Sunday, February 23, 2014

The fable of the plant closure

Once upon a time there was a little widget factory operating in a not-so-little town. The factory made good widgets, not great ones, but they were good quality and the price was right. The business flourished.

The widget factory owner, his wife and all his children flourished. All the widget makers at his widget factory flourished. The little town, which had lots of little factories like this one, flourished. All was good.

Then one day the widget making factory owner was approached by a beautiful temptress. The factory owner fell for her charms and tumbled into bed with her. He had an affair. His wife discovered and she left him. What she didn't leave was her half ownership in the widget factory.

The factory owner had to face the shocking reality that he wasn't the sole owner. He and his estranged wife were co-owners. What was he to do?

The factory owner hired good lawyers -- good for him, bad for his wife. It was soon learned that in another city in a country not all that far, far away there was another widget maker. A greedy widget maker who grew his business by buying other widget factories that, for whatever reason, could be bought for a song.

The big widget maker was known as Mr. Acquisition because he had grown his business into one of the biggest in the entire world by buying one after another competing businesses. He had acquired dozens and dozens and dozens of both small and large widget-making plants.

The little widget factory operating in a not-so-little town was sold to Mr. Acquisition. The money paid was split between the divorcing couple. The husband opened another widget factory, a smaller one, and named it Widget Factory Two. The lawyers fashioned all this so that the cheating husband was able, as they say, to stick it to his wife one last time.

As for Widget Factory One, the little factory operating in a not-so-little town, well Mr. Acquisition continued on his buying spree until his business got too big and too complex. His prices were too high and his quality too low. The value of his company crashed. Mr. Acquisition was forced to close Widget Factory One.

Mr. Acquisition had taken a lot of his profit in shares in his once ever expanding business. This meant that as the share value of his Big Widget Company collapsed he lost millions. He began closing plants all over the world. His grossly inflated business had burst like an overfilled balloon. Workers and shareholders around the world were left, as they say, high and dry.

Mr. Acquisition, in trouble financially, was himself acquired -- or at least what remained of his widget business. But don't worry about Mr. Acquisition. The new owner gave the former owner a handsome golden parachute worth many millions of dollars. As you can tell, it wasn't really a parachute but it was handsome and it was golden and, as they say, two out of three ain't bad.


This little fable was inspired by stories still being played out in the real world.

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