Labor costs spiked as managers revamped work schedules with little understanding of how the plant actually operated. Linson says he picked up an entire shift of overtime each week because his managers didn’t realize that a furnace needed a full eight hours to heat up to operating temperature.
The steel mill went bankrupt in 2001 amid a flurry of other steel-company bankruptcies. But it’s clear that the hundreds of millions of dollars of leverage Bain placed on the company played a big role in its failure. Debt constrains a company’s ability to survive a downturn—period. And the more you have, the less likely it is that you’ll survive.
The story ends, appropriately, with the human wreckage of the buyout, with new jobs hard to find, health care lost, and meager pensions slashed. Romney’s company, which pushed the steel mill into massive debt, made a 150 percent profit.
Excellent work by Reuters.
Geez, reminds me of the old LBO cartoon:
http://www.youtube.com/watch?v=xKGrAZTOS0k
All the activity on which was taxed as capital gains, which was the major driver of inequality according to the Congressional Research Service:
http://money.cnn.com/2012/01/03/news/economy/income_inequality/
#1 Posted by Thimbles, CJR on Fri 6 Jan 2012 at 04:28 PM
People got to realize that Romney is the perfect champion for the asset army in the battle between the forces trying to raise wages, and the forces trying to raise assets.
Obama is an imperfect asset champion. Wages have no champion, which is why, during the little depression, Government net investment as a share of net national product is at a 40-year low.
#2 Posted by Thimbles, CJR on Fri 6 Jan 2012 at 04:39 PM
More on the inequity report here:
http://motherjones.com/kevin-drum/2012/01/how-rich-get-richer
#3 Posted by Thimbles, CJR on Fri 6 Jan 2012 at 04:41 PM
Don't forget that Bain's handling of the company required them to get a Federal BAILOUT to meet part of their pension responsibilities, and at the same time shorted workers out of much of their pension.
#4 Posted by Chandler, CJR on Fri 6 Jan 2012 at 05:22 PM
John Marshall at TPM had a piece suggeting that people look into public filings and audit reports to try and put a number on the amount Bain profited from the massive number of companies that went bankrupt after paying for their services.
http://talkingpointsmemo.com/archives/2012/01/the_deeper_bain.php?ref=fpblg
#5 Posted by Anthony, CJR on Tue 10 Jan 2012 at 02:16 PM