Sunday, September 25, 2011

Carlyle Group's Conway: Wants Jobs for the Poor

Carlyle Group co-founder and billionaire William (Bill) Conway wants to give his fortune away, a la Peter Peterson, Blackstone's co-founder.  Peterson gave $1 billion away to a foundation concerned about taxes, especially taxes on the super wealthy.  While Bill Conway hates taxes himself, he sees his foundation supporting a more noble goal.  WaPo reported:

“So much of what I do now is stopgap. Somebody’s hungry; we give money to the food bank,” Conway said in an interview in his Pennsylvania Avenue office. Although such help is necessary and worthwhile, he said, “It would be far better if we had a more permanent solution.”

Conway is intrigued by a recent suggestion from his wife, Joanne, to use his wealth to create large numbers of productive, self-sustaining jobs for the poor.

“More effective than giving away half my fortune before I die is finding a way to help people have a good-paying job,” he said. That would help not only the newly employed, but also their families and the rest of the community.

“If I’m going to create 1,000 jobs, or 10,000 jobs, or whatever the number is, wouldn’t we all be better off?” With jobs, he said, people “have a home; they go out to eat; they have a life.”

The Carlyle Group, a private equity underwriter with $153 billion under management, has owned more than 400 portfolio companies.   Conway had thousands of opportunities to give people, good paying jobs.  How did he do?

Take two Carlyle affiliates, automotive parts maker UCI and Vought Aircraft Industries, maker of aircraft aerostructures.  Under Carlyle's ownership, jobs at UCI fell from 6,900 to 4,350.  Between management fees and special dividends Carlyle siphoned nearly $50 million from UCI from 2003 to 2010.  As The Carlyle Group is currently bidding on TI Automotive, TI workers might want to explore Carlyle's UCI story.

Vought Aircraft Industries took $35 million from Texas taxpayers to add 3,000 new jobs in the Dallas area.  Governor Rick Perry's Texas Enterprise Fund gave Vought a $35 million check in 2004.  By 2010, Carlyle's Vought hadn't added a job.  Instead it cut 35 positions, meaning Perry gave Vought $1 million per job eliminated.  Perry renegotiated the deal in secret as Carlyle struck a deal with Triumph for Vought.  Neither Conway, nor his co-founders, made Texas taxpayers whole.

Carlyle's recent British deals point to future elderly needing assistance.  Carlyle acquired RAC and Brintons, while offloading both company's pension funds.  The move cuts worker pensions by one third.  

A former business news reporter, from a major media company, noted Carlyle's impact:

I have seen so many people -- particularly those in their 50s - 70s -- taken apart by what has happened in their industry as greed has hollowed out the economy. These are people took pride in their jobs and held themselves to this invisible standard that we all just took for granted, but is being wiped out.

WaPo's Conway piece even stated:

Needs are growing because of the slow economy. Government safety nets are shrinking because of tight budgets.  

Recall how much Conway hates paying taxes?  The wealthy's unwillingness to pay higher tax rates is a factor in tight budgets.

Conway's opportunity to grow jobs is every minute of every day. Count how many stay in a Carlyle company's country of origin and how many go to China.  There will be ghosts and angels in William Conway's future.  How will he account for his time racing his peers to the top of the billionaire list?

Update: A comment from justme39 on WaPo's article stated, "Most people aren't looking for a handout. Just a good job. Until recently I had one. Then the Carlyle Group bought my company as an 'investment'. I was laid off this past Monday after 8 years..... .  Perhaps Bill Conway as a co-founder should help his own employees first."

Update 4-14-14:  Carlyle co-founder David Rubenstein was on CNBC today pushing Carlyle's operating executives who grow jobs.  Mary Petrovich said she grew jobs from 500 to 1,000 while at one Carlyle affiliate.  She also drove "global sourcing to achieve material cost reductions," which resulted in how many U.S. jobs lost from 2005 to 2008, Carlyle's ownership period of AxleTech?

Update 1-31-22:  PND reported "Conway originally had planned to donate $1 billion to create jobs for low-income people, but when he solicited ideas for how to go about it last fall, he received more than twenty-five hundred suggestions. Ultimately, he determined that the greater need was to help the poor qualify for jobs that already existed. "I concluded out of all this that it was extremely difficult to create jobs," Conway said. "The objective I get to is similar, but I never thought I'd actually get there this way."