#12 Cheesecake

Read a news story the other day. Apparently Sara Lee Company, originally well know for its desserts, notably a frozen cheesecake that almost simulated the look and feel of the real thing, has got into a bit of financial trouble. Which is to say the stock analysts view their company structure as less than optimum to make it attractive to investors. So Sara Lee is divesting itself of certain subsidiaries. In this case the Hanes and Playtex brands. Funny how a few years back the wizards of Wall Street felt that any self-respecting company worth its artificial stock price wasn’t anything unless it was on its way to becoming a huge super-conglomerate. Little, efficient, labor-friendly, pension-rich companies were being gobbled up willie-nillie in corporate America's Qwest for world com-, I mean dom-ination. The new fat cats trimmed out all the excess operating costs—like retirement plans, health insurance, more than minimum wages—and using, they said, the economy of scale made the companies mean, lean and investor desirable. So we found companies like Beatrice Foods getting into plumbing of all things, and Philip-Morris, first known for the manufacture of coffin nails, diversifying itself in food companies like Nabisco and Kraft. So the same company that sells you dinner, like Oscar Meyer wieners, or snacks, like Triscuits, Ritz crackers or Planters Peanuts, can also sell you that after-meal kicker, the cigarrette. Perhaps if they worked even further down the food chain (or is that drain) and acquired, say, Metamucil, they could position themselves for a takeover of Beatrice foods and the whole indoor plumbing thing.
But that was then. As anyone who watches Wall Street knows, it’s not who you know, but who’s CEO you know. The newest crop has changed strategies. Today’s company-jumping MBA’s and mega-managers are all about divesting to make a company more profitable. Get rid of the unproductive appendages and strip a company down to its dynamic core. Translation, we sucked all the moneyjuice out of those subsidiaries we gobbled up, now lets spit the husks back into the trash heap of American commerce. Hmm, what a surprise, get rid of all your expensive experienced workers that care about your company cause they supposedly make your company less profitable and lo and behold the $3 a hour illegal is so unreliable and inefficient he makes your company—less profitable. Whoops. Divest Divest. Quick before the stockholders catch on. Somebody get me my golden parachute. Send my resume to Enron.
The pendulum swings. Capitalists, God bless them, forget that labor is not just a cost; it’s also a way to make their company more productive and therefore more profitable.
Personally, though, I’m going to miss all those sexy Hanes and Playtex commercials that Sara Lee used to produce. There was something real fitting about Sara Lee doing cheesecake ads.
America, ya gotta love it.