Lynn Tilton, Head of $6 billion PE Fund, Patriach Partners, Gives Riveting Speech at IvyPlus / OnPoint Conference
Lynn Tilton, Founder of $6 billion Private Equity turnaround colossus, Patriarch Partners, gave a riveting and thought provoking speech on the need for America to refocus on manufacturing jobs once again. Claiming that the Obama Administration has disregarded prior promises to form incentives and programs to bring back manufacturing, Tilton said that the ongoing recovery is built on the same false foundation that caused the devastating crisis. Tilton also said "Every great empire has been built upon a manufacturing economy; the fall of every great empire has been the failure to remember this fundamental fact." while lambasting the government’s "too big to fail—too small to play mentality"
Tilton, who employs more than 100,000 people in her 70 portfolio companies says that in "With more than 70 portfolio companies across a dozen industries, I have yet to see the green shoots of recovery. Revenue lines, despite significant declines year over year of 20-50%, reflect no major revival in top line growth." Likewise, she suggested that little of the money that was originally designated to keep liquidity in the markets for consumers and industry has actually found it’s way to the heart of the economy, the small to midsized companies with fewer than 500 employees who employ 80% of Americans. She observed that while $13 trillion has been set aside for financial firms, a far smaller amount has been put aside to aid manufacturers.
Tilton recommends the following to save and reinforce manufacturing:
(1) A TALF or PPIP like fund that would provide liquidity to manufactureres
(2) A provisional Federal bank to see this through
(3) A realignment of priorities within the Obama Administration focusing on areas where jobs are created, not saved.
When questioned by the audience about America’s labor costs, Tilton observed that most of our trade partners protect their industries at a rate far higher than our labor costs. She noted that less than 30% of the cost of manufacturing textiles is in labor and that China has a 40% subsidy on cotton from the government for textile production. Likewise VATs from other countries are an obstacle to trade for the U.S.
The full text of her speech can be found here, http://patriarchpartners.com/dust2diamonds/
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