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It is every private-equity firm's nightmare. You buy a boring little company hoping to do the usual, squeeze it for cash and flip it a few years later. And then it turns on you. Before you know it, there is a 10-month strike, Mayor Bloomberg is being asked to mediate, and you and your investors are being accused of undoing decades of labour by hardworking Italians in the Bronx all for your lousy profits.
Such is the scene at Stella D'Oro, a 79-year-old maker of Italian biscotti, cookies and breadsticks that was bought three years ago by Brynwood Partners, a private-equity firm which has been toiling away in lucrative obscurity for 25 years.
For 10 months now, 135 unionised bakers have stood in the rain and the heat picketing the Stella D'Oro plant protesting over Brynwood's cuts to pay and benefits. Younger employees have been taken on to keep the plant running, but apparently the product has suffered.
A striking foreman told The New York Post that the firm's Swiss Fudge cookie is now a mess: "It either has no fudge, fudge covering the cookie, cookies stuck together with the fudge, cookies all out of shape."
The dispute has put private-equity investors on edge across America, as firms they bought with large amounts of debt during the good years are battling to survive the recession.
What they fear is the kind of hostility meted out to bankers these past few months. But any more Stella d'Oro situations, with blue-collar factory workers seemingly pushed around for the good of wealthy investors, and it won't be long before private equity starts getting the Fred Goodwin treatment.
* Manhattan's top restaurants are trying every trick to survive, from arranging their own flowers to dispensing with tablecloths and napkins. But they continue to be felled by the economy and changing habits. Even the city's Ladies Who Lunch are gone. "Today they go to the gym, maybe, and drink vegetable juice," said Sirio Maccioni, owner of Le Cirque. "Life is no longer the same."
* Street Fighters, a new book about the final hours of Bear Stearns, claims that Bear's executives never trusted Goldman Sachs' offers of help - even locking out a Goldman team which came to review their mortgage portfolio. "When Goldman calls and offers it assistance, it's usually a moneymaking opportunity for it," said Bear's CFO, Sam Molinaro. It's a thought worth considering now that Goldman's alumni now run the biggest pot of all: the US Treasury.
