My wife’s family lived in Poland, New York, on a dairy farm when I met her. Their home was located in the midst of fields on which the Holsteins grazed surrounded by other similar dairy farms. I learned that running a dairy farm offered little relaxation time. It was a three hundred sixty-five day a year job.
Poland is located in Herkimer County. Herkimer is situated about 15 miles south. After her folks died her sister lived there in a house adjoining the farm. It is still owned by her nieces and nephew. Each year my wife would go to Poland two or more times. She loved the country and had a large garden there. When she came back it was not before she stopped at the Heidelberg Bakery and Café in Herkimer. She would buy a dozen or more loaves of bread which we savored.
On Easter, 2019, the bakery had a fire and closed. Then after searching about we learned that some of the local grocery stores carried the bread which gave us access to it. Just recently they no longer had it. Inquiring we found it was not longer delivered. We went to the site of the Heidelberg Bread Company and found the following notice: “To our valued customers: Sadly our distributor, Koffee Kup, has abruptly closed. This will create distribution outages throughout the northeast. Please be reassured that we are diligently working on alternative distribution and hope to be up and running again in the next two to three weeks. Please check back for updates!! In the meantime, please feel free to use our online store to purchase our bread.”
What happened that a company “abruptly closed.”
American Industrial Acquisition Corporation (AIAC) bought the Koffee Kup company which had about 250 employees in Vermont and another 100 in Connecticut on April 1, 2021. AIAC bills itself as “a privately held industrial investment portfolio with a long term mission to build enduring businesses.” It states it was established in 1996. It notes: “our portfolio consists of 78 manufacturing and distribution sites with over 8,500 employees in 24 countries in North America, Europe, and Asia. Total annual revenues exceed $1.6 billion.”
Now I assume AIAC has all the financial experts that delve deeply into the finances of the companies they purchase. A thorough research is done, due diligence performed, and these experts do not just make their purchases without a full understanding of what the prospects of the company will be.
Koffee Kup had been losing money over the years which was well known. Its owner “considered multiple potential buyers before selling to” AIAC. The CEO of Koffee Kup said it was motivated to sell to AIAC because “AIAC had committed to investing $4 million in Koffee Kup before acquiring the bakery April 1.”
Now here is the sinister part. On April 26, 2021, “Workers, hundreds of whom were left without jobs, said they were notified of the closure upon arriving for shifts. “You need to go empty your stuff, get your personal belongings and not report to work anymore.””
AIAC adviser Jeff Sands explained the closing noting: “that Koffee Kup had suffered financial losses in each of the past four years. The bakery had been unable to find a new investor “willing to commit the resources necessary to bring the company back to health.” But according to the CEO of Koffee Kup that was what AIAC had promised to do noting there were three other companies willing to buy it. Certainly AIAC before it bought it knew of the financial losses and using that as an excuse to close it makes no sense.
It is difficult to ascertain what AIAC will do with its purchase. What is certain is that at least 350 workers were thrown out of work without notice. Some received checks for their last week and unused time off. Those checks would bounce. No doubt AIAC with its 1.6 billion annual revenue will do well with the purchase; folks with little will suffer. That’s one of capitalism’s big downsides. Unrestrained the little guy is not protected. That is why we do need to regulate tawdry actions like those of AIAC.