WASHINGTON — Forget the marches and strikes that once defined the union movement. Big labor is relying more on guile and theatrics than blunt force to attack the ascendancy of a new form of corporate ownership: private equity.
And tactics often get personal. Union allies staged a satire outside buyout king Henry Kravis’ lavish Long Island home, asking passers-by to sign a petition giving him a break on his property taxes.
Weeks later, protesters in business suits sneaked into a private-equity conference at the Waldorf-Astoria hotel in New York, where Carlyle Group co-founder David M. Rubenstein was giving a speech. They sought to shame him with a banner that read: “Why does he pay taxes at a lower rate than the hotel’s doorman?”
Then, on Halloween, union members wearing Rubenstein masks paraded in front of Carlyle’s offices, handing out Sugar Daddy suckers.
The unorthodox protests are part of a campaign by the Service Employees International Union and its allies to position themselves as a check on what they regard as a new economic order, one dominated by the big private buyout firms.
A quiet economic upheaval
Those firms have swept up hundreds of companies in recent years. As the economy softens, union leaders say they increasingly worry that private-equity firms will try to salvage their investments by pressuring management to cut jobs or benefits. And those dealmakers are in New York or Washington, far away from where most of the employees actually work.
“We are up against the Masters of the Universe here, so we’ve got to be smart about what we do,” said Dan Cantor, executive director of a public interest group called the Working Families Party.
Executives at the private-equity firms say that they have been responsible stewards of the companies in their portfolios and note that the unions themselves have invested in private-equity funds.
“Our country and the rest of the world is living through the most profound, significant and transformative revolution in the history of the world,” said SEIU president Andy Stern, whose union will spend $100 million trying to get candidates elected over the next two years. “What we are seeing is the growth of a new form of capitalism.”
Laws stepping into the gap
In the United States alone, there were 881 buyouts worth a total of $390 billion in 2006 and 752 deals totaling $397 billion in 2007, according to Dealogic, an analytical firm. Those included Carlyle’s $22 billion purchase of energy infrastructure company Kinder Morgan, Blackstone Group’s $39 billion acquisition of commercial real estate giant Equity Office Properties, Kohlberg Kravis Roberts’ $33 billion purchase of for-profit hospital chain HCA and TPG’s (formerly Texas Pacific Group) $45 billion purchase of utility TXU.
Since the SEIU’s assault began, there have been private-equity hearings on Capitol Hill and federal legislation introduced on nursing-home care. Legislation was introduced in California to stop private-equity firms from accepting new investments from countries with poor human-rights records (the bill has been withdrawn). The Carlyle Group issued a bill of rights for patient care last year following criticism from the union.
