Look at the facts and understand what actually happens. Yes, of course, there are always opportunities in business and politics to criticize and mischaracterize others. Don't believe them without looking at the facts. A marvelous record. Could be useful to know Private Equity 101.
The General Motors Example: Note what happened with General Motors, which Romney had recommended trimming and improving via a managed bankruptcy. In the eventual bankruptcy, to have
General Motors survive, pension benefits had to be reduced, dealerships closed, many workers laid off, and bondholders and stockholders had to take huge losses.
Yet Obama blames Romney for doing the same things!!!!!
1. "Managed bankruptcy restructure"
2. Facilitate with government guaranteed loans
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BOTTOMLINE
RESCUED POOR OR ENDANGERED COMPANIES to improve them for investors (pension plans, unions,
individuals, etc.)
Very high success rate, very effective manager - Very competently gave large return to investors
Had to improve company's finances - So laid off some people, as did Feds in bankruptcy of GM! In so
doing, SAVED JOBS that would have been lost if companies did not succeed.
Borrowed moneys, based on improved performance and perceived value by the lender, to give
dividends to the investors, which was Bain's promise and obligation for investors who put up the risk capital (as it is with any investment manager!).
OUTSTANDING RESULTS - Of course, couldn't rescue all the risky, poor performing companies, but, on average performed magnificently (88+% return).
It is only conjecture and supposition when opponents incorrectly impute evil motives, as there were none -
and no one has ever proven otherwise. (Allegations are nonsense and it is sad that some people believe
them without thinking and asking for facts! See the script for The Real World New With John Coldbear on
The King Of Bain. That movie did do damage, for all those who didn't look deeper. Obama continues, but
with highly false and dishonest ads, that are the opposite of the facts, with Romney often not even involved!
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CONTENTS
The business
The process
Two sources of revenue
The jobs created issue
Understanding the different types of bankruptcy: Going out of business versus reorganizing to stay in business
and saving the company
A listing of some of the successes
False allegations easily determined to be so.
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THE BUSINESS: It took risky companies in trouble and attempted their best to turn them around, saving a number of companies from disappearing (with, of course, the concomitant job loss in some). It also started companies, which is always risky, and produced excellent results, creating billions of dollars of value (Staples, etc.).
THE PROCESS:
1. Buy a company that is underperforming and/or would go out of business otherwise (or start a company)
2. Improve it (the work culture, productivity, costs controlled, improve markets and products)
3. Sell and reap the benefits
Never, ever do they plan on failure, but they realize there are risks - and taking those risks, if successful, will produce higher returns.
Two sources of revenue:
Management/Consulting Fees - Not related to profits, similar to paying a person to work for a wage for anticipated contribution - It seems silly, thenk to assert that "Bain made money even if (risky) firm did not succeed" as if it were immoral to do so - that would make almost all jobs immoral.
Participation In Profits - Massive success here is what propelled Bain Capital's and Romney's success, which equalled, of course, the investors' returns. Returns averaging well above 50% a year on average, including risk firms that couldn't be turned around, was proof of their success
Understanding what has to be done to turn around a company - The same things that were done with GM to save it - work together to make it cost viable.
If one understands how things work, then the false readings of "bad motives" or "evil" would be displaced by seeing the benefit of doing what has to be done - and saving many jobs that would otherwise be lost.
When anyone takes on companies that might fail and companies that need to do better, there are some things that will not be capable of being solved. Sometimes circumstances beyond anyone's control happen, such as China's steel dumping that caused nationwide closing of over 40 steel mills, only a few of which were in Bain's portfolio.
Wikipedia: In any case, maximizing the value of acquired companies and the return to Bain's investors, not job creation, was the firm's fundamental goal, as it was for most private equity operations. There is no fabricated obligation to create more jobs, as sometimes there needs to be fewer jobs in order to cut costs and to survive.
How Good Is Romney?: Return per an independent study: 88% vs. 25% industry standard!
Romney left in 1999 and became a passive investor by contract, with no active management at all!
THE JOBS CREATED ISSUE
As a firm, the responsibility was to the investors, not to charity (though turning around companies benefitted many charities and pension funds who invested in the funds). Economically, jobs had to be placed overseas when there were benefits to the companies. There is no morality issue here, as job problems here in the US are not caused by evil forces but by increased competition worldwide where costs are much lower - thereby holding US wages down and replacing US jobs.
If Bain started companies that eventually, even after sold, employed more than 120,000(+) people, then those jobs wouldn't have existed if the companies were not created to hire them!
Where there were necessary economic adjustments to control costs, where there was not a financial return that was sufficient for those jobs, it was only prudent to eliminate those (unprofitable, not-worth-it) jobs. By making the company profit better and/or saving the company, 10's of thousands of jobs were saved that would have otherwise been lost if the company went out of business. This "making companies efficient" is a practice that produces lots of good. (Note that President Obama did the same thing with GM, lowering union wages so the company could be competitive instead of going out of business.)
Creating jobs is a byproduct of growth and prosperity - and it is not the job of private enterprise to create jobs - that is not the purpose. However, growth of private enterprise is what drives the job market and the prosperity of those who work for private enterprises.
Ampad plant in Marion, Randy Johnson is the person used to blame Bain (not his own company's president) for the closing of his plant. He was, however, the union leader who had his union stay out so long that it killed the plant. It was necessary to make it more cost efficient, much as was compromised by the GM unions, to save jobs and the industry.
UNDERSTANDING THE DIFFERENT TYPES OF BANKRUPTCY: GOING OUT OF BUSINESS VERSUS REORGANIZING TO STAY IN BUSINESS AND SAVE THE COMPANY
When Romney said that GM should go into bankruptcy, he wasn't talking about killing it, but about going through a reorganization while being protected from creditors and being closed down. The process that GM went through was virtually identical to what they would have gone through under bankruptcy!!!!!!
University of Chicago Booth School of Business economist Steven Kaplan would later say, "[Romney] came up with a model that was very successful and very innovative and that now everybody uses."[
a business-oriented world view – centering on a hate of waste and inefficiency, a love for data and charts and analysis and presentation, and a belief in keeping an open mind and seeking opposing points of view – that he would take with him to the public sector.[
A LISTING OF SOME OF THE SUCCESSES
During the time Romney ran Bain there was a compouned return of 113 percent per year on investments. He was viewed as a very fair manager and received considerable loyalty from the firm's members. Romney's wary instincts were still in force at times, and he was generally data-driven and averse to risk. (See Wikipedia.)
Staples startup
Gartner Group - 16 fold return
Calumet Coach - 34 fold return
"Accuride
Brookstone
Domino's Pizza
Sealy Corporation
Sports Authority
Artisan Entertainment
Top 10 Moves At Romney's Bain Capital, Los Angeles Times, 1/8/12: Note that DDI, which is represented by opponents as if it went out of business, still exists, with 1600 employees instead of 2,000. Note that net jobs added were:
Note that Bain doubled its investment in GS Industries Steel after the bankruptcy. GS Industries is now a global leader in its variety of special steel products. (The pension gap at the Kansas City mill was an unforeseen consequence of a falling stock market and adverse market conditions, for which the government had to make up the difference under the long time existing guaranteed benefits insurance fund. See what actually happened, below.
FALSE ALLEGATIONS EASILY DETERMINED TO BE SO
"When Romney Came To Town" smear movie: greatest fabrication since bigfoot. Totally full of vicious lies, reprehensible in misrepresentation and misleading editing, failure to disclose all the facts, etc. An ethical breach by those who put it out.
The King Of Bain: When Romney Came To Town - Fact Checker - by the left leaning Washington Post, which appears to deal with the facts fairly.
Ampad prospered and is alive. He wasn't there when AMPAD strike happened, see story below for fact checking.
Unimac was sold successfully by Bain to a Canadian pension fund's private equity division
KB Toys, movie said: ""Romney and Bain bought the 80 year-old company in 2000." Again, Romney left Bain in 1999 and had no operational role thereafter." Source
DDI Still exists! - "The filmmakers later acknowledge that Romney had left Bain prior to the IPO", then later said he was responsible as he owned a portion of the fund (but he had negotiated his way in 1999 to no longer be actively involved, remaining with a passive interest! Bain had sold out all of its shares two years before, though the film swears Bain dumped everything because they knew the company was in trouble. Bull!!!!!)
GS Industries
He wasn't with Bain, when the steel market imploded from China dumping steel, also causing 40 other steel mills to go under, and GS Steel went into bankruptcy in 2001. See the detailed and actual story after this section (but it survived and is a huge global success, see their site: GS Industries.).
Each one is blatantly false, which is very telling about Gingrich (and now Obama is doing it), who continued to tell falsehoods.
From this alone, I would easily question Gingrich's integrity (and'/or ability to check facts, in which case I would question his competence and/or fervor to tell the truth). It says tons about the journalists who continue to use these falsities to attack Romney: Lawrence O'Donnell, my old favorite Chris Matthews, etc. and etc. - didn't they bother to do fact checking???
When Romney wasn't even there or in management: The ultimate in silliness and stretching of the (mis)truth is blaming Romney for what he did not cause. Gingrich's characterizations are totally not fact based, despite his saying the truth should only be in ads or discussions of the opponents.
The anti-abortionists picketed a firm that disposed of medical waste, including from Planned Parenthood, but the firm was acquired when Romney wasn't even there: "By the time Bain Capital had made the investment in Stericycle, he had left the firm to run the 2002 Winter Olympic Games."
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SOME ATTACKS
Debbie Wasserman: "The more they learn that his private sector experience was less about creating jobs and more about making profits at any cost." Well, duh! She is implying that there is something wrong about that, but it would be stupid (and non-integrous) to create jobs just to create jobs and then have a lot less profit - no business can operate that way and there is no justifiable argument to do that. (It would be better if she learned about capitalism and achieved a realistic perspective.)
SOME MORE DETAILS - For those who are interested.
THE GS INDUSTRIES CHALLENGE
GS Industries is a global leader, even after China dumping of steel caused huge problem
1993
GS Industries had suffered a large decline, to the point where Armco sought to sell the mill. In the sale Armco was to cover the employee pension obligation [not Bain!]. [the pension gap at the Kansas City mill was an unforeseen consequence of a falling stock market and adverse market conditions.] Note that it is a baldfaced lie or ignorance of the facts that accusers accuse Bain of taking advantage of the government, when it had no involvement at all! Bain took a large dividend, based on issuance of bonds, where the financial condition of the firm justified it (otherwise lenders wouldn't have lent the amount that was far larger than the dividend!).
In 1995 Bain merged GS with another wire rod maker in Georgetown, South Carolina, to form one of the largest mini-mill steel producers in the U.S. The new company issued another $125 million in bonds to pay for the merger. Bain doubled down, reinvesting $16.5 million of its earlier dividend. Over the next two years, GS Industries completed its upgrade of the Kansas City plant and laid the groundwork for an IPO to pay down some of the debt. (Don't take the "conjecture" statements that are made as true or the attributing of motives as accurate - as that would be one very big logic critical thinking error.) The company foundered when a wave of cheap imports from Asia drove steel prices down sharply, while costs for natural gas and electricity rose. (it went into bankruptcy in 2001, two years after Romney had left permanently.)
A spokesman for Bain Capital said: "Over $100 million and many thousands of hours were invested in GSI to upgrade its facilities and make the company more competitive during a 7-year period when the industry came under enormous pressure and 44 U.S. steel companies went into bankruptcy. In the same period, we worked to turn around GSI, we helped launch and grow an innovative business called Steel Dynamics that is today a $6 billion global leader....
Bain sold the mill in 2003, a year after the bankruptcy from the china dumping, The subsequent buyer closed the plant, not Bain. The mill reopened in 2005 with 300 employees (was 450).
A falsehood and improper blame, failure to know facts: "We're going to go to Georgetown," Gingrich said. "Georgetown has a steel mill which was closed. Capital wasn't put at risk. Capital was drained out of that company. Gov. Romney ran saying he created 100,000 jobs in the private sector."
Was Romney a “predator” when GS went bankrupt in 2001? He had left Bain in 1999. The decision to deny the GS workers their pensions and health benefits was not Romney’s - and Armco had guaranteed the obligation, not Bain. To protect pensions, the firm had contracted with the government's Pension Guaranty Corporation, which had to make up the difference and cover the employees.. Romney was out of the picture by then. The Truth About Bain Capital, at DickMorris.com
AMPAD - Alive and prospering
It was labor trouble at the Marion plant of a Bain-acquired company, Ampad, that formed the basis of Teddy Kennedy's desperate 11th-hour attack on Romney in their 1994 Senate competition. Plant worker Randy Johnson was featured in Kennedy campaign commercials against Romney and disgruntled workers were lavished with Dickensian lachrymosity in The Boston Globe. "It is beyond journalistic malpractice for media outlets showcasing the bitter and lying Johnson to neglect to mention that he was the union president who led the strike that forced Ampad to close the plant."
"This would be as if a judge excluded the fact that the defense's principal witness is the defendant's mother." Bain's Ampad sought to renegotiate a suicide pact-union contract at the Marion plant. But instead of renegotiating, union president Randy Johnson thought it would be a great idea to immediately go on strike. Romney wasn't even at Bain during Ampad's acquisition of the Smith-Corona business, much less for the strike at the Marion plant. He was on a leave of absence from Bain to run against Sen. Ted Kennedy. About six months later, Ampad closed the Marion plant for good. As Ampad's president, Charles Hanson, explained at the time, the company had "sustained severe economic damage as a result of our inability to manufacture products at our Marion plant." Apparently, the only thing this ruthless capitalist lackey cared about was that the factory actually produce product!
In any event, it's highly unlikely that Bain would have anything to do with a day-to-day management decision to close a plant, anyway.
Bain led Ampad to thrive over the next few years, buying up more companies in 1995, hiring more workers and making investors nearly $100 million. By 1996, Ampad was being described in Chief Executive magazine as "a stronger, profitable competitor in a consolidating -- and reviving -- domestic industry."
Alas, people kept using those damn computers and shopping for discount paper at Staples and similar stores, and in 1999, Ampad had to file for bankruptcy protection.
Contrary to every single news report on Bain's involvement with Ampad, Bain did not drive the company to bankruptcy by looting it. To the contrary, Bain built up the company, added other companies to it, turned it into a "profitable competitor" that paid handsome dividends for a few years. (And by the way, the company would have gone bankrupt a lot sooner if it hadn't closed down the non-producing Marion plant.)
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(Miscellaneous notes for possible use)
Bain Capital specialized in rescuing troubled companies, so in 1992, it bought the faltering paper-based office products business, Ampad, from the Mead paper company. Far from shutting down Ampad, Bain started buying up more firms in the industry to add to Ampad's portfolio, hoping to create efficiencies and synergies.
From Wikipedia: the "Bain way", which consisted of immersing the firm in each client's business,[40][48] and not simply to issue recommendations, but to stay with the company until they were changed for the better.[4][47][49] With a record of helping clients such as the Monsanto Company, Outboard Marine Corporation, Burlington Industries, and Corning Incorporated, Romney became a vice president of the firm in 1978 and within a few years one of its best consultants and one sought after by clients over more senior partners.[9][40][44][50] Romney became a believer in Bain's methods; he later said, "The idea that consultancies should not measure themselves by the thickness of their reports, or even the elegance of their writing, but rather by whether or not the report was effectively implemented was an inflection point in the history of consulting."[
