Katrina’s post on Bain Capital’s involvement with South Carolina’s Georgetown Steel brings to mind the lengthy account I wrote of this incident back in January. The takeaway: “A review of what actually happened in South Carolina tells a different story. And that different story is quite representative of how private-equity investors helped bring global competitiveness to much of American industry.”
The U.S. steel industry was facing major global competitive pressures at the time, in large part due to overly generous and inflexible union contracts. A key point that the article makes:
In June 2004, another steel company, International Steel Group, bought the Georgetown plant for $20 million, putting 276 people to work. In 2005, Indian entrepreneur Lakshmi Mittal bought ISG; in mid-2006, Mittal Steel merged with European steel giant Arcelor SA to become the largest steelmaker in the world. By that time, the Georgetown plant was employing 320 workers.
The plant had employed 465 workers when Midcoast Industries (not Bain Capital) closed it down in 2003.
UPDATE: Byron York points out that Obama has downsized companies and slashed jobs before:
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.”
The Obama administration argued that the loss of jobs was necessary to save far more (union) jobs at GM and Chrysler. Now, the Obama campaign will likely say the same thing. But in the auto bailouts, whatever else one thinks of them, Barack Obama pushed for downsizing and laying people off in a failing business he had taken over.
The auto industry example won’t be Romney’s only response to Obama’s Bain attack. But it will be part of a larger counterattack against what might be called Obama’s own record in business. “President Obama wants to make this race about anything other than his own record of failures in three and a half years in office,” says a Romney spokesman. “Any time he makes a false charge or attempts to distract from his own record, we’re going to point out his own failures.”
— Avik Roy is a senior fellow at the Manhattan Institute and the author of The Apothecary, the Forbes blog on health-care and entitlement reform. He is a member of Mitt Romney’s Health Care Policy Advisory Group. You can follow him on Twitter at @aviksaroy.