When it comes to private equity firms and unions, the mix is usually explosive. Private equity firms like to fire people, right?
Well, in the depressed global economy, things can get topsy-turvy.
Just take a recent piece in TheHill.com. The co-authors include Carlyle co-founder David M. Rubenstein and United Steelworkers' President Leo W. Gerard.
Yes, they are proposing a solution for the current economic turmoil. Basically, they think it's critical that the focus be on manufacturing.
How? Keep in mind that spending on manufacturing has "ripple effect through the economy." Essentially, for every dollar spent, there is a $1.40 lift. Manufacturing leads to spending on such things as raw materials, service providers (shipping, etc), wages, supplies and so on. Actually, about 60% of the spending spills over into other sectors.
Interestingly enough, there is much potential for manufacturing. For example, the steel industry is running at only 55% of capacity, which is the lowest since the Great Depression.
But, of course, this is not the only path. For the most part, the U.S. financial system needs to get back on track as well. A key will be confidence from private investors to do deals, especially in the financial sector.
True, it's not often that unions and private equity firms come together. But in times like these, there truly needs to be cooperation.
Tom Taulli is the author of various books, including The Complete M&A Handbook
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