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German critics are crying foul. As part of its restructuring, MTU, which employs 7,400 people worldwide, has cut about 1,000 jobs. Germany's metalworkers' union, the nation's biggest and most influential, holds up MTU as an example of several firms that it views as victims of unscrupulous American financiers. THE PLUNDERERS ARE HERE, ran the headline on a cover story in the union's monthly magazine in May. The article was accompanied by a crude caricature of insects in Stars and Stripes top hats circling over a German factory; they had cigars in their mouths and dollar bills falling out of their briefcases. "Financial investors from America are cannibalizing German companies," read the story, likening them to bloodthirsty mosquitoes that suck the cash out of firms to enrich themselves.
MTU executives and private-equity investors argue that without the investor-backed restructuring, the firms would be worse off. Udo Stark, MTU's chief executive since the beginning of this year, points out that the restructuring plans, including layoffs, were put in place even before KKR bought the company. Moreover, while the firm trimmed its working-capital needs, spending on research, critical to MTU's future, wasn't affected. Stark calls the locust debate his firm is caught up in "irksome and damaging," and he is worried that private-equity investors are being built up as "the straw men for all of Germany's problems, from high unemployment to the financial problems of the national pension system. It's the easy way out."
Locusts haven't been sighted elsewhere in Europe so far, although there are concerns beyond Germany. In France, President Jacques Chirac and his new Prime Minister, Dominique de Villepin, have fiercely criticized the "Anglo-Saxon model" of deregulated free-market economics, of which private equity is a bedrock, saying it is inappropriate as a remedy for the nation's economic woes. "I am profoundly attached to the French social model," Villepin said after taking office last month.
And even in Britain, there are some lingering qualms. At least two big buyout deals, involving retailer W.H. Smith and food producer Uniq, have fallen apart in the past few months because of objections raised by the trustees of the firms' pension funds, who were worried that former employees could suffer.