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.