Given the strength of unions in the midwest, I find it rather shocking that there has been no mention of Romney’s dealings with Bain Capital. AmPad was a unionized paper product company that Bain purchased from Mead corporation in 1992. Bain made a killing on the deal, in part by killing jobs — firing 200 union workers in Indiana. However, the Bain definition of “shared sacrifice” is that Bain shares in your sacrifice. In the time they owned AmPad, Bain had AmPad borrow money to buy more companies, but used part of the borrowed funds to pay Bain $60 million in fees. These fees were in addition to the $2 million in annual consulting fees Bain charged AmPad. Yet, this was not where the real money was made; that was made when Bain took AmPad public and made $45-50 million. But how could Bain scratch by with only $50 million? They had bills to pay. So they charged AmPad $2 million for setting up the IPO.
So, what is Mr. I-know-how-to-create-jobs, response? In an October 1, 2002 Boston Globe article, his gubernatorial campaigns spokesman said:
“Mitt has been an investor, but it would be unfair to judge Mitt on what he has invested in and not actually run”
So, we’re clear — being an investor does not equal job growth. Wait I thought I read that Mitt was creating jobs at Staples by investing in the company. I’m SURE he’s not one of those people who takes credit when things work out and then points fingers when they don’t.
Of course, this is not the best part. The best part of the AmPad story is trying to understand exactly what Romney’s role was. First, he stated the following regarding AmPad layoffs:
“This is not a fantasy land. This is the real world, and in the real world there is nothing wrong with companies trying to compete.” (Boston Globe, October 9th, 1994)
Then he claimed that he was on leave of absence from Bain (running for Senate in 1994), so AmPad decisions made by Bain were not his call. But after AmPad workers started to protest his 1994 campaign he agreed to meet with them (see Boston Globe, October 10th, 1994). He had nothing to do with the situation, but was still “acting” like he could do something. Interesting.
So, the narrative can be spun as “detached outsider trying to help get to an arrangement between parties.” Well, let’s see what the insiders remember. First, Charles Hanson, Ampad’s CEO, during the time it was owned by Bain, regarding Bain’s (and Romney’s) impact on company strategy:
“Any significant direction we received would certainly have been authorized by him.”
And what direction did Bain propose? A “rollup” strategy in which Bain would buy more companies and combine them with Ampad — which Hanson knew meant significant worker layoffs. Arguing that Romney didn’t/couldn’t know about this strains creduilty. However, as Hanson said of the period when Romney was running for the Senate: “There was a high level of interest in not hurting his political aspirations.” (See Boston Globe, October 29, 2002)
Well, at least people in Romney’s own firm think he’s playing this straight. Oh, yeah …. After Romney lost and returned to Bain, he decided to permanently shut down the plant and in a letter to a union official stated that he wanted to settle the strike:
“privately without fanfare. It included communicating my strong personal desire that the strike be settled and that the plant remain open, offering my ideas for a possible settlement, and relaying the sentiments of the workers I met with in Boston.”
However, Marc Walpow (a former Managing Director at Bain) and a Bain-appointee to the AmPad Board of Directors, remembers Romney’s role in AmPad differently:
“He was in charge. He could have ordered me to settle with the union. He didn’t order me to do that. He let me make decisions that would maximize the value of the investment. That was the right business decision as CEO of Bain Capital. But let’s not pretend it was something else.”
Well, at least someone is honest about what PE guys do.