Bain Capital - GST Steel - Obamas Commercial

[Doc]

For reasons stated above I disagree with that. But to each his own.

Romney can talk about Bain, because it actually helps him. But when he does, Barry shouldn't touch it. He's already gotten burned by it once, and the fact of the matter is that Bain created many more jobs than were lost. It wasn't even close to story Barry would have you believe, which is they take over companies, immediately suck them dry, and then move on.

[Magox]

The best way to figure out how many jobs that were created as a result of Bain Capital's involvement, in my opinion, is to see when Romney was in control of Bain and when he departed, and then add all the jobs created and subtract it by the ones lost during his tenure.

 

That to me sounds like the logical thing to do.

 

Here is a detailed look into Bain.

 

How many jobs did Romney and Bain Capital create?

 

 

 

There are two ways to look at job creation. The first is to look at jobs created and lost in Bain Capitals companies at the time Romney left Bain Capital at the beginning of 1999. The second is to look at jobs created and lost in those same companies today. This gives Romney and Bain Capital credit for having invested in those companies when they were young. It is inappropriate to include companies that Bain Capital invested in after Romney left because he did not have any impact on those investments.

 

While it is difficult, if not impossible, to get employment data on all of Bain Capitals investments, and not all of the data are perfect, it is possible to look at some of the successes and failures to get a sense of magnitudes.

 

Among Bain Capitals investments under Romney, the large job creators are clearly Staples and Sports Authority. Both of these were small, young companies when Bain Capital invested in them. Bain invested in Staples when it had only one store, so there were likely fewer than 200 employees at the time. Bain appears to have invested in the Sports Authority when it had fewer than ten stores. Unfortunately, there are no public data to say how many people were employed at that time. At the end of 1998, Staples had more than 42,000 employees, Sports Authority had almost 14,000, Gartner Group had almost 3,000, and Steel Dynamics had over 500. So at the beginning of 1999, when Romney left Bain Capital, these four companies alone employed almost 60,000 total employees. While some of the job growth at Sports Authority came from acquisitions, there is no doubt that these four companies created tens of thousands of jobs over the period.

 

Fast forward to today. By the end of 2011, Staples had about 89,000 employees. Sports Authority is now a private company. The last time it reported employee numbers, in 2006, it had 14,300 employees. In addition, Gartner Group had over 4,400 and Steel Dynamics had over 6,000 employees. Using the most recently available data, these four companies alone employed almost 125,000 total employees.

 

Bain Capital also successfully turned around several existing businesses during Romneys tenure. For example, Bain Capital bought Wesley Jessen Vision Care for $6 million in 1994. It had been a division of Schering Plough and was not profitable. Bain Capital and a new CEO turned it around and sold it to Ciba Geigy for over $300 million in 2001. When it was sold, it appears to have had 2,600 employees. Today, the company is part of Ciba Vision.

 

Overall, then, the companies Bain Capital funded under Romney have created tens of thousands of jobs using any measure.

 

What happened to the companies that went bankrupt, particularly the companies Bain Capital supposedly looted? How many jobs did Romney and Bain Capital destroy?

 

A Wall Street Journal article mentions four companiesAmerican Pad & Paper (Ampad), Dade Behring, DDI, and Stage Storesthat Bain Capital made very profitable investments in and took money out of; later, the companies went bankrupt. What the article does not tell you is what happened before and after those bankruptcies. When you add it all up today, even in these investments, it looks likely that Bain Capital created jobs overall.

 

Bain Capital invested in Stage Stores in 1988, when the company was young. Stage went public in 1996 with 9,606 employees. Bain realized $184 million from the investment, then reinvested $23 million for a net payout of $161 million. Employment expanded to 15,700 employees by 1999. The company was hurt by the early 2000 recession and went into chapter 11 bankruptcy in 2000. Employment dropped back to 9,800 in 2001. Subsequently, Stage left chapter 11 and today it employs 13,500 people. So, even at its lowest point, Stage Stores had more employees than when it went public. Today, Stage has roughly 3,900 more employees than it did in 1996.

 

Bain Capital and Romney delivered strong results for their customers, better than other private equity firms that on average outperformed the public markets.

 

Bain Capital bought Dade from Baxter in 1994. They later merged it with Behring. Bain Capital took Dade public in 1996 and cashed out $216 million. Dade went bankrupt in 2002 but it recovered, improved operating income to over $300 million, and was acquired by Siemens for over $6 billion in 2007. Bain would have been better off holding rather than cashing out. What happened to employment? When Dade went public in 1996, it employed 5,500. This increased to 7,400 with an acquisition in 1997. Employment declined thereafter, reaching a bottom of 6,000 in 2002. It rebounded to 6,400 in 2006, just before the sale to Siemens. So, overall, employment declined by 1,000 from its peak in 1997 to its final level in 2006. This was undoubtedly unpleasant, but does not seem to be as dire as portrayed.

 

DDI produced circuit boards for the telecom business. It went public with 1,800 employees in 1999. It then made an acquisition to get to 3,200 employees. After the tech bubble burst, the companys business declined and it went into chapter 11 bankruptcy. Like the other two companies above, DDI came out of bankruptcy and today has almost 1,700 employees and is profitable. So, overall, employment declined by 1,500.

 

American Pad & Paper (Ampad) was a manufacturer and marketer of paper-based office products. In 1992, Bain Capital acquired Ampad from Mead. Bain Capital and new management made additional acquisitions in order to enhance the company's scale, broaden its product line, expand upon its national presence, and strengthen its distribution capabilities.2 It went public in 1996, but declined soon thereafter, going into chapter 11 in 1999. The different pieces of the business were sold thereafter. Employment was 4,105 in 1996 when the company went public. It had declined to 3,800 by 2000, the last employment numbers available. So, as of 2000, employment had declined by 300. Unfortunately, it is very difficult to know what happened after the pieces were sold.

 

When you combine the increase at Stage and the decreases at the other three companies, you end up with a net increase in jobs of 1,100. So, even if Ampad suffered another 1,000 job losses in its break up (another 25 percent or larger decline), Bain Capital could argue that these four investments led to a net increase in jobs.

 

And, when you combine the $6 billion that Dade Behring received from Siemens with any valuation for the other three companieseven zeroit seems likely that Bain would have been better off holding on to its investments rather than cashing out.

 

While we will probably never be able to measure the true numbers, it seems pretty clear that looting is an inaccurate description of what happened with these companies.

 

Steve Kaplan is the Neubauer Family Distinguished Service Professor of Entrepreneurship and Finance at the University of Chicago Booth School of Business. He has consulted for investors in private equity funds and for private equity funds. He also has invested personally in both private and public equities. He has no involvement with any presidential candidate.

Edited May 23, 2012 by Magox

[IDBillzFan]

The best way to figure out how many jobs that were created as a result of Bain Capital's involvement, in my opinion, is to see when Romney was in control of Bain and when he departed, and then add all the jobs created and subtract it by the ones lost during his tenure.

How do we calculate how many jobs he saved? I mean, it's an important measurement to the WH, so we should probably give consideration to Bain as well.

 

If we use the WH calculations, we take the number of jobs created, you multiply it by 100 repeatedly until you come up with a number that sounds good, then add 7. I think that's how Axelrod did it, anyway.

[dayman]

Cannot really get into this tonight (will look over at lunch tomorrow) but can you produce a link Magox? I'm not trying to be a link monster but I kind of need one. One of my main problems is I really seem to be able to find whatever I want to find on google (in a bad way)...current journalism really letting us all down.

 

Also on a side note just b/c I only took a few finance courses in undergrad years ago...I know we know Jim Cramer works for NBC and has been blasted from time to time re: analysis blunders...but do we know if he's a complete and utter idiot regarding his knowledge of Bain? (not trying to go nuts on this...this is just a very small question to determine if I should give minimal weight or no weight to what he says).

Edited May 23, 2012 by TheNewBills

[Nanker]

Clearly Romney's financial background shows he has a grasp of economic principles and knows what it takes to make capitalism thrive.

Clearly Obama's miasma background shows he has a grasp of street savvy principles and doesn't have a clue whatsoever about the economy.

[Magox]

Cannot really get into this tonight (will look over at lunch tomorrow) but can you produce a link Magox? I'm not trying to be a link monster but I kind of need one. One of my main problems is I really seem to be able to find whatever I want to find on google (in a bad way)...current journalism really letting us all down.

 

Also on a side note just b/c I only took a few finance courses in undergrad years ago...I know we know Jim Cramer works for NBC and has been blasted from time to time re: analysis blunders...but do we know if he's a complete and utter idiot regarding his knowledge of Bain? (not trying to go nuts on this...this is just a very small question to determine if I should give minimal weight or no weight to what he says).

Cramer is what I call a stock cheerleader. Ever since the time Jon Stewart pwnd him on his show, from my perspective he became irrelevant, not to mention that he's a Democrat and happens to think Tim Geithner is doing a good job .

 

If you want to do a fair analysis, look at the companies that Bain Capital purchased, try to research how many people were employed when Bain Capital stepped in and how many people were employed when Romney left in 1999.

 

I've gone over this a few times, and I keep getting somewhere 60,000-90,000 net jobs created. That doesn't even include all the jobs that were saved, but for the sake of not using the Obama administrations metric of success, we won't include that, plus it would be virtually impossible for someone like me to come up with an accurate number.

 

Just between Sports Authority, Staples and the Steel Company there were over 55,000 net jobs created, and the amount of jobs lost aren't that significant, even the companies that the Obama administration likes to highlight didn't even have 1000 jobs between the two of them.

Edited May 23, 2012 by Magox

[meazza]

The economist

 

If he's smart, Mr Romney will argue that Mr Obama's apparent inability to see the relevance of business experience to government just goes to show why he can't be trusted to achieve either the goal of sustained economic growth or the goal of leaving no one to suffer in the rubble of creative destruction. Efficiency matters, a lot, in business and government. If a business is inefficient, it is eventually either turned around or it is shuttered. If government is inefficient, it doesn't shut down. Rather, it makes promises it can't keep. When government makes promises it can't keep, people suffer; everyone does not get a fair shot. So, who is better prepared to identify and implement the reforms required to make sure government can keep its promises? That's the question. Mr Obama is desperate to convince voters that a record of success in making organisations more efficient is either irrelevant or nothing but a record of callous inhumanity to man, because it will otherwise become all too clear which candidate has the experience America needs to get back on track.

 

...

 

Mr Obama's Bain offensive seem likely to help the market-loving right continue to belatedly warm to Mr Romney, who now has an excellent opportunity to soberly explain to America the righteousness and relevance of his business experience. Moreover, he can appear the bigger man by insisting on a clear-eyed comparison of his and Mr Obama's qualifications. I'm not at all sure, however, that Mr Romney has what it takes to make the most of this chance. Indeed, Mr Obama's challenge seems a perfect test of Mr Romney's political mettle. If Mr Romney can't defend against Mr Obama's attempt to turn his experience at Bain into a liability, he doesn't deserve to win.

[Doc]

Barry's problem with Romney and Bain is that Romney isn't fund-raising for him.

[fjl2nd]

I don't care who you are, this was a great line by the President:

 

 

And so if your main argument for how to grow the economy is, “I knew how to make a lot of money for investors,” then you are missing what this job is about.

 

 

Thanks for posting the blog from The Economist meazza. I love their stuff.

[DC Tom]

I don't care who you are, this was a great line by the President:

 

 

 

 

 

Thanks for posting the blog from The Economist meazza. I love their stuff.

 

That is a great line. It's also a gross over-simplification of Romney's experience. But it is a great line.

[1billsfan]

That is a great line. It's also a gross over-simplification of Romney's experience. But it is a great line.

 

Not sure if you're being sarcastic, but if you aren't, I don't get anything great about the line. His line of argument is laughable. Even democrats are looking at him as if he's cracked. The anti-business president who has presided over the worst recession in US history is mocking his opponent's successes in the business world as a credential for the job of president. Obama should start touting his own past record instead. He can start with his sterling record of voting "present" 129 times in the Illinois state legislature.

 

Anyone else beginning to think Obama may not even want to be reelected? I'm starting to wonder. He seems as uninterested and unenthused as his supporters. He may indeed have come to the conclusion his socialist policies won't ever work in America, he wants to maintain his far left credibility for whatever he does after he leaves office, and he wants to get out while the country hasn't totally caved in on itself and he becomes the most hated man in the history of America.

[/dev/null]

Anyone else beginning to think Obama may not even want to be reelected? I'm starting to wonder. He seems as uninterested and unenthused as his supporters. He may indeed have come to the conclusion his socialist policies won't ever work in America, he wants to maintain his far left credibility for whatever he does after he leaves office, and he wants to get out while the country hasn't totally caved in on itself and he becomes the most hated man in the history of America.

 

Obama wants to be re-elected. His Super Sized Ego won't allow otherwise. It's the burden of Governing that Obama doesn't care for.

He's the President. He's in charge. What he says should be the way things go, right?

His Socialist policies could not possibly be at fault. It's those pesky 300 million people left to their own devices that were not able to live up to their part.

 

If everybody just did what they're supposed to do, we'd be living in the Golden Age of Obama

[IDBillzFan]

I don't care who you are, this was a great line by the President:

There was another great line by the President during a speech in Colorado yesterday where, according to Politico, he explained to the audience that Romney has not "spent time working in the real world."

 

Pure genius.

[Chef Jim]

There was another great line by the President during a speech in Colorado yesterday where, according to Politico, he explained to the audience that Romney has not "spent time working in the real world."

 

Pure genius.

 

What?? Did he really say that?? Holy crap dude WFT. So being a professor at Harvard, being a community activist, a State Senator, US Senator then President is the real world?

 

Gold Jerry....comedy gold!

[Doc]

I don't care who you are, this was a great line by the President:

It's a great line...to show how out of touch Barry is about what Romney did and brings to the table. The better line was by Romney, who said that Barry has only ever been a politician or community organizer, but those don't mean jack **** when it comes to leading a country, and that the results speak for themselves. I'm paraphrasing, of course.

[dayman]

Do not try and bend the spoon. That's impossible. Instead... only try to realize the truth.

[DC Tom]

Not sure if you're being sarcastic, but if you aren't, I don't get anything great about the line. His line of argument is laughable. Even democrats are looking at him as if he's cracked. The anti-business president who has presided over the worst recession in US history is mocking his opponent's successes in the business world as a credential for the job of president. Obama should start touting his own past record instead. He can start with his sterling record of voting "present" 129 times in the Illinois state legislature.

 

Anyone else beginning to think Obama may not even want to be reelected? I'm starting to wonder. He seems as uninterested and unenthused as his supporters. He may indeed have come to the conclusion his socialist policies won't ever work in America, he wants to maintain his far left credibility for whatever he does after he leaves office, and he wants to get out while the country hasn't totally caved in on itself and he becomes the most hated man in the history of America.

 

It's a great line because it sells to the masses.

 

I don't get you people that expect truthiness in your electioneering. It's sales that makes the campaign, not truth.

[fjl2nd]

It's a great line because it sells to the masses.

 

I don't get you people that expect truthiness in your electioneering. It's sales that makes the campaign, not truth.

 

That's all I was trying to say about it. A great line to deliver to the public. Obama must believe he can turn this Bain thing around on Romney. It could work or it might backfire.

 

I definitely can see it working by Obama pushing that Romney is running on his record of making money for investors and wealthy people and once again leaving the middle class behind. Should be interesting....

[B-Man]

Hey, Barry … who is this “we” you speak of?

 

Obama taking a cue from Joe “Middle Class” Biden.

 

 

Well, those of us who’ve spent time in the real world …

 

 

 

Has Obama spent one day in the private sector? Has he gotten one thing on his own merit rather than Obama-as-articulate-clean-symbol-white-leftliberals-could-feel-good-about-grooming?

 

h/t Jim Geraghty who points out:

 

"It would probably be rude of me to think about Michelle Obama’s work, where her salary jumped from $121,910 to $316,962 per year after her husband became a U.S. senator, a job that was strangely left unfilled after she stepped down to focus on her husband’s campaign."

 

 

Such positions are quite challenging to find in .................... the real world

 

Protein Wisdom

 

.

[Doc]

That's all I was trying to say about it. A great line to deliver to the public. Obama must believe he can turn this Bain thing around on Romney. It could work or it might backfire.

 

I definitely can see it working by Obama pushing that Romney is running on his record of making money for investors and wealthy people and once again leaving the middle class behind. Should be interesting....

Romney's best response to Barry is: Jonathan Lavine.