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!”

 

 

Romney’s Bain, Part 2

Any effort at looking at what Bain Capital did while Mitt Romney was in charge will turn up some info on the paper product plant in Marion, Indiana that Bain owned Ampad acquired in 1994.  I have not put a lot of effort into finding more details, so it may be this story is already on the internet somewhere.  Well, now it is here too.

Before typing this up, I had a chat with a friend of mine (no liberal, he!) who lives in Marion, reads the paper, and has always seemed to have his ear to the ground to verify my version of events is reasonably accurate.

I was living in Marion in 1994. I got the Marion Chronicle Tribune (no liberal, it!) every day and I read it.  Most of what I know is from what I read in that paper.

The local SCM plant was purchased by Ampad. According to this timeline, it was a year before  all the employees were let go.  They were then allowed to apply to get their jobs back. Almost all of them did apply and did get their jobs back. My friend remembers that the wage scale was cut 25% and all seniority was lost.

Some period of time passed by, I’m guessing a month or so (but maybe just a few days…). The company announced changes in the work rules. The employees grumbled but kept working. This happened a few times (three, four?). The last time, rules were instituted to restrict bathroom visits.

The workers finally went out on strike. They picketed the plant for a period of time (I think a couple of weeks, maybe a month). Then the company announced the plant was closing and moved the equipment out.  The jobs were gone.

I am perfectly willing to admit that sometimes companies closing plants is, in the long run, a good thing. It might not ever be for the local community, but it can be for the company’s overall health. These events are sometimes necessary evils.

But what Bain did in Marion was a bit above and beyond the call of duty. Even at the time, I felt it was obvious that the plant was purchased for the purpose of closing it. But someone thought “Instead of just closing this plant, let’s see what we can squeeze out of it first.” The employees were not just let go, they were abused to see what it would take for them to strike.

My memory is that the paper reported a “no comment” from Bain Capital on at least a few occasions. Maybe there is “another side to the story,” but Bain had no interest in telling that story.

Romney’s Bain, Part 1

It seems like all the news is talking about what Romney did at Bain Capital and whether it was good for the economy or not.

I feel like I have a lot of different things to say about this, but if I try to put them all in one post, well, it would probably never get finished.

So to begin with, something simple.

Newt Gingrich has lately decided that what Mitt did at Bain was bad for the country.  This is particularly interesting given that just a few weeks before, Newt was taking credit for helping Romney get rich.

“I was part of (the late Rep.) Jack Kemp’s little cabal of supply-siders who, largely by helping convince (President Ronald) Reagan and then working with Reagan, profoundly changed the entire trajectory of the American economy in the nineteen-eighties,” Gingrich said. “You could make the argument that I helped Mitt Romney get rich because I helped pass the legislation.”

So there it is, Newt flip flopping about the master of flip flopping.