Wall Street Comes to Fayette: Update 3

There is yet more fallout from the implosion of First Brands, which I wrote about in reporting on the closing of Eagle Machining in Fayette, Ohio. If you recall, First Brands is an umbrella company formed by man named Patrick James, since indicted, whose roll-up of auto parts makers and suppliers was financed, in large part, by Wall Street private credit. Since the First Brands bankruptcy, private credit itself has become a toxic source of Wall Street anxiety.

Now the people running First Brands have told the state of Ohio that potential buyers for its corporate entities are balking, with the predictable result that more Buckeyes, about 1,200, are losing their jobs.

On February 23, the company informed the state, and Cleveland mayor Justin Bibb, that 146 employees at the corporate headquarters were being fired that same day. The company excused the short notice by saying "announcing this action earlier than today would have jeopardized the sale process and the Company believed that potential bidders would not have been interested in the business lines without its employees." In other words, the employees were being held in place like department store mannequins while management tried to unload the debt-ridden properties.

Then, on February 27, the company issued three more notices. In Greenville, Ohio, 302 people at a FRAM plant would be fired as of April 30, the company said. In Tiffin, Ohio, 407 people would be fired on April 30 at TMD, Toledo Molding and Die. Another 302 would lose their jobs at TMD's Bowling Green facility. (This hit close to home. As I wrote earlier, my grandfather was a tool and die man.)

All this damage, not just to the people who will lose their jobs, but to American manufacturing (a good tool and die maker is not made overnight), represents the fallout of financial engineering. People who make nothing ruin the careers and security of people who make something, and the people who make nothing get rich doing it.