Charles Hugh Smith discusses how the Air Force cannibalizes to keep the illusion of a fully functional Flightline. He also shows what’s being done to the American healthcare system through this hollowing out. You’ll undoubtedly learn something from the article. This general definition is offered. (Bold in the original.)

Cannibalize is an interesting word. It is a remarkably graphic way to describe the self-inflicted destruction of a system by stripping previously functional subsystems to sustain the illusion of system functionality.

Wall street does this all the time. Investors don’t care if a company does it because the stock price keeps rising for a time. More often, they sell the lower profit-producing business units first. But sometimes, in an act of cannibalistic suicide, they will sell the money makers and bankrupt the company. This point is well taken.

An enterprise maintains a substantial cash position even as it loses money every quarter by quietly selling off its most valuable assets. This maintains the illusion of financial strength even as the enterprise is being hollowed out.

With some tactical variation, this is more or less what Cerberus Capital Management did to Remington. The Cerberus web page touts: ” Your partner to improve performance and drive value. Learn how Cerberus creates an edge for our investors and business partners worldwide.” Uh-huh?

Turning small-scale, localized finance into centralized / globalized hyper-financialization cannibalizes finance to benefit the few with unlimited access to credit, leverage and monopoly. First you borrow vast sums at low rates of interest that are inaccessible to mere mortals, take a corporation private, indebt the company and use the funds to accumulate mountains of derivatives that leverage the debt 10-fold or even 100-fold, then take the corporation public again, goose the stock and then cash out all the leveraged gains.

The newly public company has been stripmined of core assets and burdened by debt. The financiers cannibalized the corporation to benefit themselves at the expense of everyone else with a stake in the business and the future viability of the enterprise.

Food is also discussed.

Highly processed products are simulacra of food that hijack our hardwired pleasure responses to heavy concentrations of salt, sweets, fat and spice and crunchy/chewy mouthfeel. The nutritional content of these products is so low and the fat-salt-sugar content so high that they are severely damaging to health on multiple levels.

The unwary consumer who stuffs themselves with these simulacra of food (shall we call it “fud”?) feels full even as their body and brain are starved for real nutritional content and real-food fiber.

A high sugar intake means gaining weight in fat. But few understand that anything that tastes like food but delivers minimal nutrition makes people fat. The reason is that your body releases enzymes and other chemical reactions to process the food; your digestive system then looks for particular nutrients found in the food based on that taste. But, with processed food, the nutrients aren’t there, so your body ‘thinks’ that something is wrong with its ability to absorb nutrients, so it starts packing on fat. Before processed foods, this is an excellent function for the body to have. In lean years and drought, this functionality ensures the body can make it through seasons, or a year, of low-quality foodstuffs until a better harvest. Lean times may well be approaching. Understanding how your digestive system is supposed to work may come in handy.

The linked article also appeared at WRSA.

The extent of this isn’t clear to me from the article.

Remington Firearms, the country’s oldest gun manufacturer, will be moving its headquarters from Ilion, New York, to Georgia, the company announced Monday.

As part of the deal, the company said it would invest $100 million in the operation and hire 856 people over a five-year period in Troup County.

It was not immediately clear what effect the transfer would have on Remington’s operations in New York and Tennessee. The company owns the parts of the former Remington Outdoor Co. which makes rifles, shotguns, and some handguns after the former parent auctioned its assets in pieces last year during a bankruptcy proceeding in Alabama.

Investors doing business as the Roundhill Group purchased the Remington-branded gun-making business, including operations in Ilion, New York, and Lenoir City, Tennessee, for $13 million.

[ … ]

Phil Smith, a spokesperson for the United Mine Workers of America, which represents some workers at a factory in Ilion, said the union had no information about whether workers in New York would be affected. The new owners recently restarted operations there, calling back more than 200 workers who had been laid off. The local government in New York offered 10 years of tax breaks in exchange for the restart and upgrades.

Well, at this point, you can color me confused.  I don’t know what parts are left after the sale, what is moving, and what they will be manufacturing.

This move is far too late, but I hope they can make a go of it and get back to good guns after Cerberus financially engineered the life out of them.

And if they want to make good stuff without the hassle of a union, getting to a right to work state is the best idea.  Keep the union out.

Times Union.

ILION — Despite finding a new buyer, the bankrupt Remington Outdoor Compay laid off 585 employees on Monday and said their benefits would expire later in the week, without severance pay, according to the union that represents them.

Some of the workers, though, may be called back to work in the coming months.

“This outrageous action by Remington Outdoor company is a slap in the face,” said Cecil Roberts, president of the United Mine Workers of America, which represents most of the more than 700 people who work at the gun factory. He said the union is exploring legal options to fight the layoffs and lack of severance pay.

“We are now working with the new company to get the plant reopened and start putting our members back to work. But the old, failed Remington had one more kick in the pants for our members,” he said.

[ … ]

The company is expected to hire back 200 workers within 60 days, according to state Sen. James Seward’s office, whose district includes Ilion. It wasn’t immediately clear, however, if the new workers would be represented by the UMW as the company is emerging from bankruptcy.

United Mine Workers of America.

That’s one reason Remington is bankrupt.  Combine collective bargaining with awful management, poor foresight and engineering second rate products that no one wants, the Remington 700 fiasco, and being behind the development and innovation curve, and this is what you’ve got.

Bushmaster had to compete with Daniel Defense, Rock River Arms, LaRue Tactical, BCM, and a hundred other brands.  Remington 700 had to compete with Bergara, Tikka, Savage, Ruger and a hundred other brands.

From Sniper’s Hide.

As to how this sort of thing can happen, one commenter notes:

Lawsuits
Unions
RP9 Pistols
R51 Pistols
Ho Hum AR’s
Ruger, Howa, Tikka, Bergara, and the rise of “production class” customs eating your lunch in the bolt action segment
Hornady

Bad decisions.  True enough, being in a collective bargaining state rather than a right to work state harmed them, as it will any company.  They should have relocated as should any firearms manufacturer located in the Northeast.

But they have made some extremely bad business and financial decisions like waiting far too long to acknowledge the problems associated with the 700, failures they even duplicated in non-trivial numbers by their own testing.

Other firearms manufacturers have been smarter and faster, and the firearms-buying public has too many very good options to settle for mediocre products these days.

There is also the issue of the fact that Cerberus / Freedom Group was essentially a company of “financial engineers” (I loath that term for reasons that would send me off on a rant) who worked hard to squeeze every last drop of money out of the company and leave it bankrupt.

This serves as an object lesson to firearms manufacturers everywhere.  [1] Don’t sell out to financial engineers who want to rape the company, [2] admit and fix flaws in guns, and do it fast, [3] get out of union states, [4] give the public what they want by being innovative, cost effective and smart, but don’t make trash, and finally, [5] hire good engineers.

We’re all watching the remaining firearms manufacturers located in the Northeast.  If you are one of them, why are you still there?

Prior: Gun Valley Moves South

Strange news.

Remington Arms, America’s oldest gun maker, is preparing to file for Chapter 11 bankruptcy protection and is in advanced talks for a potential sale to the Navajo Nation, The Wall Street Journal reported on Friday.

Remington is making preparations for the Native American tribe to serve as the lead bidder to purchase its assets out of Chapter 11, the Journal reported here, citing people familiar with the matter.

The report added that the filing could come with in days.

I think everyone in the gun community expected Remington to go down the toilet, especially after being bought by Cerberus with financial “engineers” skimming money from profits.

But this is odd – Navajo Nation?  I wonder what that’s all about?  What does Navajo Nation intend to do with Remington?

CNBC:

A landmark class action settlement involving some of Remington’s most popular firearms has officially gone into effect, after critics of the agreement declined to take their case to the Supreme Court by a Tuesday deadline, according to an attorney for the plaintiffs.

That means that millions of owners of the iconic Model 700 rifle — and a dozen Remington models with similar designs — have 18 months to file claims for a free replacement of their guns’ allegedly defective triggers. The guns have been linked in lawsuits to dozens of accidental deaths and hundreds of serious injuries, though Remington still maintains they are safe.

“Anyone with one of these guns should take advantage of this opportunity to get the trigger fixed,” said Eric D. Holland, a lead attorney for the plaintiffs in the class action case. “I’ve encouraged everyone to put these guns away. Don’t use these guns. Make the claims now.”

A special website has been set up with information on how to file a claim, and there is also a toll-free hotline, 1-800-876-5940.

[ … ]

The effective date of the settlement comes almost exactly eight years after CNBC first explored allegations that Remington engaged in a decades-long coverup of a defect that allows the guns to fire without the trigger being pulled.

Remington said the guns have been safe since they were first produced. But the 2010 documentary “Remington Under Fire: A CNBC Investigation” uncovered internal company documents showing engineers warning of a “theoretical unsafe condition” even before the trigger design went on the market in 1948. The company repeatedly decided against modifying the design or launching a recall, even as accidents and customer complaints continued to pile up.

It’s more complicated than simply the rifle firing when the trigger isn’t pulled.  The rifle would discharge at times when the cartridge was sent into battery, and Remington engineers knew it and had data from their own testing that showed it.

How sad.  After all of the pain, suffering, money, lawyers and loss of reputation to the company, this is apparently the end.  All of it could have been avoided by simply doing a recall when the engineers found it.  The world is almost always a worse place when people don’t listen to engineers.

Prior: Remington 700

Reuters:

U.S. weapons manufacturer Remington Outdoor Co Inc. said on Thursday it had emerged from Chapter 11 bankruptcy with less debt and more stable financing that may help it ride out a slowing market for firearms.

Remington, America’s oldest gunmaker, filed for bankruptcy protection in March, weeks after a shooting at a high school in Parkland, Florida killed 17 people and triggered intensified campaigns for gun control by activists.

Under the reorganization plan, inked two days before the Feb. 14 Parkland shooting, creditors including JPMorgan Chase & Co and Franklin Advisors will take ownership stakes in the company in exchange for forgiving more than $775 million of debt.

Remington also received a $193 million new lending package funded by seven banks, including Bank of America Corp.

“It is morning in Remington country,” Chief Executive Anthony Acitelli said in a statement.

Investors in Cerberus Capital Management LP, the previous owner, had urged the private equity fund to sell Remington after its Bushmaster rifle was used in a school shooting in 2012 in Sandy Hook, Connecticut, in which 20 children died.

Remington has said its bankruptcy would not affect lawsuits against it, including one filed by the families of Sandy Hook victims. It is also appointing a new board of directors.

Bank of America has hinted that it may sell its participation in Remington’s exit financing package.

“These companies have a real opportunity to solidify a brand that is in sync with what customers want now and in the future,” said gun control advocate Igor Volsky. He called Parkland “a tipping point for Americans waking up and saying that guns are a real problem.”

I’m not sure if this is “morning” or sunset in Remington country.  Someone else now owns the controlling interest in Remington, apparently, and BoA is apparently looking for a buyer, while going on record saying that “guns are a real problem.”

You may be watching Remington in its death spiral.

Andrew Ross Sorkin writing at NYT:

The usual suspects of potential buyers are circling, including rival gun manufacturers like Sturm, Ruger & Company and some small financiers willing to accept whatever criticism would come from buying Remington.

More tantalizing is a pie-in-the-sky idea: whether a beneficent billionaire, like Michael R. Bloomberg, could buy the company and either try to transform it or shut it down — a sort of philanthropic euthanasia in the name of gun control.

Yet all of those options have challenges. So here’s a practical idea that should be considered more than just a thought experiment:

What if the big banks that have provided financing to Remington during its bankruptcy were to back — and partner with — one or more of the big private equity firms in an effort to transform the company into the most advanced and responsible gun manufacturer in the country?

After all, virtually all the banks have a “social impact” unit or at least an initiative meant to “do good.” And so do many private equity firms, like TPG and Bain Capital.

And they would not be out to kill the business; quite the opposite: They could create a profitable model for the rest of the industry using technology and sound sales policies to reinvent the modern-gun manufacturer.

A reimagined Remington with a new management and mandate could develop smart-gun technology. It could back fingerprint technology meant to prevent anyone who is not the gun’s owner from shooting it, a measure that could greatly reduce suicides and the potential for guns to be stolen. It could add an identity stamp to ammunition fired from any of its guns. It could also establish and standardize responsible sales policies for retailers to sell its firearms.

What would happen, for instance, if a consortium were to come together so that the banks offered the buyer a below-market loan, giving a socially responsible investor the advantage of a lower cost of capital? What would happen if one of the big retail chains like Walmart and Dick’s — both of which have already established that they only want to sell guns in a responsible way — were to guarantee distribution, sales and marketing support?

Yes, Andrew, in your world little girls like puppy dogs and purple unicorns throwing pixie dust in the air as they fly across the sky spreading cheer and happiness to all.  It’s a nice vision – for a little girl.

The reality is that Remington would quickly go out of business, the “smart gun” wouldn’t sell, and no more people would buy guns from Walmart or Dick’s than do now.

This is what happens when social planners who know nothing about what they’re trying to plan collide with more capital than should ever be under the control of one man.

So here is a suggestion, Andrew.  Take the challenge.

Perform a fault tree analysis of smart guns.  Use highly respected guidance like the NRC fault tree handbook.

Assess the reliability of one of my semi-automatic handguns as the first state point, and then add smart gun technology to it, and assess it again.  Compare the state points.  Then do that again with a revolver.  Be honest.  Assign a failure probability of greater than zero (0) to the smart technology, because you know that each additional electronic and mechanical component has a failure probability of greater than zero.

Get a PE to seal the work to demonstrate thorough and independent review.  If you can prove that so-called “smart guns” are as reliable as my guns, I’ll pour ketchup on my hard hat, eat it, and post video for everyone to see.  If you lose, you buy me the gun of my choice.

To date, no one has taken me up on the challenge.  That’s disappointing, because I’d like a free gun.  If you don’t like that challenge, here’s another one.

Talk law enforcement into taking a smart gun.  All officers, no exceptions.  Find a department somewhere in a large city to agree to arm all of their officers with smart guns.

See if you can pull this off, Andrew.  I’m watching and listening.

Postscript: Poor Remington.  What an awful time to be in bankruptcy.

Reuters:

Bank of America Corp is preparing to provide critical financing to Remington Outdoor Co, which makes assault-type rifles, just weeks after the U.S. bank said it would stop financing “military-style” firearms for civilians.

The bank is contributing $43.2 million to a $193 million lending package funded by seven banks, according to court documents, which will help put Remington back on stable footing as it emerges from bankruptcy later this month into an uncertain environment for gun makers.

The package replaces a similar credit facility the banks committed to providing Remington. Both were agreed in late March, before Bank of America, the second-largest U.S. bank by assets, changed its policy to stop financing companies that make military-style guns for civilian use.

Anne Finucane, Bank of America’s vice chair, said in April that the bank had decided on its pledge to help reduce mass shootings, saying in an interview with Bloomberg TV that “it is not our intent to underwrite or finance military-style firearms on a go-forward basis.”

[ … ]

But withdrawing from the deal would hurt the bank’s reputation for standing by its lending agreements and could undermine Remington’s survival, according to one person familiar with the bank’s thinking.

Surely BoA knew about this loan package before it’s stupid announcement on other firearms manufacturers.

That means one of two things.  Either BoA is full of liars and crooks who were only trying to make an appearance of cooperating with the gun controllers, or Remington has been strong armed and is preparing to jettison its Bushmaster line of guns.

If the first is true, it doesn’t mean BoA will lend in the future to firearms manufacturers.  It just means that they are liars.  If the second is true, this is the end for Remington.  There will be no recovery.  Tikka can easily supplant the Remington 700 because it’s a better gun.

Bloomberg:

Remington Outdoor Co. has only been in bankruptcy for a month, but creditors are already planning an out.

The U.S. firearms and ammunition juggernaut will likely go up for sale directly following its bankruptcy, according to people with knowledge of the situation. Certain stakeholders, some of whom haven’t been publicly identified, have already started putting out feelers for potential strategic buyers, these people said.

Rather than hold the collection of 13 brands that includes a 200-year-old rifle maker, ammunition manufacturers, silencer companies and traditional firearms manufacturers, the lenders will be trying to offload at a particularly fraught time.

You can say that again.  This isn’t a good time for Remington to be doing anything like this, and I don’t expect them to last long.