The Long Version

Retired broadcast journalist. Blogging helps scratch the itch. Recovering exRepublican – Sober and still Conservative.

Posts Tagged ‘Bain

Rolling Stone: From Music Mag to Smear Machine

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Illustration by Robert GrossmanAs I started reading the Rolling Stone “expose” on Mitt Romney and Bain Capital by Matt Taibbi which is scheduled to be published in the September 13th addition, I was genuinely interested to see if someone had actually found a crack in the Romney “character” armor.

Nope.

It didn’t take long to realize this was going to be nothing more than an envy laced, bigoted, intellectually dishonest, source-less, opinion piece that doesn’t even pretend to adhere to some resemblance of objective journalism.  All of which was revealed in the first two pages.

What happened to the days when Rolling Stone was about seeing your favorite Rocker on the cover?

As a retired broadcast journalist and former news director, I was trained in the old school ways of news gathering and reporting.  When journalists did their best to leave personal bias and ideology out of the story and clearly labeled opinion as such.  Not these days.

The title, Greed and Debt: The True Story of Mitt Romney and Bain Capital, really should be changed. It should read “My Angry Personal Narrative About How I Believe Mitt Romney Got Disgustingly Rich, and Why it Pisses Me Off”, By Matt Taibbi.

That title would be a far more accurate indicator of the story to follow.  Oh Taibbi used all the proper dates, names, and second-hand quotes, he just organized it and spelled it out the way he sees it as opposed to how it actually happened according to those who were actually there and participated in the many Bain deals on both sides.  What we read in Rolling Stone is an interpretation.  Taibbi wasn’t there.  He didn’t participate in any discussion of any deal Bain ever did.  He didn’t even research it very well.  Where are the interviews?  The smoking guns?  Where is the irrefutable evidence that everything Taibbi is telling us is the absolute undeniable truth?

He appears to rely on old rehashed stories and quotes from other publications but even then we only get snippets and selective quotes with little or no context.   He names sources such as, former Bain employees, one Wall Street trader, or a prominent Wall Street lawyer.  Tough to cross-examine those witnesses.

He did interview a guy who was once at KB Toys, but I don’t know why.  The Bain KB Toy deal happened long after Romney had left Bain to run the Olympics and then to run for Governor of Massachusetts.

In fact Glenn Kessler, fact checker at the Washington Post had this to say about Bain, Romney, and KB Toys. “Can you really say Romney was responsible for the closing of 600 stores at KB Toys in 2004, given that the initial Bain investment took place in 2000, when he was at the Olympics, and he had clearly left Bain by 2002? It would have been fuzzier if the investment had started under Romney’s confirmed leadership, but I could find no evidence of his direct involvement in this deal.”

Taibbi’s narrative about Ampad is just as shaky. If you want to know the facts about Bain and Ampad or even GST go to this link at Factcheck.org.  It’s not quite what Taibbi leads us to believe.  I’ve also written about the GS Technology deal.  You can read about it here.

Taibbi’s method of fact gathering and reporting resembles one of a reporter who decides to do a write-up on a football game while seeing only the final score but then proceeds to tell you how he thinks the game was played based on the outcome. Even though he was never in attendance.

I get it. Your guy looks like he could be beat and all you’ve got to date is that Mitt Romney cut a kids long hair when he was 18 and he strapped a dog kennel to the roof of his car… I get it. But I don’t get the disdain for success and the need to demonize those who attain success by so many in the media and on the left. I really don’t.

Perhaps it was Taibbi’s time spent in Russia that led him to despise individual success and see it as an affront to the welfare of the collective.

This story might have been easier to swallow if it held even a tiny hint of objectivity.  Bain did have many success stories.  Companies who did make it after they were acquired and are still doing quite well.  A true story would include those truths too, would it not?  But why ruin a good smear with good news about a good man you want to look bad?

I get it.

I’ve been told Matt Taibbi wished he had been a novelist rather than a journalist. After reading this piece of fiction I’d say he got his wish.

Written by DCL

September 1, 2012 at 1:49 am

Bain Capital and GS Technology…The REST of the Story.

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This is by far a more revealing story—of the pressures of a global market, the dangers of an inflexible workforce, and the opportunities that come with private equity and risk-taking.

It’s not the story the President’s campaign wants the American people to hear however.  It’s much much easier to just blame Bain Capital and, in turn, the President’s political opponent.

The problem is the Obama team knows the majority of Americans are too lazy to dig for information or do their own fact checking.  They want it spoon fed through their TV screens, radios, or laptops.

It’s been said the Truth will set you free.

So here’s a heaping helping from the Wall Street Journal where Kimberley Strassel reported in May the real reasons GS Technology went under.  It isn’t the story the Obama political machine or mainstream media would have you believe.  Not even close.

Taken from the Wall Street Journal – Potomac Watch, Thursday, May 17, 2012

This week the Obama campaign debuted its attack on Bain Capital, the private-equity firm Mitt Romney founded. Its two-minute ad purports to tell the story of GS Technologies, a Kansas City-based Bain investment that went bankrupt in 2001.

To hear the Obama campaign, this is a tale of greed: GST was a healthy, happy, quality steelmaker until Bain plundered its worth and stripped its 750 workers of their due. “It was like a vampire,” laments one former employee in the ad. “They came in and sucked the life out of us.”

GST is a tragic tale, though in a different way. The real story of GST is that of a private-equity firm trying to spark some life into a uncompetitive, over-unionized industry. Bain’s crime here—if that’s what you call it—was giving a dying steel plant an unexpected eight-year lease on life.

When Bain bought the Kansas City mill in 1993, steel was a scene of carnage. Global players were pouring out cheap products, and America’s high-cost steel plants couldn’t compete. The industry had lost 200,000 jobs in preceding years. In 1992 alone, the six largest U.S. steel mills had lost a combined $3 billion. Armco, the company Bain would buy the plant from, would lose $641 million in 1993.

The Kansas City plant was itself dying. At its 1970 height it employed 4,500; by the late 1980s it was down to 1,000. A year before acquisition, Armco had laid off another 75. Its equipment was old; it faced fierce competition at home and abroad.

B.C. Huselton, a vice president of the business at the time, tells me that in 1990 the Armco CEO held a meeting. “He told us, ‘Look, we either try to sell it, or we’ve got to shut it down.'” Armco had shut down another Kansas City facility, Union Wire Rope, only a few years before.

The Kansas City plant had two product lines—high-carbon rods and grinding media (used in mining)—that it felt could give it a competitive edge. But it needed investment, and Armco was tapped out. Bain nonetheless saw some potential and in 1993 joined other investors to acquire it for $80 million. Management renamed it GS Technologies (which would become part of a larger GS Industries) and poured an additional $100 million into modernization.

The strategy worked for a time. The market firmed up and GSI became a U.S. leader in steel rods. In 1994 it felt confident enough to distribute a dividend to investors. In both 1996 and 1997, GSI would realize $1 billion in revenue.

And then came the tsunami. The late 1990s saw a new outpouring of cheap steel from elsewhere around the globe. The Asian financial crisis walloped the mining industry, cutting demand for GST products. The price of GST’s electricity and natural gas skyrocketed. The union dug in, refusing to make concessions. By April 1997, it was on strike, shooting bottle rockets at guards. Labor costs spiked, and by 1999 GSI was reporting $53 million in net losses.

In 2001 it would become one of 31 steel companies that went bankrupt from 1993 to 2003. (Mr. Romney left Bain in 1999.) The steel crash was the economic drama du jour, with Congress railing about “dumping.”

At the time, GST’s union blamed the company’s bankruptcy on the political class, for failing to hamstring imports. “We can’t compete against the steel imports that are being sold under cost,” said the president of GST’s union in 2001. “Our pleas fell on deaf ears in the political arena.” The Bush administration would ultimately slap on giant tariffs.

The bankruptcies were led by unionized companies that, like airlines and textiles and Detroit, had negotiated pay and benefits that helped drive their employers under. GST’s pension benefits would get passed on to the federal Pension Benefit Guaranty Corp., which in 2002 received $7.5 billion in claims from the steel industry alone. The PBGC covered GST’s basic pension payouts.

The Obama ad doesn’t note that the broader company, GS Industries, employed 3,500 and that the Kansas City plant (with 750 workers) was the only one shuttered. Other plants were bought and operate today. Nor does it mention Bain’s other steel investment in the early 1990s, in an Indiana start-up called Steel Dynamics. The firm touts innovative technology and a nonunion workforce. It today reports $6.3 billion in revenue—25 times what it claimed in its 1996 IPO—and employs 6,000.

A private-equity firm looking to quickly strip value from a company—to “suck” the life out of it—does not do so by investing $100 million in modernization and holding on for eight years, through bankruptcy. Bain has surely made its share of mistakes, and one may well have been trying to resuscitate a traditional steel firm in the grip of industry upheaval. The irony, says Mr. Huselton, is that this plant “wouldn’t even be in today’s news, if it hadn’t been the opportunity that came with Bain. Those jobs would have been gone in 1993.”

Isn’t it amazing what important details provided in context can do?