Corporate community, ruined after Icahn episode, votes Trump oblivious that Icahn is his gatekeeper

Posted by DanielS on Thursday, 09 February 2017 16:17.

Together back in the 80s, when Carl Icahn was showing Donald Trump the ropes of “corporate-take-over”, such as his plunder of TWA.

The Carl Icahn episode that pilfered the corporate culture of the once bustling American town—Lancaster, Ohio—is highly instructive of itself. It provides a lesson in its farther implications, however, as it set in motion transformations of that corporate culture which effected a perverse irony of its residents becoming Trump voters, seeking a return to their corporate culture as it had been - implicitly White - oblivious to the fact that they are hoping to do this through Trump, whose appointed gate-keeper is Carl Icahn - the very man who plundered Lancaster’s corporate culture and set in motion its transformative demise, with devastating impact upon the now rust-belt town and its people (nearly all White).
 
(((NPR))) doesn’t provide a transcript of portions which refer to Carl Icahn, e.g.

NPR, Glass House’ Chronicles The Sharp Decline Of An All-American Factory Town, 6 Feb 2017:

13:10: Dave Davies: “When did outside financial interests first pose a challenge to the management of Anchor Hocking, this giant of a company?

Brian Alexander: The first time was Carl Icahn.

It is meaningful that the relatively brief episode of Carl Icahn’s corporate raid on Anchor-Hocking did not merely lead to a limited financial downturn following the large (what amounts to) bribe that he levied against the company in order to get rid of him, but it had implicative force which transformed even the subsequent non-Jewish corporate culture, creating a new corporate culture - a new context, if you will. That is the kind of thing that the serious ethno-nationalist will want to examine further.

Ibid:

Brian Alexander: It’s the 1980’s, Carl Icahn has just begun his career of what became known at the time as “green mailing.”

Dave Davies: “Corporate raiding”, “corporate take-overs.”

Alexander: “Corporate raiding”, saying now I’ve just bought 5% of your stock. I want a seat on the board. You’re running your company in a lousy way; and so I’m going to come and make all sorts of trouble for you, but you know, if you want to buy me out, at a profit, at a premium, well maybe I’ll go away; and so that’s exactly what happened with Carl Icahn.

Carl Icahn bought over 5% of the stock of Anchor Hocking, agitated the board, saying you need to make some different decisions, you could be returning more share-holder value and was eventually bought off at what I calculate to be about a three million dollar profit to Carl Icahn.

That episode did not last long, but I argue that it changed Anchor Hocking forever, from then on.

Dave Davies: In what way?

Brian Alexander: It scared people…

........................................................................


NPR, Glass House’ Chronicles The Sharp Decline Of An All-American Factory Town, 6 Feb 2017:

NPR host Dave Davies: We heard a lot in the presidential campaign about anger and frustration among working class voters in America’s heartland. Today we’re going to focus on one factory town in central Ohio that was once a bustling center of industry and employment, but is now beset by low wages, unemployment and social decay.

Lancaster, Ohio isn’t just a research subject for our guest Brian Alexander, it’s his hometown.

His new book tells the story of the company that was once Lancaster’s largest employer - Anchor-Hocking Glass Company was a Fortune 500 company with its headquarters in the town. The company provided jobs, civic leadership and community pride. It’s decline Alexander argues isn’t just a product of increased competition and changing markets, he says the firm was undone by Wall Street investors who had little knowledge of the company and little interest in anything besides short-term profit.

       
        Red arrow locates Lancaster, Ohio

Ibid:

Lancaster, Ohio, the home of the Fortune 500 company Anchor Hocking, was once a bustling center of industry and employment. At its peak following World War II, Lancaster’s hometown company was the world’s largest maker of glassware and employed more than 5,000 town residents.

Though Anchor Hocking remains in Lancaster today, it is a shell of its former self, and the once thriving town is beset by underemployment and drug abuse. Lancaster native Brian Alexander chronicles the rise and fall of his hometown in his new book, Glass House.

“People are genuinely struggling,” he tells Fresh Air’s Davies. “The economy of the town is struggling, not because there’s high unemployment, [but] because the employment that there is all minimum wage, or even lower than minimum wage.”

Fairfield County, in which Lancaster is located, went 61 percent for Donald Trump in the presidential election — a fact that Alexander attributes to the candidate’s message of disaffection. Alexander says on Election Day one Lancaster woman told him she voted for Trump because she wanted “it to be like it was.”


Main Street, Lancaster, Ohio

        The NPR text highlights skip the Carl Icahn portions that would be here and move to the following point in transcription:

Ibid:

On the 1987 acquisition of Anchor Hocking by the Newell Corp.

It was a hostile takeover. It’s still a little bit mysterious exactly how hostile it was, but they buy it in a hostile takeover, and the first thing they do is fire all of the executives and close down the headquarters. So now you have gutted a core group of people that were active in the life of the town. As one person in Lancaster, an old-timer who I interviewed said, “It ripped the heart out of this town.” So you’ve taken away the executives, you’ve taken away their wives, their families. ...

[It was] devastating for the town. And the new incoming people, the people Newell picked to run Anchor Hocking never lived in Lancaster; they all lived in Columbus. There’s a long-standing belief, unshakable belief, that Newell instructed its incoming executives to not live in Lancaster, so as not to be involved in the United Way and other Lancaster civic activities. I could not find any proof of that, but you cannot shake Lancasterians’ belief that that was, in fact, the case. ...

Workers will tell you that Newell was not a bad employer. They were not necessarily unhappy under Newell. It wasn’t the same; it was less of a family atmosphere. Workers who are hourly people and salaried people all say the same thing. They say that the company became somewhat more efficient, that they made money, they made money for Newell, that they were not unhappy under Newell, but it didn’t feel like the old Anchor Hocking, and it never would again.

On how what happened in Lancaster reflects a larger trend in capitalism

When you can pay a foreign worker a third or less of what you’re paying a unionized flint glass worker in Lancaster, that’s an element, but it’s far from the only one. We seem to have this shrugging-shoulders belief that this is all some sort of natural evolution, like how the dinosaurs died. But what I’m trying to argue in the book is that some of this, at least in part, results from a series of conscious decisions [by] politicians, economists, business people, financiers.

        Here is a transcription of the Carl Icahn episode and what ensued:

Ibid:

13:10: Fresh Air Host Dave Davies: “So let’s go through some of this: When did outside financial interests first pose a challenge to the management of Anchor Hocking, this giant of a company?

Brian Alexander: The first time was Carl Icahn.

It’s the 1980’s, Carl Icahn has really just begun his career of what became known at the time as “green mailing”.

Dave Davies: “Corporate raiding”, “corporate take-overs.”

Alexander: “Corporate raiding”, saying now I’ve just bought 5% of your stock. I want a seat on the board. You’re running your company in a lousy way; and so I’m going to come and make all sorts of trouble for you, but you know, if you want to buy me out, at a profit, at a premium, well maybe I’ll go away; and so that’s exactly what happened with Carl Icahn.

Carl Icahn bought over 5% of the stock of Anchor Hocking, agitated the board, saying you need to make some different decisions, you could be returning more share-holder value and was eventually bought off at what I calculate to be about a three million dollar profit to Carl Icahn.

That episode did not last long, but I argue that it changed Anchor Hocking forever, from then on.

Dave Davies: In what way?

Brian Alexander: It scared people.

For eighty years, Anchor-Hocking had been this very boring, widows and orphans, old-time manufacturer. Everybody had an Anchor-Hocking measuring cup, everybody had an Anchor-Hocking glass or a baking dish in their home.  It was just there, it payed dividends every year, nobody paid any attention to it.

Now suddenly, Carl Icahn has done what is called “putting-it-in-play” - and this is a term of art where business becomes a game.

So, Anchor-Hocking is now “in-play.”

...and it draws the attention of Newell, partly because, in its panic, Anchor-Hocking sold-off its container division: all those beer bottles, mayonnaise jars, peanut butter jars and so on…that was about 50% of the income of the company..  so they essentially halved the value of the company, making itself a much smaller target in what is now an ocean full of sharks.

Dave Davies: ..and, there’s a business principle behind this idea that I, as an outsider can look at a company and see something that I think that I can do better, or that it isn’t doing well-enough - what’s the business principle behind the idea that this corporate raiding is a good thing?

Brian Alexander: Well the argument that activist investors often say, and look, sometimes it’s true, is that C.E.O’s and executive officers and boards become complacent and lazy, they don’t look at how to better make the company more efficient, have increased sales, what-have-you - better corporate strategies.

I don’t deny that at times that might be true. Anchor-Hocking did make some mistakes on its own, before Carl Icahn ever got there. ..so he may have had some legitimate argument. I’m sure that he would say that he did anyway .

And so they say that they make the American economy more efficient.

The other side of the argument is that they hold people up, they take money and they walk away.

Dave Davies: So, in the 1980’s the company was bought by the Newell corporation which was this manufacturing empire…that had some serious effects on the company and the town what happened?

Brian Alexander: Right…well, Newell buys it, and in what was a hostile take-over….it’s still a little bit mysterious as to how hostile it was, but they buy it in what was a hostile take over and the first thing they do is fire all the executives and close down the headquarters.  So now you have gutted a core group of people that were active in the life of the town ...as one person in Lancaster, an old-timer who I interviewed said, “it ripped the heart out of this town.”

So, you’ve taken away the executives, you’ve taken away their wives, their families, even some of those people who stayed there of course, not everybody left… many of them did leave because they were too young they had to go and find a job someplace else.. but that leadership class is no longer there.

Dave Davies: And from Newell’s point of view this is one company among many, why would they need many headquarters? There’s a rational basis for them, but devastating for the town.

Brian Alexander: Devastating for the town.

And the new incoming people, the people that Newell picked to run Anchor-Hocking, never lived in Lancaster. They all lived in Columbus.  There’s a long standing belief, unshakeable belief, that Newell instructed its incoming executives to not live in Lancaster, so as not to be involved in The United Way and other Lancaster civic activities ..at any rate, they were not active in Lancaster and they did not live in Lancaster.

Dave Davies: and what about workers, the number of people employed, waged, benefits?

Alexander: Workers will tell you that Newell wasn’t a bad employer. They were not necessarily unhappy under Newell. It wasn’t the same; it was less of a family atmosphere. Workers who are hourly people and salaried people all say the same thing. They say that the company became somewhat more efficient, that they made money, they made money for Newell, they weren’t unhappy under Newell, but it didn’t feel like the old Anchor Hocking, and of course it never would again.

Dave Davies: In 2004 Anchor-Hocking is bought by Cerebrus ..this private equity group. This is worth going-over in just a bit of detail… what happens under this private equty group. First, clarify a couple of terms. What is “private equity”, what is its goal in its business model?

Brian Alexander:  Well, the basic business model is that I’m a private equity guy and I go out and I try to find investors to create a pool of cash, so I go to pension funds, I go occasionally to very wealthy individuals, I go to other money managers and I say give me money and I’ll form a pool and I’ll go out and I will buy a variety of companies and I will help these companies operate so that at some point we can exit the company, either sell it or have an IPO and make a profit and I’ll return that profit to you.

Dave Davies: So, in theory, we’re buying companies, but making them perform better, increasing their value and everybody makes money.  Lets see how it worked in Lancaster, Ohio.

To buy Anchor-Hocking the glass company,they formed a company called Global Home Products, then that company borrowed a bunch of money to buy Anchor-Hocking and some others.  So Anchor-Hocking now finds that it’s owned by a new company but it has all this debt, because money was borrowed to buy it; what’s the effect of that debt on this company?

Brian Alexander:  ...right, private equity is essentially a re-branded version of leveraged buy-out…so the effect of this debt is that you’ve now got to pay interest on the debt ...and that’s an enormous expense, because the debt can be huge and it can shackle you.  You might also have to undergo some things like selling off your assets in order to attack the debt, which can hamper such things as marketing, research and development and so on…

Dave Davies: and they brought in new managers and you write that they had some bright ideas, one of them was buying a new information technology system for processing invoices and all that and rushing that in. What was the effect of all that?

Brian Alexander: Well, as one person told me, “it brought us to our knees”, they essentially collapsed, had very serious cash flow problems, they couldn’t make it work…and as a result, long story short they went into bankruptcy.

Dave Davies: what was the effect on the workers, their lives, their morale their connection?

Brian Alexander:  It think that’s the biggest issue. If I can be so bold as to say, this was a spiritually destructive experience for them. People in Lancaster and I think people all over the country,  feel that capitalism is supposed to work a certain way.  And these people had first hand experience with a kind of ‘nuther brand of capitalism that they were not expecting and that they were not expecting and did not fully understand and there is no reason why they should understand it. It’s not that they’re not smart, they are smart, it’s that this is not the way they were told the system worked…and so it left them incredibly disillusioned and wary and un-trusting and I think that really follows through in other elements of their lives within the town and within this country.

Dave Davies: We talked about how Lancaster, Ohio was an all-American town in the 40’s, 50’s,  60’s and into the 70’s..  in part because there was, you know, people of all incomes and a corporate leadership that was invested in the town… look at the town now and tell us how it compares…

Brian Alexander: It’s not the same town by any stretch of the imagination ..although if you were to look at the town you would say that it looks about the same. The houses for example are not kept-up quite as well as they used to be. The west side, which has always been sort of the working-class side of town is even more disheveled than it used to be ...people are genuinely struggling, parents are in jail so grandparents or uncles now have the kids. I saw just the other day a map of the state of Ohio, that showed the percentage of the kids who are now part of the social service system…the percentages of their parents are who are now opiate users.

In Fairfield County, 58% of the kids who are in the system their parents uses opiates, the county next door, Hocking county, it’s over 70%.  So, now you’ve got drugs in the community, which are an escape for all of this sort of stuff.

The economy of the town is struggling not because there is high unemployment, but because the employment that there is, is all minimum wage or even lower than minimum wage. and so thirty old guys are working at Buffalo Wild Wings or Taco Bell making $8.50 an hour and they say there’s no place else for me to go from here. This is going to be it.

Dave Davies: I’m sure you began this project long before Donald Trump was a serious Presidential candidate in 2016 .... does what happened here connect-to the support that he got in places like this in Ohio?

Brian Alexander: Absolutely.

I’d be sitting in a lot of bars and I’d have people discussing, you kow the primary season and so on and somebody would say something about Trump ..and they’d say, yeah, you know I kinda like that Trump and other people would laugh, but then as the months went on it became more and more obvious that there was some real support for Trump.

...and in fact, Fairfied County went heavily for Donald Trump.

...and its I believe, and this is a theory, that it really is this disaffection

You know, on election day morning, a woman in Lancaster who I spent some time with called me up, and I said have you been to the polls and she said yeah, “Trump baby!”

..and I said, “really? Why is that? and she said, “I just want it to be like it was.”

             

Ibid: Dave Davies: and how much do the people effected by what happened even know about these distant owners and complex financial transactions?

Brian Alexander: Almost nothing.

        .. “in fact, Fairfied County went heavily for Donald Trump.”

        ..and Carl Icahn

        Addendum

Ibid: Dave Davies: Was [Lancaster] racially diverse?

Brian Alexander: No. Lancaster people to this day will say that they live in the Whitest town in America. ..it’s virtually an all-White town, slightly more diverse than it used to be, but not by much…and in the 40s, 50s, 60s it was very sort of Anglo-Saxon Protestant and Catholic in that town, to the point where the Klan, in the 20’s, for example, the Klan was a force. The sheriff and the mayor were Klan members.

Dave Davies: Those who voted for Trump, how do you think they will judge his Presidency?

Brian Alexander: I don’t know, but I believe that they will be ultimately be extremely disappointed, but I think partly Trump has already fulfilled at least one expectation, that is to express this sort of generalized anger and aggressiveness that they wish they could do; and I think Trump is sort of their paladin doing it for them.

(((Trump is vicariously “doing it” for them - expressing and channeling their anger (similar as (((Operation Clean Break/Project for a New American Century had inspiring effect on some Whites who vicariously identified with Jewish hyper-ethno-centrism))), but they only think its for them; they are vicariously identifying through Trump, but it is a highly refracted, Jewy/and civic American version of their wish to express ethno-nationalism, to express some of the initiative and aggression in regard to their own EGI that the YKW, in fact, exercise in their own interests.)))



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