Los Angeles Times - 08.09.2019

BuSINESS

SUNDAY, SEPTEMBER 8, 2019:: LATIMES.COM/BUSINESS

C

Tom Gores has made himself one of the richest men in Los Angeles

buying castaway, often obscure businesses that he overhauls and un-

loads for big profits.

That formula worked to perfection, for example, when his private eq-

uity firm acquired steel distributor PNA Group for an $18-million invest-

ment, cleaned house, made related acquisitions and sold the bulked-up

company for more than $300 million, not including debt.

But with his latest purchase of a troubled asset, the 55-year-old bil-

lionaire has found himself in a harsh spotlight.

The $1.6-billion acquisition of Securus Technologies has put Gores in

control of a leading provider of telephone services to inmates — and a

poster child for an industry widely condemned as a racket, given rates

that can top a dollar a minute.

The Beverly Hills private equity titan has waded into a campaign

against mass incarceration and what activists call the “prison industrial

complex” — companies that operate or service correctional facilities,

profiting off disproportionately poor and minority prisoners and their

family members.

The decision to acquire the company in 2017 has raised eyebrows since

the Detroit Pistons owner seemed an unlikely buyer. The prior year he

drew glowing headlines for leading a campaign to raise at least $10 million

amid the water crisis in Flint, Mich. — a majority black community where

he grew up that has been devastated by auto-industry consolidation.

And he’s been praised for his commitment to Detroit, where he’s funded

charities and relocated the Pistons, a shrewd business move after a

lengthy exodus to the suburbs led by prior ownership.

Gores is being targeted by activists who are demanding reforms at Se-

curus and have even pressed pension funds to stop investing in his Plati-

num Equity buyout firm. And although the activists haven’t been able to

starve Gores of capital, they are not letting up, threatening to make their

campaign more personal by taking it to criminal justice advocates in De-

troit and athletes in the NFL and NBA, whose players are known for being

outspoken.

Gores, in an interview with The Times, said he knew his firm was

courting “headline risk” when it decided to acquire Securus, but he saw

the company as a solid business where Platinum could act as a “change

agent.” He admits being taken aback by the activists’ campaign.

“I will tell you I didn’t realize that there would be this much headline

risk, but these sometimes are opportunities to make change,” he said. “I

can’t tell you we expected it to be this much work, but sometimes these

things land with you and you got to make a difference.”

Platinum says it has begun reforms at the

PLATINUM EQUITY’STom Gores, with kids on the court in 2017, has been criticized for his purchase of Securus Technologies.

Mike Ferdinande

His troubling stake in the

‘prison industrial complex’

Detroit Pistons owner Tom Gores’ private equity deals made him

a fortune. An investment in a jail phone firm made him enemies.

By Laurence Darmiento

[SeeGores,C6]

For more
than two
decades,
Kaiser Per-
manente and
most of its
major unions
enjoyed a
relationship
that was the
envy of the U.S. healthcare
industry — indeed, almost
every industry.
The heart of the relation-
ship was a Labor Manage-
ment Partnership first
reached in the mid-1990s.
The partnership has
brought to 165,000 unionized
employees wages and ben-
efits that have remained at
or above industry standards,
as well as a voice in decision-
making in Kaiser’s hospitals,
clinics and laboratories.
Kaiser committed not to
fight unionization drives at
its nonunion shops and to
accept limits on layoffs, and
received in return more
than 20 years of relative
labor peace.
But now there’s reason
to wonder how much longer
the Labor Management
Partnership can survive.
Last year, Kaiser added a
provision to the partnership
terms forbidding signato-
ries to “pursue, sponsor, or
support legislation or ballot
initiatives ... the primary
purpose of which is to harm
another member of the
Partnership.” Violators
could be expelled from the
partnership.
The language was aimed
directly at the largest mem-
ber of the 33-local Coalition
of Kaiser Permanente
Unions, which has repre-
sented the labor side of the
partnership. That’s the
Service Employees Interna-
tional Union-United Health-
care Workers West, which
sponsored an anti-Kaiser
ballot initiative in 2018 and
has been taking an increas-
ingly combative stance
against the company in its
current contract negotia-
tions.
The revision helped to
trigger discontent with the
SEIU within the labor coali-
tion. In March 2018, as a
result, 22 locals split from
the coalition, forming an
Alliance of Health Care
Unions that has accepted
the revised partnership
terms.

MICHAEL HILTZIK

Bitter

contract

talks at

Kaiser

Can a longtime spirit

of labor-management

cooperation survive

today’s acrimony?

[SeeHiltzik, C7]

century, so there are Tesla

memorials all over the place.

The Taycan is a billion-

dollar bet on an electric-

drive future, the first in what

the high-end German car

company hopes will be a long

line of battery-powered

high-performance cars and

sport utility vehicles. And it

is perhaps the most potent

challenger yet to electric-car

king Tesla Inc.

First, though, the car

must pass muster with

Porsche’s high-end custom-

ers and their sky-high expec-

tations. With the Taycan, the

company seeks a reputation

for quality and performance

on par with that of internal-

combustion classics such as

its storied 911 series. And its

reception here in California

— which accounts for 25% of

Porsche sales in the U.S. —

will be crucial.

So far, so good — the com-

pany says more than 20,000

have been ordered, with cur-

rent production plans at

Porsche chose Niagara
Falls to introduce its new
Taycan all-electric sports
car this week. The thunder-
ing water flow can turn out
2.5 million kilowatts of
hydropower — a powerful
source of sustainable energy
and a potent symbol for a
product that aspires to be
nearly pollution-free.
Another, more subtle rea-
son for the backdrop: the
two statues of Nikola Tesla
looking down on the festiv-
ities, one from the Canadian
side, the other from the U.S.
side. Niagara Falls is the site
where Tesla first tested his
controversial alternating
current electrical distribu-
tion system in the late 19th

With Tesla in its sights, Porsche goes electric

By unleashing Taycan,

German automaker

launches into a future

tied to sustainability.

By Russ Mitchell

THE 2020Taycan’s reception in California, which accounts for 25% of Porsche’s U.S. sales, will be crucial.

Delia BaumChristoph Bauer Postproduction

[SeeTaycan,C8]