Earlier this year KKR purchased over 90% of the outstanding equity of WMF, a south German tableware manufacturer, founded in 1853 in Geislingen an der Steige, Germany, by the miller Daniel Straub and the Schweizer brothers.
On August 21, 2014 WMF announced that the Group business performed at a stable rate in first-half 2014 achieving a gross revenue of EUR 462.6. Overall revenue grew by 3% and the realised operating profit (EBIT) increased to EUR 27.6 million in comparison with EUR 17.7 million in the prior year.
On August 28, 2014 Buyout group KKR said it had obtained more than 90 percent of WMF's share capital, putting it on track to gain full control of the German cutlery and coffee-machine maker and delist it.
KKR invested 586 million Euros. It announced that it intends to find savings of 30 million Euros a year requiring the firing of hundreds of employees and the likely divestiture of some parts of the business.
There has been a lot of discussion in Germany since the financial crisis focusing on the so-called "locusts" of private equity.
The thinking is that these financial investors are only concerned in returns. They represent no social value. They don't possess a moral compass and have no compunction in destroying companies and the communities that rely upon them.
They raise funds with the stated goal to find companies that are not maximising their potential, purchase them, and through either divestiture or cost cutting, a euphemism for cutting employees, maximise the return and then sell the more valuable company on, often to another financial investor.
This is the hard end of capitalism.
It is why there is a need for regulation.
30 Millionen Euro will der neue Eigentümer KKR jährlich sparen, hunderte von Arbeitsplätzen abbauen
Wie funktioniert das Ganze? Ein Finanzkonzern wie KKR leiht sich Geld, etwa bei Banken oder Pensionskassen, um einen Fonds zu gründen. Damit kauft er Firmen wie die WMF. In nur wenigen Jahren werden die Unternehmen auf Erfolg getrimmt. Durch Verkauf einzelner Sparten oder den Abbau von Arbeitsplätzen. Das Ziel: mehr Profit. Dann wird die Firma weiter verkauft, der Fonds aufgelöst und die ursprünglichen Geldgeber werden ausgezahlt.
Monday 13 October 2014
Thursday 9 October 2014
Employment is the Goal
I read two conflicting articles yesterday about the levels of unemployment in Europe. The one focused on the "Participation" rate as an explanation that things aren't maybe as bad as they appear. The other suggested that changing labour laws to make it easier for employees to be fired would be the solution to Europe's unemployment dilemma.
First of all the discussion around the Participation rate essentially says that in looking at unemployment figures it is not only a question of how many people are employed but also measures the number of people either employed or actively looking for work as a share of the working-age population. Simply put if large numbers of people who could work have stopped looking and more importantly have stopped registering as unemployed then they fall off the radar and the unemployment numbers go down.
This is happening in the US apparently, while in Europe the participation rate is increasing ie more people are actively seeking employment and so even if the number of actively employed were to stay constant as a percentage of the employable population the unemployment rate would increase.
In any event all the article actually proves is that the statistics are eminently massagable depending on what you want to prove. For those of you who care the writer of the first article works at a major UK fund manager and their sources, Bloomberg, claims that the particpation rate in Europe is rising while in the US it is falling.
The second article was written by an American geopolitical thinktank. Their angle is that unemployment is the single most dangerous challenge the European Union faces and that the unemployment figures are understated as many Europeans are no longer looking for employment.
Go figure.
But their underlying assumption is that it is essentially a question of labour law regulations. In one breath they support austerity and claim that reforming labour laws to allow companies to fire employees easier will boost employment.
To be fair, the argument is that if an employer knows that they can fire an employee if the market turns against him then that same employer might be more willing to take on a new employee in the first place.
And they are probably right.
But it puts a lot of hope in the ethics of employers not to abuse the system.
My next post will look at a class of employers for whom ethics are beyond the pale.
First of all the discussion around the Participation rate essentially says that in looking at unemployment figures it is not only a question of how many people are employed but also measures the number of people either employed or actively looking for work as a share of the working-age population. Simply put if large numbers of people who could work have stopped looking and more importantly have stopped registering as unemployed then they fall off the radar and the unemployment numbers go down.
This is happening in the US apparently, while in Europe the participation rate is increasing ie more people are actively seeking employment and so even if the number of actively employed were to stay constant as a percentage of the employable population the unemployment rate would increase.
In any event all the article actually proves is that the statistics are eminently massagable depending on what you want to prove. For those of you who care the writer of the first article works at a major UK fund manager and their sources, Bloomberg, claims that the particpation rate in Europe is rising while in the US it is falling.
The second article was written by an American geopolitical thinktank. Their angle is that unemployment is the single most dangerous challenge the European Union faces and that the unemployment figures are understated as many Europeans are no longer looking for employment.
Go figure.
But their underlying assumption is that it is essentially a question of labour law regulations. In one breath they support austerity and claim that reforming labour laws to allow companies to fire employees easier will boost employment.
To be fair, the argument is that if an employer knows that they can fire an employee if the market turns against him then that same employer might be more willing to take on a new employee in the first place.
And they are probably right.
But it puts a lot of hope in the ethics of employers not to abuse the system.
My next post will look at a class of employers for whom ethics are beyond the pale.
Monday 6 October 2014
Seeking Truths from Facts
I was recently in the US for my summer vacation and one of my small pleasures is to read the title stories of magazines such as the National Enquirer just to see what weird ideas their editors come up with to sell their magazine.
In addition to the usual "I was abducted by aliens" stories there were any number of bizarre claims about the lives of the rich and famous running from what some fourth rate soap star is doing to what's going on in the White House.
I found it hard to believe that anyone actually takes anything of what they read in such publications to be true, but then as I tried to watch the news and flipped through various news websites I begin to think that I might just be demonstrating my naivety couched in a blanked of intellectual snobbism.
Now some people might maintain that I have been outside the US too long and have not lived through the decline of the media to the point that it is difficult to know what to believe regardless of the source.
But watching the reporting on the Ebola epidemic and the amount of scare mongering in the press it is clear to me that there is no interest in reporting constructively but rather every possible opening for sensationalism is mined to provide headlines a la National Enquirer even from what I had previously held to be respectable publications.
One of my more disappointing realisations was that the Huffington Post, once a viable provider of alternative views on significant news items has essentially morphed into a Fox National Enquirer mishmash.
I am not sure who is feeding whom but the focus of the news and the polarisation of American society seem to be woven together in such an unhealthy symbiotic relationship that it is impossible to know what facts can I trust in analysing a situation to try and distill some acceptable version of the truth.
In addition to the usual "I was abducted by aliens" stories there were any number of bizarre claims about the lives of the rich and famous running from what some fourth rate soap star is doing to what's going on in the White House.
I found it hard to believe that anyone actually takes anything of what they read in such publications to be true, but then as I tried to watch the news and flipped through various news websites I begin to think that I might just be demonstrating my naivety couched in a blanked of intellectual snobbism.
Now some people might maintain that I have been outside the US too long and have not lived through the decline of the media to the point that it is difficult to know what to believe regardless of the source.
But watching the reporting on the Ebola epidemic and the amount of scare mongering in the press it is clear to me that there is no interest in reporting constructively but rather every possible opening for sensationalism is mined to provide headlines a la National Enquirer even from what I had previously held to be respectable publications.
One of my more disappointing realisations was that the Huffington Post, once a viable provider of alternative views on significant news items has essentially morphed into a Fox National Enquirer mishmash.
I am not sure who is feeding whom but the focus of the news and the polarisation of American society seem to be woven together in such an unhealthy symbiotic relationship that it is impossible to know what facts can I trust in analysing a situation to try and distill some acceptable version of the truth.
Wednesday 1 October 2014
Victors, Vanquished and Who Writes History
I recently had the pleasure to celebrate my 30th wedding anniversary where, somewhat under the influence of alcohol, I entered into a discussion of my July 3rd post "From the Outside Looking In" with some of my friends. The following is a response to them in letter form:
Hi Guys.
I have returned to London and after recovering from jet lag and partying I re-read the blog from July 3rd. I think I understand why you thought it might have been difficult to determine my nationality given the perspective from which I write.
To be frank I think over the years whenever I write about Germany I try to make a distinction between good Germans and bad Germans with an eye to their recent history and my relationship to it.
For if indeed history is written by the victors we run the risk of not only allowing the victors to write the history of the wars, but to also allow them to rewrite the entire history of the vanquished. That is what I was trying to present in the blog using the English take on the American Revolution. As we discussed I am sure that the Vietnamese take on the Viet Nam war is very different from ours. Indeed, the next time you go on a golf outing go to Bayeux in Normandy and check out the French take on William the Conqueror's "trip" to Hastings.
Recently I inherited a book from my father-in-law written in 1901 entitled "A Century of German Victories". They had no sense of guilt or shame but rather pride in their military prowess. And yet when one thinks of the modern German state we invariably find the seeds of the Third Reich in the creation of Prussia.
I am not pretending to suggest that there is no connection. But I think however that it is along the lines of the minority report-an excellent science fiction book and ok film-where even if the majority of predictions presume result 'x' there will be a report which predicted result 'y' which was never allowed to come to fruition.
History is not a straight line although the concept of manifest destiny goes a long way to suggesting that there are geopolitical themes which are almost inevitable. That doesn't have to result in genocide, though there may be a case to be made given the slaughter of the Indians in America's charge to the West and the destruction of European Jewry encapsulated in Germany's Drang nach Osten.
But that is not what I was writing about on July 3rd. I was trying to give a voice to a nation's history "before the deluge" that is not normally granted to it.
I would hope that all nations are given the opportunity by third parties to understand not only how the world sees them-but to also get a glimpse as to how they see themselves.
It could give a new meaning to the idea of globalism.
Regards,
mz
Hi Guys.
I have returned to London and after recovering from jet lag and partying I re-read the blog from July 3rd. I think I understand why you thought it might have been difficult to determine my nationality given the perspective from which I write.
To be frank I think over the years whenever I write about Germany I try to make a distinction between good Germans and bad Germans with an eye to their recent history and my relationship to it.
For if indeed history is written by the victors we run the risk of not only allowing the victors to write the history of the wars, but to also allow them to rewrite the entire history of the vanquished. That is what I was trying to present in the blog using the English take on the American Revolution. As we discussed I am sure that the Vietnamese take on the Viet Nam war is very different from ours. Indeed, the next time you go on a golf outing go to Bayeux in Normandy and check out the French take on William the Conqueror's "trip" to Hastings.
Recently I inherited a book from my father-in-law written in 1901 entitled "A Century of German Victories". They had no sense of guilt or shame but rather pride in their military prowess. And yet when one thinks of the modern German state we invariably find the seeds of the Third Reich in the creation of Prussia.
I am not pretending to suggest that there is no connection. But I think however that it is along the lines of the minority report-an excellent science fiction book and ok film-where even if the majority of predictions presume result 'x' there will be a report which predicted result 'y' which was never allowed to come to fruition.
History is not a straight line although the concept of manifest destiny goes a long way to suggesting that there are geopolitical themes which are almost inevitable. That doesn't have to result in genocide, though there may be a case to be made given the slaughter of the Indians in America's charge to the West and the destruction of European Jewry encapsulated in Germany's Drang nach Osten.
But that is not what I was writing about on July 3rd. I was trying to give a voice to a nation's history "before the deluge" that is not normally granted to it.
I would hope that all nations are given the opportunity by third parties to understand not only how the world sees them-but to also get a glimpse as to how they see themselves.
It could give a new meaning to the idea of globalism.
Regards,
mz
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