Tuesday, 28 July 2015

Viasystems revisited - ruthless as ever

DOUG COLLIE on the 'casino capitalists' who still haunt the Borders

Mention the name Viasystems anywhere in the Central Borders and you are certain to evoke memories of some of the darkest days in the region's chequered industrial past when the US electronics conglomerate pulled the plug on a thousand jobs in Selkirk and Galashiels before disappearing across the Atlantic with the spoils from their asset stripping exploits.

In 1997 the printed circuit board moguls from St Louis, Missouri had promised their Borders workforce such a bright future they'd all need sunglasses. But a year later the guys in the sharp suits were gone, leaving the skilled PCB makers to pick up the pieces of their shattered lives and dealing the regional economy a near fatal blow.

The Mills brothers - Jim and Bob - who founded the business and ran the show together with colleagues like David Sindelar, the company's chief finance officer, showed complete disregard for the families who suffered at their hands, and union shop stewards dismissed the group of mercenary Yanks as 'casino capitalists' who gambled with people's lives to become filthy rich.

So it was intriguing for those of us who lived through the Viasystems nightmare to learn the much-maligned company had been taken over by another PCB outfit called TTM Technologies Inc., from California. TTM paid an impressive $927 million dollars to clinch the deal, much of the money being required to pay off Viasystems' extensive debts.

Not Just Sheep & Rugby was anxious to discover what the gang of heartless executives who brought misery to hundreds of local folk seventeen years ago had been up to in the interim, whether any of the main players from the Borders trauma were still with the company, and was there a chance some of those at the top might get their deserved comeuppance?

We discovered that it's been very much business as usual following the decision to up sticks from Scotland, become bankrupt in 2001, then rise like a Phoenix from the ashes three years later with a multi-million dollar development programme aimed at world domination of PCB production. A series of new factories were built in China and Mexico to take full advantage of the cheapest labour on the planet.

The odious Mills brothers are long gone: pensioned off with massive golden goodbyes. Some will remember they even paid themselves bonuses shortly after completing their dirty work here in the Borders.

But Mr Sindelar is still around. He managed to climb right to the top of the greasy pole where he now sits as chief executive officer on a basic annual salary of $920,000 dollars, and total earnings in 2014 (inclusive of stocks, bonuses, compensation and pension enhancements) of $3,634,239. But that was a relatively poor year for him compared to 2012 when he trousered $4,520,155. His car allowance last year - $33,994 - was also pretty impressive.

Some of Viasystems' employees fared rather less well than Mr Sindelar. A rationalisation at the Juarez plant in Mexico saw the scope of operations and the workforce reduced by 22% during 2014 with the company shelling out $600,000 on numerous severance packages. Another community devastated by Viasystems' actions, just like Selkirk all those years ago.

And there have been issues too in China where disgruntled employees at the biggest factory stopped work temporarily even though Viasystems had become totally "non-union". A fire at the Guangzhou facility damaged property, destroyed inventory and temporarily reduced manufacturing capacity. The company raked in $33 million dollars from the resultant insurance claims.

The penny pinching outfit, always hoping to force down costs and pay overseas workers as little as possible, have taken steps to counter new minimum wage levels which vary in each of the Chinese provinces.

According to a Viasystems file lodged with the US Securities and Exchange Commission (SEC): "With anticipated changes in minimum wage laws in China we expect our labour costs will increase. We have begun reducing staffing at certain of our Chinese plants."

It is interesting to note that the Chinese minimum wage in 2015 ranges from 1,030 yuan per month in Guizhou province to 1,820 yuan per month in Shanghai. The sterling equivalents are £106.84 and £188.79 respectively. Hardly in David Sindelar's league!

Meanwhile back in the USA Viasystems has been mired in law suits in Delaware and Missouri. It is alleged that company bosses grossly under-valued the business during the takeover negotiations with TTM, charges that are without foundation say the Board of well-heeled directors, all of them earning at least $210,000 a year.

And if David Sindelar is concerned that the new owners might want to add him to the long list of Viasystems severance deals then he can at least rely on an arrangement he has with the company which means he is entitled to up to $9.1 million dollars if his employment is terminated or there is a change of control.

It's all enough to give casino capitalism a bad name!

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