Randy Johnson has a rather important distinction to draw between Romney’s work as a venture capitalist and the work involved in actually creating jobs; the two are not the same. Johnson explained the difference, “Romney and his fellow investors got into the game to grow their own wealth, not to create jobs or grow the company for everyone. To them, Ampad must’ve been a resounding success.”
After Mitt Romney’s Bain Capital bought Ampad, the Indiana company where Randy Johnson was gainfully employed, Randy and his fellow workers were promptly fired the day after the 4th of July via note, and escorted by security out of the building.
Some folks were allowed to come back to work at lesser salaries and cuts to benefits, but eventually the factory was closed after Bain drained it of cash by making sure they and their investors got paid, while increasing the debt by 35%.
“I was working the night shift and making hanging file folders, a quality product, proud of it. We showed up after the Fourth of July holiday and all we found was a one page note that said we were fired. They brought in security guards, walked us out, and wouldn’t let us back in the building.
They let some of us come back to work, but only after they cut our wages, they slashed our health care benefits, and threw out the retirement plan. Then, instead of negotiating with us, Romney and his partners closed the factory and laid us all off.
But the story of Ampad doesn’t end there. It turned out that Romney and his buddies had been loading up Ampad with debt by borrowing more and more against the company. At the same time, they were demanding millions in management fees every year, to ensure that they and their investors got paid first. By 2000, Ampad couldn’t even pay the interest on the debt. Romney dumped it—said that was it. In seven years, the debt was more than 35 times as big, and it had grown to more than $400 million. [Ampad] had to declare bankruptcy at that point.
When it was all over, Romney and his pals squeezed more than $100 million out of the company, 20 times the amount they first put in. They closed Ampad factories across the country, from Georgia to Texas to California to New York.
Romney and his fellow investors got into the game to grow their own wealth, not to create jobs or grow the company for everyone. To them, Ampad must’ve been a resounding success.
If he took those values and lessons to the White House, it would be a resounding failure. Romney economics devastated my family and devastated the workers’ families and communities. The jobs have to be the first priority in this country—we ought to be focused on that, and from my experience, Mitt Romney is not the man for the job. I believe the American people—especially American workers—need to know about the values and experiences Romney the businessman would bring to the table as Romney the president. And it’s only fair to ask whether those values and experiences qualify him to be our president—or in my book, disqualify him.”
Running a venture capitalist group that preys on businesses in order to get the most short-term cash out of them is quite different from creating jobs. In fact, the two objectives are quite the opposite.
When Mitt Romney says he’s qualified to run this country because he’s a “businessman”, people should ask themselves if they want the venture capitalist in charge, whose goals are to wring the most cash out for himself and his investors while wracking up huge debt in order to bankrupt the company.
Steve Rattner of The New York Times (and also someone used in a Romney ad, defending private equity) explains:
Bain Capital — like other private equity firms — was founded and managed for profit: ideally, huge amounts of gain earned legally and legitimately. Any job creation was a welcome but secondary byproduct.
The language in one prospectus seeking Bain Capital investors was clear: “The objective of the Fund is to achieve an annual rate of return on invested capital in excess of the returns generated” by other investments. Any job creation was accidental…
These enterprises were often what Wall Street describes as “undermanaged,” which means the Bain Capital team could take “aggressive action” that often included cutting costs — read: jobs — to increase profitability.
Under Mr. Romney’s leadership, Bain Capital engaged in the less attractive practice of putting more debt on seemingly successful investments in order to take dividends out. In at least four instances of Bain Capital investments during Romney’s tenure, these “recapped” companies, of which two were featured in the Obama ads, subsequently went bankrupt, costing thousands their jobs.
Rattner points out that Romney was really in the less approved of private equity business, not venture capitalism. However, we’ll use Romney’s term because the end result of Bain’s objectives remains the same — “recapping” companies by piling debt onto the business in order to suck dividends out for the investors.
I’ve seen the impact of Romney’s version of venture capitalism up close. It’s like one day everything is fine and the next, the rug is pulled out from under you. It’s like a “war”. You think you’re working for good people, who will live up to their contract with you, but once a Romney comes in, your contract is worthless.
A close friend of mine was hired by a mom and pop company that later was bought out by a Romney type who drained it of all resources while paying himself a huge salary. Stock options were revoked for the staff. Then he began laying people off; people the company had relocated from around the country, including my friend. People who were now stuck with homes that were worth less than they owed on them, in an area with no employment in their field, which is precisely why they were relocated into the middle of nowhere.
Financial devastation followed for many of them. This stuff happens to good people, it hits out of nowhere, and too often it destroys lives and towns. Sadly, Randy Johnson is only one of many Bain victims, and yet their stories share an eerie similarity. Pride in hard work and a good job one day, and the next day your entire life is turned upside down.
For those defenders of venture capitalism, I have to ask, have you ever been on the receiving end? Do you know the difference between trying to save a company and using a company to enrich yourself without a care for the people who made it? There’s a big difference, and it’s offensive to have venture capitalism equated with capitalism and the American Dream.
Venture Capitalism is the American Nightmare. It’s preying greed taking advantage of vulnerable, smaller companies. Those small companies are a big part of what America so great. That pioneering, can-do spirit and the pride the workers have in making something, being a part of something – that is American. The idea that anyone who is willing to work hard can be a business owner or have a decent job – that is American. America was the land of opportunity. All you needed to make it here was grit, determination and hard work.
Post recapping, we have a modern day Pottersville courtesy of folks like Romney; the “real Americans” are subjected to an American Nightmare where hard work means nothing. Effort is meaningless. Being willing to sacrifice for the good of your company isn’t enough. The little people are used and abused as pawns for the greater advance of the very wealthy, whose sole goal is to increase their wealth, not build the American Dream.
And the mom and pop companies built from the ground up by generations of American families are brought to ruin, decimated and destroyed for profit.
There are some values more important than profit, money and greed. Pride in our work is one of them and family connections to small towns created through mom and pop operations are another. Those values are destroyed when Bain comes to town. In the Romney model, the only thing that matters is profit for a few.
But in America, the land of opportunity and freedom, we care about the independent spirit that built this country, and that spirit wouldn’t stand by and let the recap artist of Bain capital destroy it.