The Zombie Contagion Spreads

Posted May 12th, 2009 at 10.54am in Enterprise and Free Markets.

Hartmarx, known for its Hart Schaffner & Marx and Hickey Freeman suits, and for making President Obama’s inauguration tuxedo and topcoat, has long been America’s leading clothier for men. Now its workers want to make the company, which is in bankruptcy, a leader in a different way.

Hoping to save their jobs and start a national movement, Hartmarx workers are pressuring Wells Fargo, the company’s main creditor, to approve the sale of Hartmarx to a buyer that would keep it alive instead of liquidating it, and most likely putting its celebrated labels on suits made overseas.

Seeing a political and public relations opening, the workers and their union are arguing that Wells Fargo, having received $25 billion in the bank bailout, should keep a 122-year-old American company like Hartmarx in business and preserve some 3,600 jobs.

Got that? Not only has TARP turned our nation’s financial institutions into “Zombie banks”, but thanks big labor’s power over the Obama administration, TARP now threatens to turn any unionized company that did business with a TARP bailed-out bank into a zombie business.

Our economy will never recover if the federal government is forced to prop up every failing unionized firm in this country. We must fight the zombie menace. We must repeal TARP now.

Author: Conn Carroll
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7 Comments

May 12, 2009 MARK,HOUSTON writes:

On this I have to disagree, “Hartmarx” has a long standing tradition and history in this country. we need to do everything we can to save it, PERIOD. Although I don’t like the strong arm tactics of the union(even though I an a union member)the company is part of our AMERICAN ideal,our heritage. It’s like taking old glory and selling to the highest bidder just to make a few bucks.

May 12, 2009 Frank, Atlanta writes:

Fine, Mark, then you just go ahead and write a check.

The rest of us prefer to keep our money and perhaps start a company that does a better job than Hartmarx did.

Look at Harley-Davidson..investors brought it back from the almost-dead. leave govt out of the business of ‘business’

May 12, 2009 » Financial News Update - 05/12/09 NoisyRoom.net: “Extremism in the defense of liberty is no vice. Moderation in the face of tyranny is no virtue.” Barry Goldwater writes:

[...] The Zombie Contagion Spreads [...]

May 12, 2009 Barb -mn writes:

I agree with Frank. Every person that creates a business in a FREE country means they take on the consequences they may endure, regardless of why.

Because they have dignity, they deal with the consequences and if need be, start all over again or find another interest. An honest business wouldn’t think of stealing monies from the taxpayers(their customers.) Only if they have dignity. And only in a FREE country.

Otherwise they are cowardice. Including the government that takes the business over at the expense of the taxpayers (the businesses’ customers.) Really shows a disingenuous owner. And government under FREEDOM.

And in a FREE country the government would know and not go beyond the line, wouldn’t think about holding a hand. The business owner would do everything he could to keep the government out of their business. Business owner automatically deals with the consequence within the law under FREEDOM… If they have dignity. If not, they’ll never get our business.

May 13, 2009 Eric, Alabama writes:

Harley Davidson was assisted by special tariffs on foreign motorcycle imports in the early eighties. It would not have survived otherwise. Who wanted 50’s technology at 80’s prices!

May 13, 2009 No Dumping Allowed writes:

Regarding this:

Harley Davidson was assisted by special tariffs on foreign motorcycle imports in the early eighties. It would not have survived otherwise. Who wanted 50’s technology at 80’s prices!

There is a big difference between propping-up a failing company and protecting a company from dumping, which is what Japan has done to our market for years now.

May 16, 2009 Dale Wettlaufer writes:

The premise Wells Fargo accepted TARP funds, ergo HartMarx should receive assistance, is greatly flawed for numerous reasons.

1. Wells Fargo was forced to accept TARP funds. It did not apply for the funds and did not want them when the program was proposed. Treasury Secretary Paulson forced the company to take the funds, as has been well documented in his “talking points” memo and in commentary by Wells Fargo executives.

2. HartMax has rarely, if ever, generated a return on capital above its cost of capital. Over the course of a business cycle, it has failed to do so. This program is a bid to save the jobs of the politically-connected, not save a business that is demanded by the market or staunch a systemic risk. There is a big difference between the premise of TARP and the premise of bailing out HartMarx.

3. Wells Fargo has a fiduciary duty to its depositors, its creditors, and its equity holders (the taxpayer among these) to maximize the value of its interest in HartMarx. If that means liquidating its interest in HartMax, that is what is required by all laws and norms regulating fiduciary duty. If they can maximize their interest by keeping it alive, so be it. Overriding hundreds of years of case law, corporate practice, and tractable economic theory for the sake of sentiment or, worse, to provide political payback, is truly demented.

Next up, YRC Worldwide asking for $1B in TARP funds. That will be the big litmus test on the issue of bailing out failed companies to save union jobs.

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