Nearly two decades ago, Teddy Kennedy placed attacks on Bain Capital at the centerpiece of his senate campaign. His prime target was Ampad, a Bain-owned company that had bought an Indiana plant. According to a recent biography, The Real Romney, “the day Ampad bought the factory, SCM [the former owner] fired the workers. Many were rehired, but at lesser wages and reduced benefits.” Kennedy’s campaign, the authors claim, seized on the opportunity to cast Romney as the villain, and made “six thirty-second TV spots featuring nine Ampad workers” that were “withering” in their criticism.
Now, the Obama campaign is hoping that the Ampad saga — including the follow-up story that around 200 employees lost their jobs when the plant closed in 1995 — will turn voters against Romney. Yesterday, the campaign released a six-minute video about Ampad, featuring interviews from angry former employees. A sample quote from a former employee: “To me, Mitt Romney takes from the poor and middle class and gives to the rich. It’s just the opposite of Robin Hood.”
This isn’t the first time Team Obama has attacked Romney’s Bain record. The campaign recently targeted two other Bain-backed companies: GST Steel and Dade Behring. Both times, the Obama team cherry-picked their facts. With GST Steel, the campaign neglected to mention that Romney had not been working on the day-to-day business of Bain for around two years when GST Steel went bankrupt and 750 jobs were lost.
In the case of Dade Behring, a medical company that Bain had acquired, the president’s campaign took a harsh, if incomplete, line: “Romney’s business strategy wasn’t about strengthening companies and creating jobs for long-term economic growth,” Obama spokeswoman Lis Smith asserted in a statement last week. “It was about reaping quick profits for himself and his investors at the expense of workers and communities. . . . That’s what he did at Dade Behring — loaded the company up with debt, put it on a path to bankruptcy, and caused 850 workers to lose their jobs, all while he and his partners walked away with $242 million,” she added.
Obama’s team is working hard to exploit those layoffs. A former Dade Behring human-resources officer, Cindy Hewitt, detailed her experience at the company in a press conference organized by the campaign. According to the Tampa Bay Times, Hewitt said that she was concerned about a culture in which “businesses are used to generate wealth for a small number of people and businesses are run to the ground and the lifeblood is sucked out of [them] and all of their employees lose their jobs.”
It is true that 850 workers lost their jobs at a Miami plant. But, according to a source familiar with the company at the time, that plant was the “the oldest and the least inefficient plant” they operated and, in a declining industry, cuts had to be made somewhere.
“This was not one of those situations where somebody snapped their fingers and said, ‘Okay, we’re going to close this plant tomorrow.’ The plant was wound down over an extended period of time. There was a year of job fairs and other outplacement efforts that were made by the company, generous severance payments were made, and ultimately, about 80 percent of the people found other positions,” added the source.
Ken Spain, vice president of public affairs and communications at the Private Equity Growth Capital Council, makes the case that sometimes private-equity firms have no way to avoid layoffs.
“Oftentimes, companies that are in need of a turnaround are already in the process of shedding jobs, and in order to successfully make the company profitable and stay in business, private-equity firms have to find ways to shed waste and inefficiency,” he says. “That can mean a variety of things, [including] streamlining processes, improving the management, and, unfortunately at times, shedding jobs.”
Still, Spain argues, private-equity firms may have to cause temporary pain, but they create jobs over time: “Companies that benefit from private-equity investment often grow jobs at an even faster rate over the long term.”
But for Romney, explaining the rationale behind the layoffs may not be enough. The Obama campaign’s argument is that private-equity firms are inherently geared toward “maximiz[ing] profits” and not concerned with job creation. To some, it may thus appear ridiculous for Romney to claim that his business experience gives him an edge in creating the right climate for new jobs.
“When you’re president, as opposed to the head of a private-equity firm, your job is not simply to maximize profits,” Obama said yesterday during a press conference in Chicago. “Your job is to figure out how everybody in the country has a fair shot.”
Romney’s campaign rejects the idea that possessing business experience such as his is irrelevant to the role of president. “President Obama can’t come close to matching the many years of experience that Mitt Romney has as a private businessman, so he has chosen to attack the free market,” Romney spokesperson Andrea Saul argued in a statement. “But millions across this country are struggling and deserve a leader who understands [how] the economy works.”
And a Romney aide dismissed the Obama campaign’s attacks on Dade Behring, labeling them the “type of policy posture and reasoning from President Obama and his administration that helps prove just how anti-business they are.”
“Cherishing free markets and working with entrepreneurs and industry to form capital for businesses aids job creation and economic expansion,” the aide adds, saying that voters have “lost confidence” in Obama as a result of his disdain for the private sector.
As for Romney himself, he is determined to frame Obama’s attacks on Bain-backed companies as part of Obama’s larger problem with the private sector.
“President Obama confirmed today that he will continue his attacks on the free enterprise system,” Romney said in a statement yesterday, responding to Obama’s comments in Chicago. His own campaign, Romney added, would take a different tack: “offering a positive agenda to help America get back to work.”
— Katrina Trinko is an NRO reporter.