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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