Romney’s Bain, Part 3

There is an inter­est­ing tid­bit in an arti­cle from The Boston Globe titled “The Mak­ing of Mitt Rom­ney”. The arti­cle is not avail­able free, but there is an excerpt at Mass Resis­tance.

Through Ampad, Bain bought sev­er­al oth­er office sup­ply mak­ers, bor­row­ing heav­i­ly each time. By 1999, Ampad’s debt reached near­ly $400 mil­lion, up from $11 mil­lion in 1993, accord­ing to gov­ern­ment filings.

Sales grew, too — for a while. But by the late 1990s, for­eign com­pe­ti­tion and increased buy­ing pow­er by super­stores like Bain-fund­ed Sta­ples sliced Ampad’s revenues.

So, one of Bain’s invest­ments con­tributed to the bank­rupt­cy of anoth­er of Bain’s invest­ments. For all I know, that was smart busi­ness, but it strikes me as kind of dumb. It con­sti­tutes a fail­ure on the part of Bain to rec­og­nize that con­se­quences of a trend that Bain helped put into motion.

I can imag­ine a conversation:

We have cre­at­ed a sit­u­a­tion where we can use our buy­ing pow­er to force man­u­fac­tur­ers to sell us their prod­ucts at low­er prices.”

Hey, this would be a great time to get into man­u­fac­tur­ing those products!”

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