America's Biggest Milk Producers Are Going Bankrupt • Hacker News Board

Re: America's Biggest Milk Producers Are Going Bankrupt

#101

Post by matthewdgreen » Tue, Jan 07, 2020, 2:31 PM UTC

fennecfoxen wrote: post #74

_bxg1 wrote: post #28

Earlier quoted context omitted.

I don't understand how bigger waves haven't yet been made about these locusts. Where's the New York Times expose? Proposals by Congress on how to make this vampirism illegal? Literally anything?

If you want to fix this going forward, make all new defined-benefit pensions plans illegal, as we have amply demonstrated that they can't be trusted over the course of a lifetime. Putting your future in the hands of an automaker was bad enough; why do we expect someone to put their future in the hands of a dairy? A defined-contribution pension plan, where you end up actually owning the assets in question, is the only…

This just turns into another class of scam, where a different class of financial vampire takes the guaranteed stream of revenue from your pension system and systematically diverts a larger and larger share into their own pocket.

Re: America's Biggest Milk Producers Are Going Bankrupt

#102

Post by asdf21 » Tue, Jan 07, 2020, 2:31 PM UTC

koboll wrote: post #35

cowpig wrote: post #10

The title of the article states that milk producers are "going bankrupt," but then cites the rising costs of raw milk, which seems like a good thing for a milk producer. So I look up the company on wikipedia and Borden Dairy is a processor & distributor, not a producer. Furthermore, "employee pension obligations" being cited as a primary cause of bankruptcy without any more details raises a red flag for me. This arti…

If you can't discharge student loans in bankruptcy, you damn well shouldn't be able to discharge pensions you've promised your employees for decades.

Humans still exist and live on after bankruptcy.. companies are dissolved.

Re: America's Biggest Milk Producers Are Going Bankrupt

#103

Post by asdf21 » Tue, Jan 07, 2020, 2:33 PM UTC

code4tee wrote: post #78

Milk as a beverage is in decline, but milk as a product has been steadily growing as a raw material (cheese, yoghurt, etc.) The companies in trouble are those that were too concentrated in beverage milk and failed to diversify their business models to stay relevant. Some of these companies troubles also smell badly of PE shenanigans with over leveraged debt deals and other PE card tricks.

100% this. All that being said, it's also the market working as it should in a way... poorly (in this case, borderline sociopathically) managed companies going out of business.

As someone else said, the unwinding of large consolidated food companies is largely a good thing.

Re: America's Biggest Milk Producers Are Going Bankrupt

#104

Post by fennecfoxen » Tue, Jan 07, 2020, 2:36 PM UTC

matthewdgreen wrote: post #101

fennecfoxen wrote: post #74

Earlier quoted context omitted.

If you want to fix this going forward, make all new defined-benefit pensions plans illegal, as we have amply demonstrated that they can't be trusted over the course of a lifetime. Putting your future in the hands of an automaker was bad enough; why do we expect someone to put their future in the hands of a dairy? A defined-contribution pension plan, where you end up actually owning the assets in question, is the only…

This just turns into another class of scam, where a different class of financial vampire takes the guaranteed stream of revenue from your pension system and systematically diverts a larger and larger share into their own pocket.

Historically? Maybe a little, yeah, but even at ridiculous rate of, say, 2% annual fees, you're just not looking at the same sort of massive capital losses you could expect following a major corporate insolvency...

And more and more pension funds offer low-fee index funds than ever before. Praise Vanguard.

Re: America's Biggest Milk Producers Are Going Bankrupt

#105

Post by Retric » Tue, Jan 07, 2020, 2:36 PM UTC

asdf21 wrote: post #100

mcv wrote: post #90

Earlier quoted context omitted.

That's exactly why it shouldn't even be on the company's budget. They should pay for it to an insurance company while the employee works there, and once the employee doesn't, the insurance takes care of it. Take the employer out of the equation once they're no longer relevant.

>Take the employer out of the equation once they're no longer relevant. Not exactly, if the company is willing to go so far as bankruptcy / reincorporation... how will any previous contracts with whatever insurance company last through that?

The idea is an employee’s pension must be fully funded before they leave and then handled by a 3rd party. At that point the company could dissolve without impacting retired workers.

Re: America's Biggest Milk Producers Are Going Bankrupt

#106

Post by Spooky23 » Tue, Jan 07, 2020, 2:39 PM UTC

fennecfoxen wrote: post #74

_bxg1 wrote: post #28

Earlier quoted context omitted.

I don't understand how bigger waves haven't yet been made about these locusts. Where's the New York Times expose? Proposals by Congress on how to make this vampirism illegal? Literally anything?

If you want to fix this going forward, make all new defined-benefit pensions plans illegal, as we have amply demonstrated that they can't be trusted over the course of a lifetime. Putting your future in the hands of an automaker was bad enough; why do we expect someone to put their future in the hands of a dairy? A defined-contribution pension plan, where you end up actually owning the assets in question, is the only…

Or not allow the type of behavior that makes these boring industries less boring. Borden has been around for like 150 years.

The whole scenario of giant global entities taking over agriculture and food services is probably the most obviously bad but ok things that will happen in my lifetime. We've declared dairy some sort of environmental catastrophe, to be replaced by cloudy water percolated through soy, almonds and similar products, which ultimately will roll up to 4-6 companies like Coke, Pepsi, Inbev, etc.

Re: America's Biggest Milk Producers Are Going Bankrupt

#107

Post by duxup » Tue, Jan 07, 2020, 2:39 PM UTC

_bxg1 wrote: post #28

sp332 wrote: post #3

A counterpoint: these companies were recently bought by private equity firm KKR Co, the same company that loaded up Toys 'R Us with debt and then liquidated it. https://mobile.twitter.com/rhinosoros/status/121424602712711... This bankruptcy filling might just be negotiation in the courts to reduce pension obligations.

I don't understand how bigger waves haven't yet been made about these locusts. Where's the New York Times expose? Proposals by Congress on how to make this vampirism illegal? Literally anything?

I've certainly seen a handful of NYT articles that weren't shy about pointing out the mess that is left behind and questioning what if any economic value there is.

Re: America's Biggest Milk Producers Are Going Bankrupt

#108

Post by ghaff » Tue, Jan 07, 2020, 2:42 PM UTC

fennecfoxen wrote: post #74

_bxg1 wrote: post #28

Earlier quoted context omitted.

I don't understand how bigger waves haven't yet been made about these locusts. Where's the New York Times expose? Proposals by Congress on how to make this vampirism illegal? Literally anything?

If you want to fix this going forward, make all new defined-benefit pensions plans illegal, as we have amply demonstrated that they can't be trusted over the course of a lifetime. Putting your future in the hands of an automaker was bad enough; why do we expect someone to put their future in the hands of a dairy? A defined-contribution pension plan, where you end up actually owning the assets in question, is the only…

>A defined-contribution pension plan, where you end up actually owning the assets in question

Assuming of course that you have actually saved over time and have picked appropriate assets to invest in.

Defined benefit plans have their problems--both the funding and the fact that they were historically designed around long-term employment at a single organization. But they do have the virtue of being a retirement income stream that requires no action on an employee's part.

ADDED: >no one will shrink your pension in bankruptcy

Except the market depending upon where you have invested your money

Re: America's Biggest Milk Producers Are Going Bankrupt

#109

Post by gwbas1c » Tue, Jan 07, 2020, 2:43 PM UTC

code4tee wrote: post #78

Milk as a beverage is in decline, but milk as a product has been steadily growing as a raw material (cheese, yoghurt, etc.) The companies in trouble are those that were too concentrated in beverage milk and failed to diversify their business models to stay relevant. Some of these companies troubles also smell badly of PE shenanigans with over leveraged debt deals and other PE card tricks.

At least with my personal dietary changes over the last few years, I've started eating more cheese but putting less "milk" in my coffee.

Now that I telecommute, it's very hard for me to keep milk around for just coffee. Non-dairy milk keeps better in the refrigerator.

(But, when I'm at a coffee shop or in an office, I use real milk. It moves fast enough that it won't go bad.)

Re: America's Biggest Milk Producers Are Going Bankrupt

#110

Post by LatteLazy » Tue, Jan 07, 2020, 2:46 PM UTC

fennecfoxen wrote: post #74

_bxg1 wrote: post #28

Earlier quoted context omitted.

I don't understand how bigger waves haven't yet been made about these locusts. Where's the New York Times expose? Proposals by Congress on how to make this vampirism illegal? Literally anything?

If you want to fix this going forward, make all new defined-benefit pensions plans illegal, as we have amply demonstrated that they can't be trusted over the course of a lifetime. Putting your future in the hands of an automaker was bad enough; why do we expect someone to put their future in the hands of a dairy? A defined-contribution pension plan, where you end up actually owning the assets in question, is the only…

Sorry in advance, this is a bit of a rant...

The problem is not defined benefit vs defined contribution really, it's that companies are not really required to fund defined benefit.

There are 1001 third party companies (normally insurers) who will happily underwrite a defined benefit scheme (so if the employer goes under the pensions are fine). But that would mean employers actually making pensions contributions that would actually fund the actual cost. Firms prefer to under pay the schemes. Depending on the scheme/firm/local-laws, that might be by just underpaying it, or by more cunning means like using the funds to buy company stock (so it looks like its funded on paper but you're just as screwed when the employer fails, Ironically this is what the federal government is doing with social security too) or by making optimistic assumptions (if I assume all workers die a week after retirement age and a 9% interest rate, final salary pensions need only cost me 5cents a head today! Can you prove I'm wrong?)

Unions (where they exist and have influence) also don't want to push this. Admitting the employer is unlikely to pay is a serious accusation that won't be proven for 20+ years. If you press hard and the employer DOES up their (real) contributions then that means you'll lose out somewhere else in the compensation package (so less health coverage or lower raises). Plus, If you get someone 1000 dollars more in 20 years, but 10 dollars less now, they won't thank you,they'll demand to know where there 10 dollars is!

This is also the reason politicians won't regulate harder: it would push firms to declare bankruptcy sooner (and the electorate punishes that, better let the problem worsen and hope its the next guys issue) and it would mean many firms withdrawing or cutting back their schemes. And again, people would rather have the promise of a good pension (that will likely never happen) than the certainty of a mediocre pension.

The key issue here is a mix of costs and people being strongly incentivised to lie about a cost now as the problem won't happen for decades.

The only advantage defined contribution has is that it is harder to cheat. But actually, defined benefit schemes are less risky and far more appropriate for the average dummy than defined contribution schemes.