By Jim Schutze
By Rachel Watts
By Lauren Drewes Daniels
By Anna Merlan
By Lee Escobedo
By Eric Nicholson
James Sanderson had encountered a rare moment of industrial harmony.
It was the early 1990s, and the 750 men and women at Georgetown Steel were pumping out wire rods at peak performance. They had an abiding trust in management's ability to run a smart company. That allegiance was rewarded with fat profit-sharing checks. In the basement-wage economy of Georgetown, South Carolina, Sanderson and his co-workers were blue-collar aristocracy.
"We were doing very good," says Sanderson, president of Steelworkers Local 7898. "The plant was making money, and we had good profit-sharing checks, and everything was going well."
What he didn't know was that it was about to end. Hundreds of miles to the north in Boston, a future presidential candidate was sizing up Georgetown's books.
At the time, Mitt Romney had been running Bain Capital since 1984, minting a reputation as a prince of private investment. A future prospectus by Deutsche Bank would reveal that by the time he left in 1999, Bain had averaged a shimmering 88 percent annual return on investment. Romney would use that success to launch his political career.
His specialty was flipping companies — or what he often calls "creative destruction." It's the age-old theory that the new must constantly attack the old to bring efficiency to the economy, even if some are destroyed along the way. In other words, people like Romney are the wolves, culling the herd of the weak and infirm.
His formula was simple: Bain would purchase a firm with little money down, then begin extracting huge management fees and paying Romney and his investors enormous dividends.
The result was that previously profitable companies were now burdened with debt. But much like the Enron boys, Romney's battery of MBAs fancied themselves the smartest guys in the room. It didn't matter if a company manufactured bicycles or contact lenses; they were certain they could run it better than anyone else.
Bain would slash costs, jettison workers, reposition product lines and merge its new companies with other firms. With luck, they'd be able to dump the firm in a few years for millions more than they'd paid for it.
But the beauty of Romney's thesis was that it really didn't matter if the company succeeded. Since he was yanking out cash early and often, he would profit even if his targets collapsed.
Which was precisely the fate awaiting Georgetown Steel.
When Bain purchased the mill, Sanderson says, change was immediate. Equipment upgrades stopped. Maintenance became an afterthought. Managers were replaced by people who knew nothing of steel. The union's profit-sharing plan was sliced twice in the first year — then whacked altogether.
"When Bain Capital took over, it seemed like everything was being neglected in our plant," Sanderson says. "Nothing was being invested in our plant. We didn't have the necessary time to maintain our equipment. They had people here that didn't know what they were doing. It was like they were taking money from us and putting it somewhere else."
History would prove him correct. While Georgetown was beginning its descent to bankruptcy, Romney was helping himself to the company's treasury.
The Working Man's Villain
He should have known better. The year before Romney purchased Georgetown, he mounted his career in politics, setting his sights on the biggest target in Massachusetts: the U.S. Senate seat held by Ted Kennedy.
There were early signs that he might topple the Kennedy dynasty. Much like today, Romney was pitching himself as a commander of the economy, a man with the mastery to create jobs. Yet he suffered an affliction common to those atop the financial food chain: He assumed that what was good for him was good for all. Call it trickle-down blindness.
In the midst of that 1994 campaign, one of Romney's companies, American Pad & Paper, bought a plant in Marion, Indiana. At the time, it was prosperous enough to be running three shifts.
Bain's first move was to fire all 258 workers, then invite them to reapply for their jobs at lower wages and a 50-percent cut in health care benefits.
"They came in and said, 'You're all fired,'" employee Randy Johnson told the Los Angeles Times. "'If you want to work for us, here's an application.' We had insurance until the end of the week. That was it. It was brutal."
But instead of reapplying, the workers went on strike. They also decided the good people of Massachusetts should know what kind of man wanted to be their senator. Suddenly, Indiana accents were showing up in Kennedy TV ads, offering tales of Romney's villainy. He was sketched as a corporate Lucifer, one who wouldn't blink at crushing little people if it meant prettying his portfolio.
Needless to say, this wasn't a proper leading man's role for a labor state like Massachusetts. Romney was pounded in the election, taking just 41 percent of the vote. Meanwhile, the Marion plant closed just six months after Bain's purchase. The jobs were shipped to Mexico.
Yet Romney didn't learn his lesson. He seemed incapable of noticing that his brand of "creative destruction" left a lot of human wreckage in its wake. Or that voters might see him as more scumbag than saint.
I'm figuring it will only take another 10 years or maybe less, for humanity to tire of this and start the extermination. Lobbyists or Republicans, who knows which will be first to go!!!!
Free Market is not Capitalism, it is chaos and doesn't work. True Capitalism needs to be heavily regulated and Capitalism, the economic system, not the capitalist, is the primary consideration.
We are the worst possible example of what could be an ideal economic model.
Your conversation style is akin to kicking over trash cans and running, skipping, holding hands and giggling with your playmates.
did you not read the article? profitable companies with hard working employees are bought and guys like Romney use the company to get credit (which they can because the company WAS MAKING MONEY) they pay themselves and then leave the company to rot and to pay all the debt. Can someone please explain me how the F@#CK can you call that good capitalism
The real villain wasn't Romney or his kind, but the original owners who cashed out and threw their company to the wolves.
Josh Kosman is a media hack. His biased one sided stories are the worst sort of journalism, lies and distortions. This is why he writes for the Dallas Observer. His tripe is more suited for the National Observer. His source is a disgruntled union member. Kosman leaves out that Romney left Bain Capital 2 years before GS Industries filed bankruptcy. Or that Bill Clinton's kneeling lip jobs to the Chinese and union greed killed the US steel market leading to several steel companies going belly up including Bethlehem Steel.
More BS by the socialist Observer, hey earth to Observer, this is a CAPITALIST economy, (sort of at least it use to be) Socialism doesn't work, witness Russia, Europe and China that is now more capitalistic than we are! (and they are rubbing our faces in it!) We are now in a world economy and it's either compete or perish. The days of big labor are over with, if you don't believe it look at Europe. With the recent events in France look forward to it only getting worse.
HelloA more indept article on Parasit romney is check out this link. http://www.informationclearing... This is the best on the subjectPeaceStephen Schweter
what the hell is wrong with you?youve read a story about man whose job was to shut down businesses (which put people out of work),move it to mexico and write himself a fat check and wants to be president and all you can do is finger point which political part did what or is worse! theres no difference between the parties because they are all rich like romeny.most of you are pathetic and contribute to the problems you complain about!
Long story, but worth the read. It just goes to show that because you have money and you know how to make it, it does not mean that you are right to lead this country. We need someone who will restore the country, not the same old BS where the politicians look out for thier own pocket books instead of looking out for the people they represent. Ron Paul 2012!
And perpetual politician and "waitress sandwich" womanizer Teddy Kennedy was not a parasite? You guys are pathetic... (lol)
Go down thru history and you will find many, and I believe more than Republicans, presidents were Democrats and rich before taking office. They made their money off the sweat and misfortune of others Cleveland, Van Buren, Monroe, Clinton, Tyler, FDR, Johnson, Madison, Jackson, Jefferson, Washington and least but not last JFK. They may have been pricks in business but not all ran the country in to the ground as president like Obama will do given 4 more years to complete the job!
This is not a partisan conversation, it is about the rape of a country which relies on an economic system that, when respected, is the greatest in the world. Both political parties are complicit in enabling huge holes in the protective wall around our economy that allows unscrupulous people to "game" the system at the expense of hard working owners and workers in the American business community. You'd really have to read the article to figure that out though and, well, it does have a few big words in it.
Other's action can not be used to rationalize evil deeds. I don't who else did it. It is just wrong period.
The Republican Party needs a transformation. This country needs to get away from Corporcrat rule, which is what Mitt Romney and Obama are all about. Young people, the future of our country, recognize someone who can direct us back in the right direction - - towards true LIBERTY for its people. RON PAUL has the right message to reinvigorate the Republican Party. Mitt Romney is its doomed past.
Mr. Kosman, and David Foster talk like typical union people(yes I am one also) If Romney is a parasite, and vulture, then please tell me just what is Obama? He is a communist, and never worked a day in his pathetic life. Community organizer, Ha! what a laugh. Even now as president he has a hard time working like a president should, vacation after vacation. I agree I can't wait until election so I can vote for Romney. I agree with Thomas_Avit. The Republoican party does need a transformation, and people like the tea party people are trying to do just that, by getting rid of all the old moderate conservatives like Richard Lugar and others. I like RON PAUL but I don't like his foreign policy. Mr Avit needs to read more history. Ron Paul is an isolationist---That is exactly what got the world into WWII. The world let Hitler go too long without trying to stop him. Don't wait on the young people to lead the U.S. out of this mess, they tend to go for guys like Obama. YOU Mr. Avit probably would not vote for the right person to lead us back to a strong nation. Tell me,Did you vote for Reagan? I'll bet you didn't.
What a dumb person you are. You must be wealthy too and have done the same thing costing people their jobs, homes, cars and way of life and you think that's okay. And you even called that working... The president worked many days of his life and the only sorry, useless person in this scenario is Mitt Romney a destroyer of families and their dreams so he could be wealthy. A disgrace to mankind.
Did you even read the article? - eg Romney - like so many private investors and big corporations - used taxpayer money to fund their investments - paid themselves and walk away after taking the companies. Being a CEo doesn't mean someone is a good President. Both our parties work the system - but Republicans are the biggest hypocrites because they take government money and then badmouth it as if they don't. And President Obama isn't a communist - do you even know what that word means? Apparently most Republicans are either over the age of 60 are not well educated -- their points of reference - Hitler; Nazis'; Marxism -- are outdated and irrelevant. And it was Nixon and George Bush Sr. who proudly opened up the doors for our country to do business with China - Bush Sr. turning his head as tanks ran over students in Tieaman Square. People like Romney criticize China - yet all do business with them - and they ARE communists. At least Democrats pretend to want to help people - wherewas Repbulicans try to blame everything on the poor, unemployed and workers who actually make our economy work. If our minimum wages was higher, then our gov't wouldn't have to help as many people. It's the Mitt Romneys of the world - who are born rich but yet take tax money to continue to line their pockets - who are the true "evildoers." As for Reagan - he was the cause of our gov't deficit -- if you actually can read - go back and you'll discover that when he cut taxes for the rich - our gov't deficit began. And the results of that were why George Bush Sr. had to raise taxes and was voted out of office. The same is hapning now -- Baby Bush tanked our economy and now the Republicans try to blame President Obama - some things never change. But ask yourself -- if things are so bad - how is it the 1% have made even more money even during the worst recession in a half century?
what Ruth explained I am dazzled that some people able to earn $8833 in one month on the internet. did you see this webpage makecash16.comONLY
Wow. I was going to vote for Romney. Looks like I have more reading and research to do. Interesting story. I may still vote for him.If it ends up Romney versus Obama; I will definitely vote for Romney. He is the better of the two evils.
Mitt's a job creator in the same sense that Lucifer is a soul saver. No more, no less. He helps his friends, which amount to an extremely small group. Everyone else pays a steep price, and Mitt feels no remorse. None at all. If you hope for more than that, you're pipe dreaming. nothing more.
alot of firms under the tutelage of the Fed sent the country to ruin some don't exist anymore so what is the moral imperative, make Chavez President because we need to do good for the proletariat? Capitalism never ran that way at best trickle down good times after a holocaust No we aren't that big a losers just a little slow sometimes when misguided, if you don't like Romeny then vote for Ron Paul but don't vote for big governement and suppression of entrepeneurialsim unless your an A 1 leach or satisfied on a welfare haul
You can't trust unions, the govt, or extreme profit minded, ok, greedy corporate types. What's left?
After reading this, I don't have much regard for Romney. However, the article makes the companies out to be the victim.
Anyone stop to think that that's what the CEO of said companies were shopping for when they partnered with Bain?
I know when CompUSA went under that's precisely what they had in mind when they liquidated the company. They weren't trying to get back on their feet.
Sure, great story, if you take everything it says as the gospel. How about a story regarding how unions destroy companies by draining them for THEIR profit? Union bosses get rich and the workers get the shaft after it's all said and done. Ask auto workers, American Airlines pilots/mechanics, steel workers. But they did one thing good, they provided a great atmosphere for robotics companies to flourish!
that would be a great topic if this story was about Unions. Its not. Stick to the topic. Your boy is a pariste. deal with that on election day.
Last time I checked union members elected their leaders, don't cry when you do nothing to change the folks at the top, then complain when they continue to do the same thing over and over again.
Badmann,Corporations of the likes run by Romney are robbing you blind while they distract you w/the fear of losing your liberties! Open your eyes man. Freedom should not come at the price of losing your home, your healthcare, and your job to the 1%!!!
my roomate's mother got paid $16978 past month. she has been working on the internet and moved in a $438100 home. All she did was get fortunate and profit by the instructions leaked on this website (Click on menu Home more information) http://goo.gl/gpzIo
Thinking progressively? If you mean thinking like a progressive, you are wanting us to reach the end of the road we are now on rather than turning around and taking a different course. Progressivism means you have no natural rights. That means you only have rights that the government allows you. I hardly think surrendering our liberty is the way to prosperity.