Putting Simmons to Sleep
For most of the 133 years since its founding in a small city in Wisconsin, the Simmons Bedding Company enjoyed an illustrious history.
Presidents slumbered on its mattresses aboard Air Force One. Dignitaries slept on them in the Lincoln Bedroom. Its advertisements featured luminaries like Henry Ford and H. G. Wells. Eleanor Roosevelt extolled the virtues of the Simmons Beautyrest mattress, and the brand was immortalized on Broadway in Cole Porter’s song “Anything Goes.”
Its recent history has been notable, too, but for a different reason.
Simmons says it will soon file for bankruptcy protection, as part of an agreement by its current owners to sell the company — the seventh time it has been sold in a little more than two decades — all after being owned for short periods by a parade of different investment groups, known as private equity firms, which try to buy undervalued companies, mostly with borrowed money, and then “flip” the company for profit.
For the rest of this excellent article in the October 4, 2009 N.Y. Times go to: http://www.nytimes.com/2009/10/05/business/economy/05simmons.html?_r=1&scp=1&sq=simmons%20mattress&st=cse
For a related article see:http://www.nytimes.com/2009/10/05/business/economy/05simmons-side.html?ref=economy
Last Batch Bronx Bakery
Standing at long tables at the end of an assembly line, gowned women pack what are likely to be some of the last biscotti, fudge stars and breadsticks produced at the Stella D’oro bakery plant in the Kingsbridge section of the Bronx. The women stack 10,000 cookies a day into plastic trays.
A tiny label on the packages says the cookies were made in a union bakery. These will be collector’s items. Why?
More than a year ago, Brynwood Partners, a private equity firm that owned Stella D’oro, opened negotiations with the union representing its bakers and packers. The owners had a list of demands. They wanted, for instance, to cut the salaries of the women packing the cookies by $1 an hour for each of the next five years. They are now making $18 an hour; at the end of the contract, they would be making $13. Other changes included the elimination of a pension plan.
These cuts were needed to keep the business going, the Brynwood negotiators said, to make pay and benefits comparable with other jobs in the Bronx.
For the rest of this excellent article in the October 6, 2009 N.Y. Times go to:
The demise of Stella D’oro also is richly detailed in a Feb. 6, 2012 New Yorker article.
Money Managers Created Capitalism Crisis
Prof. L. Randall Wray says in recent think tank paper that the absence of proper regulation coupled with perverse incentives has caused capitalism to be “dominated by highly leveraged activities seeking maximum returns in an environment that systematically underprices risk.” To correct this problem, he suggests that further financial consolidation be discouraged, esoteric investment products curtailed, and market stability rather than speculation promoted.
L. Randall Wray is a professor of economics and director of the Center for Full Employment and Price Stability at the University of Missouri–Kansas City.
From Boomerang by Michael Lewis:
Finance is now detached from productive enterprise and instead consists of the same players trading bits of paper among themselves at increasingly inflated values.