
maintained, until recently, an aura of celebrity themselves, claiming
the high ground of free-market orthodoxy in their breathless claims --
like a good Victorian parent to the spindly adopted orphan -- about
taking undervalued and underperforming companies, building them up and
selling them off in a win-win-win trifecta for workers, investment
partners, and the U.S. economy as a whole. Some of the workers in the
Accuride/Gunite brake drum foundry in Rockford, however, would beg to
differ with KKR, Mr. Kravis, and the whole private equity model. In
fact, they are calling Henry out.
David Buchanan and Rick Kardell, both active members of the United
Auto Workers (UAW) with long family connections to the foundry, stood
around a metal drum filled with firewood outside the Gunite front gate
on Rockford's east side where I visited with them this week. Gloved
hands outstretched in iconic fashion over the flames, snow on the
ground on all sides, David and Rick spoke with bitterness about the
realities of KKR's buy out of Accuride/Gunite in 2005. "KKR came in
with an aggressive new management that changed the whole nature of the
workplace," Kardel points out. "For years we felt like a family, a
unit, I mean it was a two way street. We would give when we had to,
and they would give when they had to, but that's gone completely. It's
not there anymore. There's no relationship between the union and the
company, and they're trying to get rid of that even more. They're
trying to take the voice out of the workplace right now for us. But
that has been since KKR has come in and done this."
Things have changed at the Rockford foundry. The new Accuride/Gunite
is home to numerous OSHA violations (including a collapsed floor that
left workers hanging in the air, waiting to be rescued by the local
fire department), and a drain on investment in this profitable
company. Buchanan, a man with charisma to burn whose family has given
over 50 years to the company, sums up the KKR culture with a story
that is the sine qua non of their efficient, lean and mean management
style.
Wrapped in several layers and wearing one of those floppy-ear hats
that make him look 200 pounds to the wrong side of healthy living,
David's words vaporize as they leave his mouth: "One of the employees'
brothers had a heart attack and the employee left work and went to see
his brother. Well, his brother died. He ended up dying. When the guy
came back to work management disciplined this man for the day that he
left when his brother had the heart attack. They said the reason why
you're being written up is because your brother didn't die that day.
HE DIDN'T DIE THAT DAY! This is what kind of company that we're
dealing with. This was a model employee. This was somebody who didn't
miss work, worked 60, 70 hours a week, was there all the time. He was
a good employee, and he had no write-ups prior to that. And they
disciplined him for missing that day because his brother did not die
on that day. Sad."
For those who prefer their stories less Bob Cratchity and more of a
Scroogist counting-of-the-pennies, one internal study shows that KKR,
which sold Accuride/Gunite in May, 2007 for less money than the
purchase price, still made a profit in fees worth millions and the
writing off of "carried interest," a tax loophole that even Warren
Buffet thinks should be eliminated. KKR, by one estimate, extracted
over $191 million and over $16 million in fees.
Henry Kravis made over $50,000 an hour (that is not a typo), every
hour of every day last year. David Buchanan makes roughly $22 an hour
in each inelegant forty-hour week.
Indeed, there is no crying in baseball, but there ought to be a howl of
outrage -- in Congress, in the business press, in the country at large
-- at the worst of the private equity aces who
have now no doubt flown south "to winter" in St. Kitts or shoosh about
in the Dolomites, while the comrades at Gunite bide their time on the
line and, for the moment, bite the bullet.
I'm trying not to be mawkish here, as there is both good cheer and a
bit of despair on the line in Rockford, as there have been since the
first picket line took shape in front of an ancient pyramid or a
half-dug ditch during the Shang Dynasty. But I'd take this sweet and
sour mélange any day over the gaudy Upper East Side bliss on Park
Avenue where Henry Kravis maintains his twenty-six-room townhouse
mansion. For our benefit, these contrasting and contemporary images
can focus the mind.
These facts pose the ultimate questions -- and they call Henry Kravis
to the conversation -- about what it is we are here to do on this
earth. Are we here to make billions, refine the art of the deal, to
hold to the contract of mutual indifference that seems to be an
increasing feature of American life? Or do we act in accordance with
virtues that have more to do with thick solidarities between people
who, even though unknown to one another and a thousand miles away,
need to care and to connect? These questions should answer
themselves, and easily; but, seemingly, they do not.