‘OBSCENE’ VENTURE CAPITALISTS – says GMB

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Locked-out Gate Gourmet workers outside the Greenford Royal Mail sorting office with CWU rep GEOFF LOFTUS (right) and CWU member LANRE OGUNDIWIN (left)
Locked-out Gate Gourmet workers outside the Greenford Royal Mail sorting office with CWU rep GEOFF LOFTUS (right) and CWU member LANRE OGUNDIWIN (left)

After a £1.3 billion cash strip, the claim that Debenhams is worth double what the venture capitalists paid for it in 2003 is grotesque, says the GMB trade union.

The union said on Monday: ‘Venture capitalists CVC, the asset stripping owners of the AA, are also one of the private equity partners proposing to sell Debenhams on the London Stock Exchange next month with an enterprise value of £3.2 billion.

‘This is three years after purchasing it from the Stock Exchange for £1.7 billion and taking it private.

‘Since then CVC, Texas Pacific and Merrill Lynch has stripped out £1.3 billion cash from the company. They are now trying to sell it back to the Stock Exchange for £2 billion.

‘As the new floated company will also have £1.2 billion of debt this implies that Debenhams has an enterprise value of £3.2 billion.

‘CVC are also in the process of stripping out cash from the AA.

‘Borrowings at the AA now amount to £1.9 billion or £278,000 per employee.

‘There have been reports that there will be a special dividend of £500 million to the venture capitalist owners.

‘Gwynne Prosser MP for Dover is this week lodging an Early Day Motion in the House of Commons condemning the activities of the venture capitalist owners of the AA and their asset stripping activities.’

Paul Maloney, GMB Senior Organiser said: ‘The spectre of the venture capitalists trying to sell a company to the Stock Exchange for £3.2 billion, that they paid £1.7 billion to take it off the Stock Exchange three years ago having stripped out £1.3 billion in cash is grotesque, unbelievable, bizarre and obscene.

‘GMB calls on pensions fund trustees looking after GMB members’ money to shun the offering at this price.

‘If the venture capitalists are able to float Debenhams at this price it will do lasting damage to the reputation of the City as a safe repository for the nation’s savings.

‘If this happens at a time when the City is trying to muscle in on the new proposed National Pensions Savings Scheme and when there are concerns that the merchandise being sold by the company is sourced from sweatshops in the third world, it will demonstrate that the City is institutionally racist, avaricious and greedy.

‘The asset stripping activity of the venture capitalists amounts to little more than legalised theft of the nation’s savings.

‘This is diametrically opposed to Parliament’s aim when it legislated for the setting up of joint stock companies and granted the privilege of limited liability.

‘The Early Day Motion begins the campaign to have these privileges withdrawn and put a stop to asset stripping.’

Texas Pacific is the parent company of Gate Gourmet, the Heathrow catering firm that locked out over 800 workers in a pre-planned action on August 10th 2005, in order to bring in hundreds of scabs to work according to its ‘survival plan’.

Hundreds of locked-out workers are fighting on to get their jobs back on their old terms and conditions, and are going to Industrial Tribunals, while the TGWU leaders have made a rotten compromise deal with the company supporting its survival plan and opposing any tribunal or other legal action against the company by its members.

Gate Gourmet management is now boasting of the super-exploitation that the TGWU leaders support of its survival plan have allowed it to introduce.

On April 20th Eric Born, managing director of Gate Gourmet UK and Ireland, published ‘the latest figures showing increasing productivity over the last six months at the Heathrow South production unit.’

He records that ‘The rise in productivity was accompanied by a large fall in the number of days lost due to sickness at the airline catering and logistics firm and the amount of paid overtime required. The removal of “out dated work practices” provides the company with the necessary cost structure to be competitive in the market place. The new figures show:

‘l the number of economy class bar trolleys packed at the Heathrow South unit has increased from 34 per employee per day in August 2005 to 53 per employee per day in March 2006 – an improvement of 56 per cent;

‘l the number of hours lost in the first quarter due to staff sickness at the Heathrow South production unit fell by 58 per cent relative to the previous year. The sickness rate at Gate Gourmet’s Heathrow South production unit is now three per cent;

‘l as a result of improved productivity and a lower sickness rate, the number of paid overtime hours required to be worked has fallen by 76 per cent in the first quarter of 2006 compared to 2005.’

However Eric Born observed: ‘There is still a long way to go but we are now seeing real improvements in productivity at Gate Gourmet. The changes we’ve been making to working practices are clearly paying off. . .

‘As a result of the progress we are now making, I am hopeful that Gate Gourmet UK & Ireland will break even this financial year,’ said Born.

He added: ‘Of course, we have to keep up the momentum to continually make improvements in both to secure the future of our company and the jobs that go with it.’

This is the super-exploitation and the state of fear that Gate Gourmet and Texas Pacific are establishing at the Heathrow plant with the support of the TGWU leaders.

Meanwhile Gwynne Prossor’s Early Day Motion reads: ‘That this house regrets that since the motorists organisation, the AA was purchased by the venture capitalists CVC and Permira in 2004, some 3,400 of the 10,000 staff who assist motorists have been sacked; have indulged in union-busting tactics;

‘notes that the remaining employees have been put under excessive pressure to cope with extra work resulting in some motorists being abandoned at the roadside;

‘is concerned that AA membership charges have risen by up to 30 per cent while company profits have doubled to £200 m;

‘is alarmed at reports that the venture capitalists are planning to borrow a further £500 million to pay themselves a special dividend that would burden the company with bank borrowings of £1.9 billion and which could jeopardise future pensions;

‘considers this action to be blatant asset stripping by individuals who are protecting their own assets by operating through limited liability companies;

‘believes that company law should be reformed to prevent speculators from exploiting the protections afforded by limited status and that the interests of the customer and the employee should be jeopardised by the greed of venture capitalists like Permira and CVC.’

The GMB notes: ‘AA debts amount to £278,000 for each of the AA’s 6,600 employees.

‘The interest payment on this amount of debts would amount to in excess of £11,000 per employee per annum if the venture capitalists are able to borrow at four per cent per annum.

‘To service £1,900 million worth of debt at this rate of interest would require interest repayments of £76 million.’

The union adds: ‘The AA has introduced oppressive work regimes which involve total surveillance (Dataveillance).

‘Staffs are disciplined if they do not sell upgraded cover to motorists.

‘Patrol staffs have sales targets for spare parts and upgraded cover and they are disciplined if they fail to meet them.

‘The AA’s 13 million customers have not been spared either.

‘The cost of cover now compared with November 02 has gone up by almost 30 per cent for customers who pay annually by cheque or credit/debit card.

‘The AA service to customers who breakdown has fallen in the Which survey from first to third.

‘Something like one in four is having to wait by the roadside for more than an hour.

‘Customers who need to install new batteries by the roadside were paying £56 for a battery that could be bought in Halfords for £40. The price has now gone up to £62.

‘One in five breakdowns is not repaired by the roadside and go to a garage instead. GMB has an AA document which shows that the AA receives £10 for every vehicle that they direct towards Nationwide Autocentre and AA staff are told that ‘it is imperative that we direct as much work as possible in their direction.’

The message from Gate Gourmet, Debenhams and the AA is clear.

It is that trade unions must fight Texas Pacific, Permira and CVC to stop the superexploitation of their members as the GMB is doing.

The TGWU leadership must end their collaboration with Texas Pacific and Gate Gourmet, and make the struggle of the locked-out workers official if it is to have the respect of trade unionists.

There must be no yellow trade unionism in Britain.