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Jugs of milk on store shelf.
If you are familiar with my writing you know that my dad was a milkman and he delivered milk to all of the Madison, Wisconsin, area schools. He worked for a small distributor (who ended up leaving a void in the local milk market when he tried to break the union and he went out of business). As time went by there were fewer and fewer milk bottlers in the Madison area and then in southern Wisconsin.

Golden Guernsey and Dean Foods were two of the major bottlers in Wisconsin. Dean Foods had purchased two bottling plants from Foremost farms last year (which produced Golden Guernsey). One in DePere and one in Waukesha. The justice department and the attorney generals of Wisconsin and Michigan filed an anti-trust lawsuit against Dean foods as the purchase of both of those plants would give them more than 50 percent of school milk business in the Wisconsin and Michigan markets.

In order to settle the lawsuit Dean foods had to sell the plant in Waukesha. They sold it to Open Gate Capital, a Los Angeles private equity firm. With Open Gate Capital at the helm sales were up over 20 percent over the previous year.

According to the Milwaukee Journal-Sentinel:

An employee who did not want to be identified said the workers were notified Friday night that the plant would be closed. Another employee who arrived at the plant Saturday morning was told not to come to work Saturday or Sunday, a source said. The plant was locked Saturday afternoon, with vendor trucks parked outside and Golden Guernsey trucks behind the locked fence.

[Wisconsin] Department of Workforce Development spokesman John Dipko said he was unaware of the closing.

Under [Wisconsin] law, employers are required to give 60 days' notice of any shutdown to city and state officials, and to pay their workers severance payments for 60 days leading up to a shutdown or mass layoff. The plant had roughly 100 workers, according to employees.

So a private equity firm from California purchased a dairy in Wisconsin, generated sales that were 20 percent higher, and now a year later is taking that dairy into chapter 7 bankruptcy. Distributors are scrambling to make arrangements to find new suppliers so that school milk deliveries can continue this week. This was done without the required 60 day notice to the state and without any concern about the the many schools that purchase milk from this plant.

According to bankruptcy petition Golden Guernsey has at least 200 creditors, assets of between $10 million and $50 million, and liabilities of between $10 million and $50 million. At this point, the petition doesn't contain detailed information about the company's finances. Now, I highly doubt that Golden Guernsey was losing money with it supplying so many schools in the state of Wisconsin as well as several large grocery chains. The likely scenario is that Open Gate Capital loaded the company up with debt, took the profits and is now leaving the carcass for for the vultures to pick at. I would not be surprised to see the plant and all its equipment sold off piece by piece in the coming months.

Open Gate claims it was expenses were the problem with keeping the company open:

Since being acquired by OpenGate, Golden Guernsey made vigorous efforts to reduce its expenses through discussions with its various suppliers, vendors, and the labor union. The prospect of closing the plant and the potential for bankruptcy was raised on several occasions with these groups, all of which were provided with a clear picture of Golden Guernsey's fragile financial condition. Despite this, Golden Guernsey's efforts were rejected, leading to the closure of the business.
Of course, for some they do not seem to grasp what really closed the plant. Lynn Hiemke, president of Mapleton Dairy Haulers in Oconomowoc stated:
"The Department of Justice has no clue. They have wrecked our plant. It's the federal government going in there, and they wrecked our plant."
Open Gate Capital and others involved in this mess can claim it was the Department of Justice, unions, or any other right-wing bogeymen available that caused this plant to close; however, the the truth is that it was vulture capitalism. Our society cannot thrive and grow with these vultures sucking the profits out of healthy companies and then leaving their debt ridden corpses for us to clean up.

Originally posted to Daily Kos Labor on Fri Jan 11, 2013 at 08:42 AM PST.

Also republished by In Support of Labor and Unions and Badger State Progressive.

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