Better go lock the dupe

https://www.ar15.com/forums/general/Remington-article-from-NYT/5-2217386/

Interesting article, sucks for the guys in AL.

Also not surprising at all

In on the main thread!!

I'll have to find an old post, my laptop crashed after Christmas

HE DID

Private equity firms are the devil incarnate.   They make millions and don't give a damn about the debris fields they leave behind.  So many lives ruined to enrich a few.  It is not capitalism at all.  They should be illegal.

I don’t understand what the purpose of talking about desegregation in the article was.

KKR owns Academy Sports. The clock is ticking on them too if private equity historical actions are an indicator. Toy's R Us got killed the same way.

close enough

Christmas is over

That was incredibly rude of less_than_zero to dupe the penguin almost 12 hours before he got around to posting this story. Should get a time-out for pre-duping.

Black communities with low education rates are being used as disposable labor, just by companies instead of a single master. Except since the people are not slaves the company has no stake in the employees' wellbeing. Go to class or learn a trade unless you want to be a disposable person.

This is how the penguins get their posts count up.

also all the Milken crap, most people have seen Wall Street.

Good read. Thanks for finding this and sharing OP. I don't think any other ARFCOMer would have ever posted this here since it is from the MSM NYT.

The private equity firms will be the end of a lot of companies

That’s funny, because it seemed their strategy with Chrysler was to starve it of cash, run it into the ground, and have the government pay back their investment

With the exception of the liberal BS sprinkled throughout, I can say they hit the nail on the head. There's a huge gross negligence problem at the Huntsville plant and it starts from the top down. They have slowly been withering since I started there and now they've gotten to the point where they can barely keep two shifts operating. I want to see them start moving in the right direction, not only because they sign my checks, but because I appreciate the history of Remington and what they've accomplished in the last 203 years. There's a plethora of issues with Remington and the Huntsville plant in general, but many of those issues are able to be resolved if there is a change in strategy and in leadership starting from the top of the ladder. I hate to see them struggle from the inside, but that's the nature of the beast when you sell out to a company like Succubus (Cerebus). Just my .02.

The article isn't bad, but could be better.
Here are a few things the author ommitted:
1.  The holding company Cerebus created to purchase Remington was called the Freedom Group.
2.  I saw no mention of Sandy Hook.
3.  After Sandy Hook, a large investor in Cerebus, the Cal. St. Teachers Union, did not want their retirement money invested in a gun company.  They wanted out.
4.  I understand that Cerebus had Remington take on the large loans in order to buy out the CSTU.
5.  Cerebus no longer owns Remington.  The former creditors now own it.

It did seem to wander all over the place and lose focus.  It was not written particularly well.
Reminded me a bit of a Michael Moore movie.

Not entirely true in my (albeit limited) experience. I have heard horror stories but good PE firms provide more than just financial support.

They help turn businesses around, provide capital for growth, provide connections and expertise, etc.

They are generally very well aligned with capitalism. There are some predatory groups out there for sure, but that too is capitalism.

Absolutely zero need for additional regulation. Period.

An Aimless dupe? Not possible.....

Sure makes you see some of the reasoning behind all the "corporate greed" hate.

Ditto, when these private equity firms get a hold of a company, they drain it for as much money leaving current owner and creditors holding the bag. Many good company's demise went that way. These equity companies have zero interest in running the company as an on-going concern.

I finished the article, and some of it is just bullshit:

Huntsville is a de facto segregated city.
- I actually agree with this.

Pastor T.C. Johnson, of St. Luke Missionary Baptist Church, recounted to me how while he was in the Army in the early 1990s, real estate agents didn’t show him houses in South Huntsville, the white side of town. He was unaware South Huntsville existed until some of his Army subordinates, who were white, bought homes there.
- Bullshit.  Absolute bullshit. The Redstone Arsenal currently has 2 gates that butt up against South Huntsville, and even had more before 9/11 caused the post to change security/access procedures.  In the early 1990s, South Huntsville was the up and coming place to live in. I don't know shit about Pastor Johnson, but if he was getting lower enlisted BAH, he couldn't have afforded South Huntsville. And, was his real estate agent black by chance?  Maybe the agent assumed he'd be more comfortable in the blacker part of town.

Since 1965 Huntsville’s schools have been under a federal desegregation order, which compels school districts to remedy race-based inequality. Johnson’s oldest son attended Mae Jemison High, a predominantly black school that the state classified as failing. White students at nearby schools “were so far ahead of my child it was almost sickening,” he said.
- Not true. Huntsville City Schools voluntarily agreed to continue making efforts to "remedy race-based inequality" in 2013. It is even in the fucking link the NYT provided. Jemison High sucks, in part because every black family that can afford it would rather send their kids to private school than to JHS. Not to mention, "the community" around Jemison is still butthurt about it replacing the old high school, Johnson (named for a staunch ass segregationist, BTW). The same time Johnson closed, another high school that had a poor, white demographic closed - Butler. There was not any "they tying to whitewash our history" bullshit from the Butler alumni. If it sickenates him, then he should do something about it, but I guess any of the Catholic schools (which offer scholarships to those who can't afford it) are out of the question since Mr. Johnson is a Pastor at a MBC.

Johnson’s experience was of a piece with the racial hierarchy in Huntsville. Blacks make up 31 percent of the city’s population but make up 16 percent of its police force.
- How does that differ from other metropolitan areas in the South?

Unlike Birmingham and Mobile, there has never been a black mayor in Huntsville.
- Birmingham is 75% black and Mobile is over 50% black.  Since Huntsville is only 31% black, this isn't some conspiracy.

Though blacks, like all Huntsvillians, paid the taxes that supported lucrative incentive packages, they seldom reaped the rewards of the best-paying jobs. This reality was of course not felt by whites, Johnson said. For whites, “that’s just the way it is.”
- I've also paid the taxes to support the police force which has has had to respond to the higher crime in the other areas. I have seen Huntsville Hospital install a TSA like checkpoint to the ER. That's just the way it is.

Classes for new hires were held three days a week, every week. About a year after the factory opened, leaders in Huntsville’s black community, including Johnson, began to hear reports from inside. Johnson was disappointed but not surprised to learn from his parishioners that on the Remington line, the usual racial divisions manifested. Most of the line workers were black, whereas most of the managers and engineers were white.
- Oh where to begin.  A year's worth of training was provided by the state for those line workers (there were also programs at the area JUCOs specifically for Remington; unsure if those were free to the students or if they had to pay like a regular community college class or not) which is obviously needed to be taken advantage of by the people needing jobs - who happen to be black - and this is a problem?  Regarding the engineers being white; the lack of minority in STEM fields has been well documented. It isn't exclusive to Huntsville. Regarding the management being white; was this management relocated from Ilion (95% white), Saint Cloud (91% white), or somewhere else Freedom Group consolidated (with the exception of AAC and TAPCO located in the ATL metro area were all in in very white areas)?  Considering Huntsville is one of the most educated cities in America, some bullshit Business Administration degree from a degree mill might not cut it.

And the next paragraph:
As a result, he tended to be suspicious of Southern bosses — “I have a warped mind when it comes to Alabama,” he told me — and he expected an oppositional management at Remington. But another obstacle surprised him.
Oh, so Remington treating it's employees like shit isn't because of the systemic racism in Huntsville, Alabama, or the South?  This was Freedom Group being Freedom group.  Shocking... I could have read ARFCOM to figure that out.

True, however if you really consider the reality here, equity firms are more of a death knell of companies that are already going out of business.

For a business to get picked off by one, it has to be in dire straits that the sale would be appealing.

Pretty decent article, reminded me heavily of Brian Alexander's Glass House.

We saw a lot of this happening in real time here.  Bushmaster went to shit, AAC lost their presence , Marlin turned into remlins etc.  How many duds are in a 2013 production brick of golden bullets?

Cerberus is aptly, abet unintentionally named.  It really is the hound of hades.

There seems to be a continuum between two extremes of shitty quality, on one hand you have old Detroit type stuff where cars are built by unfireable drunk/high people, on the other, if you pay temps peanuts with shitty management, its equally bad.

That's quite a profit margin to screw up.  Private equity sure does love fleecing companies and then running them into the ground.

BLUF: Bad management (including ownership) kills companies with good products.

In my working life, I have worked a variety of places, including three manufacturing companies. All three are no longer in business. I was laid off from two, and I left the third a few months before it died. All three had good products with strong markets sales, but all three had the same fatal flaw - bad management. In each case, all were private companies, that were owned and managed by members of the same family, often multi-generational. Without fail, disfunctionality within the familes spread to the management of the company, and the death spiral started.

Usually the family disfunctionality and bad management were tied to money issues. In a "good" company, it makes a product, sells the product, then pays employees, suppliers, and other obligations with income received from sales. Leftover funds after meeting obligations went to employees (raises, incentives, future investment in the facility, etc.) In the companies I worked for, it always seemed to be make a product, sell the product, pay employees with income received from sales. No raises or incentives, and playing revolving credit games with and maybe stringing along suppliers, and other obligations. Leftover funds were gobbled up somehow, usually in luxuries for the management. Over time, this spread to employees being laid off / fired, so managment could continue their lifestyles, and so eventually the products suffered, market sales suffered, and so on.

Remington appears to be the same story, in a different way. JMHO.

This...I work, kind of, in the industry. Also, I have to read the article but Cerberus is not just private equity. They are involved in distressed investing but they also have hedge funds. If i recall they held Remington under their hedge fund platform. Reason I say that is cus I know a firm that was invested in one of their hedge funds. Could be incorrect though.

And running them into the ground is not necessarily a goal most of these firms want. It makes more sense and makes them more money to improve a company and sell it off than it does running it into the ground. Make more money over the long run than you do burying one. If company is already failing, yh makes sense cus parting it out etc can make sense and return profit.

Some posters are more equal than others.

Can someone explain how PE firms make money running businesses into the ground? Wouldn't they want companies to be successful so they could sell them?

statist from NY? Check!

and thats gross, not net

It's a shell game, money moved to Cerberus, debt moved to Remington - it's buried in four paragraphs of the article.

Long read.

Interesting.

Those smart guys in the big buildings playing average Americans like suckers.

I wonder if Trumps Bumpstock BS was/is an lame attempt to panic people into buying more guns?

Good job not highlighting that part that says there were sensible reasons as to why it was done, such as doing what they did made the debt cheaper etc.

Same question has crossed my mind,

Academy seems to be doing well in Tallahassee.

Lol, bullshit. Plenty of minorities in STEM...

It's just that they are Asian, so they don't count. Doesn't fit the narrative

Yep.

SOP is to buy a company, milk it for everything it's worth, load it up with debt to milk even more money out of it, then declare bankruptcy to leave someone else holding the bag.

That would be true if they weren't abusing bankruptcy laws.

What these PEFs usually do is bloat them up with as much debt as they can first and funnel all the money right up to themselves, then declare bankruptcy.

There is much less risk and effort involved in running a company into the ground.

It's interesting that that article managed to find a racial angle on what is at its core a financial story.

But, it is the NY Times and parts of the story did occur in Alabama, so I suppose they'd be remiss if they didn't.

They bloat the business up with debt, funnel the money to the PEF, then declare bankruptcy. Usually before they declare bankruptcy though they have already sold off most of the assets, leaving the creditors with nothing.

They are fucking rent-seeking vultures and barnacles that use regulatory loopholes to enrich themselves at the expense of others. literally.