LATEST NEWS
THE UNDISCOVERED COUNTRY
On the Attacks on Retirement and Corporate Governance, and the Coming High Tide of the Neo-Con Confederacy”

It was an early October morning in Gettysburg, sky was gray. In these times of PR spin, branding and framing (such as “personal accounts” rather than “privatization of social security”) the rich metaphors from Gettysburg, this special place and history, came rushing to me as I sat there …crossroads, skin of our teeth, hold the high ground, turning point of the war, and the “highwater mark of the confederacy."

Gettysburg was a crossroads. The nation is, today, at another crossroads. We are in a struggle to preserve our core values and principles. The attack on retirement and social security, and the companion attempted roll-back of the mild corporate governance rules of Sarbanes-Oxley, represent a final assault on the building blocks of America’s New Deal. It is also a rejection of the promise of modern work-life. We’ve already lost too many battles. But the battle to preserve Social Security and retirement security is a battle we cannot afford to lose.

As Bruce Springsteen said during the election, "the country that we hold in our hearts is waiting." It still does. It is an Undiscovered Country that awaits.

(Read the full article in the Summer 2004 edition of the Heartland Journal, www.hearlandnetwork.org/steelasp/newsletter/index/asp.)


REGIONAL DEVELOPMENTS
  • Pennsylvania Capital Network Gears Up…Democratic Whip Mike Veon announced last year a major funding award to the Heartland Network/SVA to kick-start the Pennsylvania Heartland Capital Coalition. The “drivers” of this effort will be worker-friendly private equity funds, in partnership with local investors, and our mission will be to encourage these funds to co-invest in PA and regional manufacturing and energy businesses…more

    The PA Heartland Capital Network held its first meeting in the Pittsburgh area, kicking off the “footing” for an eventual deal flow network with national worker-friendly private capital firms. The first meeting of the Network was held in the offices of the Governor’s Southwest Pennsylvania Regional Director, Allen Kukovich.

  • OEOC Now Managing Common Wealth Fund…The Ohio Employee Ownership Center is now managing the Common Wealth Fund. Founded in 1987, the Fund is a community development financial institution whose purpose is to lend money to employee-owned companies or co-ops for expansion, facilities, machinery and equipment, vehicles and working capital or for employee buy-outs. Contact the Fund at OEOC: cwrlf@kent.edu.


    • HEARTLAND JOURNAL ENTRIES
  • Steelworkers Merge with PACE….Leo Gerard, president of the newly formed United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union (USW), on April 14 opened the union's first convention, telling nearly 5,000 delegates that the "largest kick-ass union in North America is in the hall." The union, to be known as the United Steelworkers, was formed earlier this week when delegates to a special convention of PACE, formerly the Paper, Allied-Industrial, Chemical and Energy Workers International Union, voted to merge with the Steelworkers, creating the largest industrial union in North America with 850,000 members.

  • Steelworkers Position on Pension Reform…At its recent convention, the USW Executive Council adopted a position on the Bush Administration’s “pension reform” proposals. “Several aspects of the Administration’s proposal to change the defined benefit pension system protect the bottom-line interests of the Pension Benefit Guaranty Corporation (PBGC) simply by harming the interests of workers and retirees. The worst of the Administration’s proposal includes…”
    • Suspending benefit improvements that are already part of a pension plan when an employer files in bankruptcy, qualifies as a financially “at risk” sponsor, or has a pension plan that is significantly underfunded. Workers and retirees have no control over the financial health of their employer or its pension plan, but the Administration would harm workers and retirees by eliminating benefit improvements that already are part of the plan.
    • Ceasing the accrual of any benefits whatsoever when the plan sponsor enters bankruptcy or is an “at risk” employer with an underfunded plan. Workers would fall short of earning qualifying for pension benefits, again through events completely beyond a worker’s control, forcing workers to continue working for years beyond their expected retirement date.
    • Freezing the guarantee of plan benefits when an employer files in bankruptcy, a change that will reduce the guarantee of relatively recent benefit and other improvements in a pension plan.
    • Outlawing shutdown pension benefits, even where the plan sponsor can afford to pay these benefits. Pension plans in the steel, aluminum, can and other industries have for decades provided shutdown pension benefits for long-serving employees who are suddenly put out of a job because of the shutdown of their plan or department or a long-term layoff. Tens of thousands displaced workers have been able to support their families because of the presence of these pensions. The Administration would abrogate labor agreements and outlaw these benefits even if the plan sponsor can afford to fund the benefits, stripping workers of a critical safety net in the event of an unexpected plant closure or similar event.
    • The Administration would punish workers and retirees for factors beyond their control and protect the PBGC at the expense of those the agency is meant to protect. When combined with the Administration’s apparent desire to make defined benefit pension plans unaffordable for many industrial employers by imposing a “creditworthiness” test for plan sponsors, utilizing bond “yield curves” that will increase pension obligations, increasing enormously PBGC premiums, and giving PBGC the right to increase premiums in the future without Congressional action, the Administration proposal would harm the defined benefit pension system and thwart the interests and expectations of the workers and retirees for whose protection Congress passed ERISA in 1974.
  • Robert Pleasure has retired… as Executive Director of the AFL-CIO Center for Working Capital...During his tenure with the Center, Bob successfully created and refined an innovative and effective trustee education program, and oversaw new program initiatives that have been crucial to the Center's advancem


    • CAPITAL ACCOUNTABILITY
  • Attack on CalPERS…The Governor of California has, for the time being, thrown in the towel in his plan to terminate the California pension system’s defined benefits programs. A newly elected Chairman of the Board of CalPERS had urged a fight over Gov. Arnold Schwarzenegger's campaign to overhaul the state's pension system for state and local workers.

    According to the LA Times, Rob Feckner, the recently elected president of the $183-billion California Public Employees' Retirement System (CalPERS), said that although the board's approach to corporate governance would "become more laser-focused and less scattershot" under his leadership, he wanted to make it "abundantly clear to corporate wrongdoers who are hurting shareholder value that we will not retreat from our fiduciary duty to protect our shareholder interests when called for."

    Feckner vowed to continue initiatives to limit excessive executive pay, control soaring healthcare costs and, above all, oppose efforts by Gov. Schwarzenegger and his Republican allies in the Legislature and business to dramatically change how public pensions are paid. "Our biggest challenge today relates to the very survival of CalPERS," Feckner said. The board and Feckner voted 9 to 3 to oppose the Schwarzenegger pension plan; the dissent came from the governor's three direct and indirect appointees.

    California officials had ousted former CalPERS president Sean Harrigan in December, voting to replace Harrigan, a long-time union official and one of the US’ most outspoken advocates for corporate governance reform, as its representative to the $177-billion Pension Fund. Recently, CalPERS led successful campaigns against Disney chief executive Michael Eisner, former New York Stock Exchange chairman Dick Grasso and former Safeway chairman Steven Burd. The Republican Party and business groups such as the Chamber of Commerce have been critical of Mr Harrigan, denouncing his links to the union movement….Just days after Harrigan was ousted, some California officials were proposing that the state get out of the pension business and give state and municipal workers a 401(k) plan instead. This move would echo proposals by the Bush administration and some members of Congress to divert a portion of the Social Security payroll tax away from the federal trust fund and into individual savings accounts.

  • Mainstreaming Responsible Investment…. This report for the World Economic Forum is a direct outcome of the collaborative discussions held experts in London and New York in 2003 – 2004, that included Heartlanders. It identifies key impediments to broader consideration of non-financial factors by the mainstream investment community, and explores changes in policies and practices that could 'tip' systemic change in the investment community in this direction

    Organized thru a series of colloquia by the British group AccountAbility, the report includes a series of recommendations for the reform of industry practices and public policy. Overall the report paints a picture of rising pressure for change in the financial community, driven largely by the changing composition of corporate share ownership due to population aging and the related growth in private retirement savings. Investors in pension funds, mutual funds and insurance policies now collectively own the majority of shares in key markets. Their investment horizons are inherently long term, as their savings are intended mainly to support retirement, the education of their children or other long-term family needs. Yet the pension funds, mutual funds and insurance companies investing money on their behalf typically do so in a very short-term manner, with results and asset management contracts evaluated almost exclusively on the basis of short-term indicators that do not incorporate social, ethical and environmental aspects of corporate performance, which typically become m


    • LABOR’S CAPITAL DEALS
  • KPS Investment in Flyer Industries Saves 1,000 Jobs…In one of the most successful investments by a worker-friendly fund to date, KPS completed a successful turnaround and sale of Flyer Industries in Manitoba and Minnesota. In March 2002, KPS Special Situations Funds completed a change-of-control transaction and recapitalization of New Flyer Industries, Ltd. (“New Flyer”). At the time, New Flyer was on the verge of being forced out of business by its banks after a period of financial underperformance. The KPS transaction saved the company and over 1000 jobs. KPS invested approximately $27.7 million of equity in New Flyer for a controlling interest in the company. New Flyer Industries, Ltd. designs and manufactures transit buses and provides parts and after market sales and services. The company serves most major municipalities and transit agencies in North America. New Flyer has a large plant in Manitoba, Canada and two plants in Minnesota. At the time of the transaction, one of the plants was non-union. KPS’ standard policy with respect to unions is “card-check” recognition. The Communication Workers of America (CWA) went on to successfully organize the plant. After completing a very successful turnaround of New Flyer in less than 20 months, KPS sold New Flyer to a company formed by Harvest Partners Fund IV, L.P. and The Lightyear Fund, L.P. KPS received proceeds from the New Flyer sale of over $200 million. The transaction could not have taken place without the contributions of numerous important stakeholders, including the Province of Manitoba through its Manitoba Development Corporation; New Flyer’s key suppliers, customers and lenders; all of its employees and the leadership of its two unions – the Canadian Auto Workers Union (CAW) and the Communication Workers of America (CWA); as well as the federal government of Canada through its Western Economic Development Fund.

  • GESD Capital Partners Rises with Investment in Andre-Boudin Bakeries in Bay Area, California, Chicago… GESD recently invested in Audre-Boudin Bakeries, Inc., the oldest continuing business in San Francisco. Andre-Boudin is a world class producer of French sourdough bread, pastries, sandwiches, soups and sourdough pizzas. The company just celebrated the unveiling of its new 26,000 square foot facility, located on San Francisco’s famed Fisherman’s Wharf, in May of this year. The facility will feature a demonstration bakery, Bakers Hall market, a Boudin Café, Bistro Boudin, a full-service restaurant and the Boudin Museum & Bakery Tour. Andre-Boudin currently operates thirty-two bakery cafes and three wholesale bakeries located in Northern California, Southern California and the greater Chicago area. "The history of San Francisco and the story of Boudin Bakery have been intertwined since the Gold Rush," noted Boudin co-chairman and GESD leader Lou Giraudo. "Boudin at the Wharf is our way of celebrating that connection." Unions include the UFCW.

  • GESD Capital Partners Acquires Golden County Foods, Inc... GESD also acquired in the Plover, Wisconsin-based Golden County Foods, Inc. in late 2002. Golden County is a specialty food manufacturer that manufactures hand-held appetizers as well as specialty potato products for retail, foodservice and private label. Since being owned by GESD Golden County has substantially grown its appetizer business, which GESD believes will be the growth engine for the company. That conviction led to GESD supporting the 2003 renovation of a shuttered food plant to create a state of the art appetizer facility for Golden County. The appetizer plant opened in early 2004. In February 2005, Golden County went through a card check resulting in the UFCW, Local 73 being certified to represent the employees in negotiations with the company. Golden County currently employs approximately 400 people between the two facilities.

  • Workers Opportunity Fund (WOF) I


    • LABOR'S CAPITAL NEWS
  • Ontario Labor Federation Sponsors First Ontario Fund… First Ontario Fund was launched in 1995 as a Labour Sponsored Investment Fund (LSIF) with the objective of achieving long-term capital appreciation while stimulating job-creation through its investment in small to medium sized companies in Ontario. The Fund currently has $59 million in assets and since its inception has provided capital to over 30 Ontario-based, mid-sized companies. The Ontario Labor Federation represents 700,000 Ontario workers in more than 1,500 affiliated local unions across the province.

  • Hamilton Lane Advisors Invests in Worker-Friendly Funds… Hamilton Lane is an independent financial institution that provides discretionary and non-discretionary asset management services in private equity and hedge fund investments. Founded in 1991, Hamilton Lane has over 60 private equity employees operating out of offices in Philadelphia, San Francisco, London and Singapore. Hamilton Lane has become the largest secondary investor in worker-friendly private equity firms. To date, HL has invested in GESD Capital Partners, KPS, Yucaipa and Landmark GCP.

  • SEIU Ramps Up Capital Stewardship Program…SEIU is creating the largest capital stewardship program in North America, as it ramps up even more it’s Capital Stewardship Program, moving toward 30 staff, according to Steve Abrecht, Director of the Program, and Executive Director of their national pension fund.

    The program was created by the 2000 SEIU Convention (read the convention resolution on Capital Stewardship) to facilitate a more active partnership between SEIU and the trustees, administrators, advisors and investment managers of members’ pension savings in the pursuit of benefit improvements and of prudent, responsible, and financially sound investment policies. From SEIU’s web site: “SEIU’s members have fought long and hard to win pension benefits that will afford them a comfortable and secure retirement. This goal looms especially large for our members in low-wage jobs, who would otherwise have great difficulty accumulating the savings necessary for a secure retirement. Consequently, our union is deeply committed to ensuring that the pension funds in which our members participate continue to provide enhanced benefits and perform at a level adequate to meet their obligations.”

  • Mutual funds had best RRSP-deadline month since 2000…Canadian mutual fund companies have enjoyed their biggest RRSP-deadline month since 2000, reporting net sales in February of $5.3 billion. The Labour-Sponsored Investment Funds are part of this system.

    The industry's sales in February, net of redemptions and reinvested distributions, were the strongest since $6.5 billion five years ago. The $5.3 billion in monthly sales compared with February net sales of $5 billion last year, a bare $485 million in 2003, $4.2 billion in 2002 and $4.9 billion in 2001. February is typically the most active month for mutual fund sales, as investors deploy money in advance of the March 1 RRSP-contribution deadline, which also boosts sales for March. The fund association's figures showed the industry's total assets increased 3.4 per cent during February to $517.64 billion, after topping $500 billion for the first time in January. Assets were up 11 per cent from February 2004. The numbers hinted that investors may have been getting slightly more adventurous than they had been in recent months: sales of Canadian common-stock funds outweighed redemptions for the first time since last March. (By Gary Norris – Canadian Press)

  • OMERS Changes Investment Strategy…OMERS announced a new asset mix strategy to shift capital to private equity and infrastructure and maintain its large real estate portfolio. Total investment in these asset classes will increase abou


    • FIX GLOBALIZATION
  • Pennsylvania and Maine Enact New Trade Enforcement Offices….Maine: In 2004, the Maine Legislature passed a bill creating a Citizens’ Trade Policy Commission to investigate and hold hearings on the impact of trade. After receiving the latest USTR request to sign on to the trade agreements being negotiated with Panama and Andean countries that could go into effect in January 2006, the Governor’s office replied that the state would use the six to twelve intervening months to consult with the Citizen’s Trade Policy Commission and other “interests in Maine before formulating our response.”

    Pennsylvania: After a two-year campaign by a labor-manufacturing-community coalition called the Next Generation Alliance, Governor Rendell announced a comprehensive manufacturing strategy in December 2004 to protect Pennsylvania jobs and businesses from unfair trade practices and to help manufacturers grow their businesses and create good jobs. The formation of the Office of Trade Policy, designed to assist Pennsylvania manufacturers in identifying unfair trade practices and help in bringing challenges to the U.S. Trade Representative in Washington, DC and through the World Trade Organization.


    • HEARTLAND BOOK CORNER
  • The Wealth Inequality Reader Wealth is distributed more unequally in the United States today than at any time since the twenties. Does it matter? The authors of The Wealth Inequality Reader answer this question with a resounding yes. Included in the collection is an article by Adria Scarf that highlights the Heartland Network, “Labor’s Capital: Putting Pension Wealth to Work for Workers”. Twenty-five substantive, readable essays explore the hidden vector of wealth inequality: its causes, consequences, and strategies for change. Plus: an illustrated overview offers the latest statistics on wealth inequality in a series of one-page snapshots. The essential reader on wealth inequality, this book is a must-have for both the activist and the scholar. Edited by Chuck Collins, Amy Gluckman, Betsy Leondar-Wright, Meizhu Lui, Amy Offner, Adria Scharf. Preface by Jesse Jackson Jr. Contributors include: Gar Alperovitz, Peter Barnes, Chuck Collins, Bill Fletcher, Ellen Frank, William Greider, Paul Krugman, Meizhu Lui, Kevin Phillips, and more. Available on the Dollars and Sense website, www.dollarsandsense.org/bookstore/wealthinequality.html.


    • SURFING THE WILD, WILD WEB
  • Pensions at Work www.pensionsatwork.ca
    PAW is the web site of a loose-knit, international coalition of people united by a strong interest in change in the pension world. Our hub is a union and university research alliance supported by an advisory board of representatives from the pension fund industry and funded by the Social Science and Humanities Research Council of Canada. “Our interest is driven by the staggering size of pension fund assets in Canada at $550 billion and a concern that this capital be invested responsibly in the interests of working people. Our goal is to engage in a broad-based dialogue on critical issues facing pension trustees with those in the trade union and the social investment communities. Assisting this discussion are representatives from the financial industry and pension experts in the law.”

  • Canadian Business for Social Responsibility (CBSR) www.cbsr.bc.ca/about/default.htm
    The Canadian Business for Social Responsibility (CBSR) is a non-profit, business-led, national membership organization of Canadian companies that have made a commitment to operate in a socially, environmentally and financially responsible manner, recognizing the interests of their stakeholders, including investors, customers, employees, business partners, local communities, the environment and society at large.

  • Hamilton Lane Advisors www.hamiltonlane.com
    Hamilton Lane is an independent financial institution that provides discretionary and non-discretionary private equity asset management services to investors. Hamilton Lane oversees over $39 billion in private equity commitments by institutional investors, including over $5 billion of discretionary assets under management. In addition to being a leading manager of private equity assets for Taft-Hartley (union) pension plans, Hamilton Lane serves many smaller public and corporate pension plans and university endowments.



    • MONEY CLIPS
  • Roy Acuff and his Smokey Mountain Boys, John Steinbeck, Larry Brown, Office Space, George Santayana, William Butler Yeats, Robin Blackburn quotes FDR, Century Foundation, John Kenneth Galbraith, etc.

      When our old age pension check comes to our door, We won't have to dread the poor house anymore. Though we're old and thin and gray, Good times will be back to stay, When our old age pension check comes to our door. When her old age pension check comes to her door, Dear old grandma won't be lonesome any more. She'll be waiting at the gate, Every night she'll have a date, When her old age pension check comes to her door. Grow a flowing long white beard and use a cane, 'Cause you're in your second childhood, don't complain. Life will just begin at sixty, We'll all feel very frisky,
      Recorded by Roy Acuff & His Smoky Mountain Boys, Memphis, TN, 5 Jul 1939 © 1962 Acuff-Rose Publications, Inc.

      And then the dispossessed were drawn west -- from Kansas, Oklahoma, Texas, New Mexico; from Nevada and Arkansas families, tribes, dusted out, tractored out. Carloads, caravans, homeless and hungry; twenty thousand and fifty thousand and a hundred thousand and two hundred thousand. They streamed over the mountains, hungry and restless -- restless as ants, scurrying to find work to do -- to lift, to push, to pull, to pick, to cut -- anything, any burden to bear, for food. The kids are hungry. We got no place to live.... John Steinbeck, The Grapes of Wrath, 1939

      'we all knew the score. their job was to rob me. my job was to pay for the robbery.' Larry Brown, Big Bad Love.

      Peter: That’s the beauty of it. Each withdrawal is a fraction of a cent. That’s too small to notice. Take a thousand withdrawals a day, space it out over a few years, that’s a couple hundred thousand dollars. Look, I don’t know about you guys, but I’m tired of being pushed around. Aren’t you?
      Samir: Yes, Peter, but I’m not going to do something illegal.
      Peter: Illegal? Samir, this is America! Come on, sit down! Come on! This isn’t Riyadh! They’re not gonna saw your hands off, all right? The worse they can do is put you for a couple of months into a while collar, minimum security resort! Shit, we should be so lucky! Did you know they have conjugal visits there?
      Samir: Really? (from the movie, Office Space)

      To knock a thing down, especially if it is cocked at an arrogant angle, is a deep delight of the blood. George Santayana

      The stream of the world has changed its course, And with the stream my thoughts have run Into some cloudly, thunderous spring That is its mountain-source; Ay, to a frenzy of the mind, That all that we have done’s undone Our speculation but as the wind. William Butler Yeats

      Roosevelt insisted that the freedoms americans cherished required economic security and that the federal government had the capacity and the duty to deliver this. p. 54, Banking on Death, Robin Blackburn

      The Century Foundation, in a recent study, addressed the problem of outstanding debt. For many families borrowing has morphed from a tool that, used judiciously, can enhance their standard of living into a nightmare that threatens to destroy their economic viability. "Debt burdens," the study said, "are at record levels because families have been stretched to the limit in recent years.

      Let us for god's sake have no more talk about putting Social Security into the stock market. That's a welfare system for Wall Street. John Kenneth Galbraith 3/19/97, “Future of Liberalism” at University of Pittsburgh. (CSpan3)



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