Politico has the 2 minute video that pulls no punches, but does it fairly, in my opinion.
And here’s the longer version…
This definitely hits close to home since I live in Kansas City. And let’s face facts…but when all this was going on the idea of downsizing to improve profits was very attractive. The internet didn’t exist and nobody thought this stuff was going to get out. Why? Because that’s just business. Bankruptcy happens. Nobody really scratched the surface to see what was going on. But now it has, and Romney has to answer for it.
Romney’s potential response? Or the one that conservative columnist Byron York is providing…
How will Romney respond? The Romney campaign has given some broad hints lately. First, the campaign has carefully scrutinized Romney’s entire record at Bain and believes it is a strongly positive one overall. But that is the big picture — there are individual instances in which Bain investments failed. Given that, look for the Romney campaign and its surrogates to counterattack by focusing on an instance in which Barack Obama, in essence, took over a company and laid people off in an effort to save the larger enterprise.
That was, of course, the auto bailouts, and while Obama often cites his success in “saving” the car industry, few remember today how many (non-union) workers lost their jobs in the Obama administration’s handling of the matter. During the economic crisis, General Motors and Chrysler shut down more than 700 dealerships, resulting in the loss of tens of thousands of jobs. And the companies did it under pressure from Obama.
“President Obama’s auto task force pressed General Motors and Chrysler to close scores of dealerships without adequately considering the jobs that would be lost or having a firm idea of the cost savings that would be achieved, an audit of the process has concluded,” the New York Times reported in July 2010. “The report…estimated that tens of thousands of jobs were lost as a result.”
Right, but the big difference? GST Steel closed after 5 years. The bailouts of GM and Chrysler were 3 years again and not only have they not folded, but they’ve started expanding and keeping plants open longer due to increased demand. And both companies have paid back their initial loans in a mix of cash and stock. In fact, 2011 was GM’s biggest year on record for earnings.
So yeah…there’s a bit of a difference between the two situations.
Stil, more from the right, this time from National Review:
I talked this afternoon with the reader who had worked at GST Steel in 1997 and e-mailed about the conditions there. This person, who wishes to remain anonymous, elaborated a little more on the working conditions at the plant, saying thanks to the union structure, there was little incentive to be productive. For instance, while some workers were required to file a report daily regarding certain productivity issues, they waited until the end of the day (when it was too late to fix things) to file the report instead of earlier, because they saw no reason to bother doing it at the most effective time. And he said for some of the employees – including those racking up $100,000 to $130,000 salaries – large chunks of the day were just spent waiting for something to fix or do, with up to an 80 percent of day just spent not working.
And that’s the hours they weren’t sleeping and getting over time. During those overtime hours, when they brought sleeping bags, there was once a problem which required a couple of them to be woken up. Our reader thought the gig was up, once their sleeping had become known, but as it ended up, a supervisor was written up and that was it: the sleeping on the job continued as before.
Yep, lazy union workers made Bain come in, suck all the money out of GST and then close up shop. Sure.
Key lines to remember from the GST video:
- “Private equity is not, per se, bad, but what Bain Capital did was not capitalism, it was bad management.”
- “The business model of loading a company up with debt in order to extract immediate profits out of it and then ensuring the failure of the company later on seemed like exactly the wrong thing we needed in America today.”
- “Bain issued 125 million dollars in bonds. And out of that 125 million dollar debt, they paid themselves almost 40 million dollars.”
Okay…let’s take that in for a moment. Bain put the company into debt to the tune of $125M and paid themselves $40M.
Of course Byron York and National Review don’t mention details like THAT, but there it is.
More as it develops…