When Mitt Romney talks about his history of job creation at Bain Capital, he almost always mentions the office supply giant, Staples. While it’s true, that Bain’s initial investment in Staples eventually led to the company expanding from one location in 1986 to nearly 1700 stores by 2006, there is a reason why you scarcely hear of Romney mentioning another great Bain Capital success story. That’s because on the whole, there really aren’t any. Oh sure, there were other small successes, but far more often, Bain took over countries, broke them apart and sold them off to the highest bidder–lining their own pockets in the process.
As a co-founder of Bain Capital, Romney played the Richard Gere role in Pretty Woman, or if you like your metaphor more diabolical, the Michael Douglas role in Wall Street. That of the slick corporate raider, who somehow manages to build nothing, destroy everything and get filthy rich in the process.
One such example is that of the 1993 Bain takeover of Armco Steel Mill in Kansas City, MO.
According to Reuters:
The old mill, renamed GS Technologies, needed expensive updating, and demand for its products was susceptible to cycles in the mining industry and commodities markets.
Less than a decade later, the mill was padlocked and some 750 people lost their jobs. Workers were denied the severance pay and health insurance they’d been promised, and their pension benefits were cut by as much as $400 a month.
What’s more, a federal government insurance agency had to pony up $44 million to bail out the company’s underfunded pension plan. Nevertheless, Bain profited on the deal, receiving $12 million on its $8 million initial investment and at least $4.5 million in consulting fees.
A new ad financed by moveon.org showcases the fate of the mill.
A similar story can be told about Bain’s 1992 acquisition of the Indiana based office supply company, Ampad.
Bain bought the company on the cheap, used it to purchase other companies at bargain basement prices, only to shut it down after draining the various entities of all value. Here is an excerpt from the 2007 Boston Globe story depicting the history of Bain and Ampad:
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.
The result: Ampad couldn’t pay its debts and plunged into bankruptcy. Workers lost jobs and stockholders were left with worthless shares.
Bain Capital, however, made money – and lots of it. The firm put just $5 million into the deal, but realized big returns in short order. In 1995, several months after shuttering a plant in Indiana and firing roughly 200 workers, Bain Capital borrowed more money to have Ampad buy yet another company, and pay Bain and its investors more than $60 million – in addition to fees for arranging the deal.
This is how Romney made his fortune at Bain. Taking distressed companies under the pretense of investing in their eventual success and if–more likely when– that success doesn’t materialize, chopping those businesses into pieces and selling them off at a massive profit.
Everyone knows that Romney doesn’t have the “common touch.” That he was a member of the lucky sperm club and grew up farting through silk. What many don’t know is how he grew his wealth. He did it on the backs of the common man, the mill worker, the plant employee, the workers of Armco and Ampad.
This is who Mitt Romney is. He builds nothing, destroys everything, has gotten filthy rich in the process, and his next project is our country.