Boston-based Bain Capital LLC more than doubled its money on GS Industries Inc. – the former parent company of Georgetown Steel – under Mitt Romney’s leadership in the 1990s, even as the steel manufacturer went on to cut more than 1,750 jobs, shuttered a division that had been around for 100 years and eventually sank into bankruptcy.
Bain Capital spent $24.5 million to acquire GS Industries in 1993, according to an investment prospectus for the company that was obtained by the Los Angeles Times and reviewed by The Sun News. By the end of that decade, Bain Capital estimated its partners had made $58.4 million off its investment in GS Industries, according to the prospectus.
Bain Capital’s partners also earned multi-million dollar dividends from GS Industries and annual management fees of about $900,000. But by the time GS Industries filed for bankruptcy protection in 2001, it owed $553.9 million in debts against assets valued at $395.2 million.
(David Wren, Myrtle Beach Sun News, 1/14/12)
Georgetown, South Carolina is a mill town; one of the few left in the United States where goods are actually produced and not just assembled. It is the home of International Paper and ArcelorMittal Steel, and the sounds and smells generating from the sites are an actual comfort, not just to the townspeople but to anyone who detests the thought of factory shutdowns and an idle workforce.
|Harbor - Georgetown, SC|
|ArcelorMittal Steel Mill, Georgetown, SC|
During the upheaval of American labor over the past few decades, Georgetown's mill took several direct hits. China was, in fact, producing cheaper (albeit lower quality) steel. Jobs were, in fact, being sent by ruthless Americans to cheaper markets overseas. Domestic car sales had declined and so had the need for the particular steel products coming out of Georgetown. No one saw the need to dig further to find a deeper, underlying reason for the failures. On the surface, there were plenty.
This isn't the first time the press has descended on Georgetown. I went to the union headquarters yesterday and met with the Steelworkers local president, James Sanderson.
Sanderson said when the Democrats came to nearby Myrtle Beach for a debate in 2008, the candidates got wind of a shutdown at the mill. They all rushed to Georgetown so they could each stand in front of the forlorn, shuttered factory and make promises to the hundreds of unemployed potential voters there was never a chance in hell they would be able to keep.
Nobody knew then what role Bain Capital had played in the inevitable failure of Georgetown Steel. They bought it and gutted it and profited from their own piracy and nobody knew it had even happened that way until Mitt Romney decided to run for president and the digging began.
As David Wren reports in the Sun-News article:
Less than a year after taking a controlling interest in the Georgetown plant, Bain Capital cut the employees’ profit-sharing plan twice – lowering the plan’s hourly rate from $5.60 an hour to $1.25 per hour. Most of the workers didn’t learn about the cuts until they received their paychecks. The profit-sharing checks eventually disappeared altogether.
Sanderson, in a September 2000 report in The Sun News, called Bain Capital anti-labor and said “they’ve forced a labor dispute at every location” during contract negotiations. Sanderson agrees that China’s cheap steel imports on the American marketplace hurt the Georgetown mill’s production and profitability.
“But if they [Bain Capital] had only invested in the mill instead of taking everything from it, we would have been able to sustain that [dumping] like we had in the past,” he said.
John Ethridge, a retired Georgetown Steel worker, said Bain Capital “treated us like dirt.”
“They brought a bunch of people in here who thought they knew how to do our job, but they had no idea what they were doing,” Ethridge said, adding that needed equipment and plant upgrades were often delayed or ignored.
Ethridge, who worked at the Georgetown mill for 35 years, said Bain Capital was more interested in how much money it could take from the plant rather than investing anything into it.
By the time GS Industries filed for bankruptcy protection, the number of employees worldwide had been cut by more than half.
After decades of uncertainty, of lay-offs and down-sizing, of bankruptcies and shut-downs, of revolving-door ownerships, the American company formerly known as Georgetown Steel is now foreign owned and called ArcelorMittal. It's up and running again, on a much smaller scale, but running nonetheless.
|ArcelorMittal scrapyard - Georgetown|
In South Carolina the sun shines bright on Romney and Bain Capital these days and I know at least a few people who are basking in it, trying to make the most of it (James Sanderson, for one; his boss Leo Gerard for another, his activist son Jamie for another; and me). But from afar comes Robert Reich, talking not about Georgetown but about the troubles at Steel Dynamics, an Indiana steel mill taken over and victimized by Bain Capital.
He explains in pure Reich-style what Bain Capitalism really is:
Bain Capitalism is not product capitalism, it's financial capitalism. It's moving money. It's getting as much money from the public sector as possible.Last night during the Republican debate in Myrtle Beach, Gov. Nikki Haley was seen smiling and nodding vigorously when Rick Perry jawed on about "South Carolina's war with the federal government", as if it was 1865 all over again. How does Rick the Wretched think we got to this place? Wasn't he the one who coined the term, "vulture capitalism"? Can you run for president or governor without understanding the necessary symbiosis between the Fed and the states in order to combat and destroy the Bains of the world and save your cities, your states, your country?
Financial capitalism is not real capitalism. It doesn't create new jobs, it doesn't put people to work, it actually ends up reducing the number of jobs. it displaces people, it puts risks on average working people, it lowers wages. Financial capitalism is what we've had in this country for the last two or three decades and it's all centered on Wall Street. It's not about making good jobs with good wages and making things.
Well, yes, you can run but should you win? In a sane world, you shouldn't. In a sane world you couldn't. (Quick reminder: Mitt Romney, the founder of Bain Capital, is about to be anointed top nominee for president by the Republicans.) That's our national nightmare these days, that total disregard by our leaders of a pervasive evil forced on us via the private sector despite absolute, indisputable proof that Bain Capital is just one among hundreds of companies whose only reason for existing is to destroy the fabric of America for profit . That malignant neglect is the reason the fight goes on and the bad guys keep getting away.
In a free market economy as defined by this new bunch of "patriots", the only bad guys are the good guys. Apparently that's us and we're toast.
|Shack and water tower in the shadow of the mill - Georgetown, SC|