INVESTORS GET THEIRS, WORKERS GET STIFFED

Because of lost jobs and falling wages, millions of Americans find themselves falling into debt – and learning that debt can be a vicious master.

Because of lost jobs and falling wages, millions of Americans find themselves falling into debt – and learning that debt can be a vicious master.

They’re not alone, for many companies are also struggling with debt. Hinkley Yachts, a longtime boat builder in Maine, is not a company you’d expect to be in trouble. It constructs boats for America’s Rockefellers – literally! Hinkley is presently building a $3 million power boat for David Rockefeller.

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Hinkley’s fortunes flow with those of the moneyed elites who always seem to do well. So, why is this respected, 80-year-old firm foundering? Debt. Not debt caused by its own spending – indeed, the family-owned enterprise has always been financially cautious. But that responsible ethic changed a dozen years ago when Hinkley was bought out by Bain Willard, a private equity outfit based in Boston.

Private equity firms are roving speculators that borrow huge sums of money to take over a business, squeeze the operation, then flip it to another buyer for a fat profit. Thus, Hinkley was burdened with heavy interest payments that had to be paid on the money that Bain Willard borrowed to buy it.

Sure enough, a year later, Bain Willard sold a majority share of Hinkley to another equity outfit that paid double the original purchase price – again with borrowed money, stacking even more debt on the boat builder’s deck. Then, with Wall Street’s collapse, sales slipped. Still, Hinkley could’ve weathered the storm – but, it had those big debt payments pulling it down.

The corporate owner has now cut Hinkley’s workforce in half, so it can keep making those debt payments. Three hundred skilled get stiffed, faraway rich investors get paid. And now, 300 local families face debt problems of their own – on their own. As one longtime employee said after getting her pink slip in July, “We have suffered from a double impact: the economic downturn and corporate greed!”

“Trying to Stay Afloat,” The New York Times, October 10, 2009.

“Battling the bastards is about as much fun as you can have with your clothes on.”

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