Considering Mitt Romney’s aversion to press interviews, the curious question after The LA Times article questioning Romney’s job creation during his Bain Capital years, who would the campaign offer as “spin-master” ?
BACKGROUND : Key comments from the article entitled : A closer look at Mitt Romney’s job creation record
— Romney and his team also maximized returns by firing workers, seeking government subsidies, and flipping companies quickly for large profits. Sometimes Bain investors gained even when companies slid into bankruptcy.
— “I never thought of what I do for a living as job creation,” said Marc B. Walpow, a former managing partner at Bain
— Michael Rumbin, a vice president of technology management at Dade International during the Bain years said “When I listen to Mitt Romney these days, he talks about creating jobs. My experience at Dade during those Bain Capital years was that it was strictly an investment, not to create jobs. No one came from Bain and said, ‘How can we hire more people?’ It was, ‘How do we turn our investment around and make a lot of money?’ Which they did.”
— Citing a number of companies that Bain was involved with including some familiar names like Staples, Inc. and Domino Pizza, and some not so familiar names like Epoch Senior Living, a pioneer in the concept of linking nursing homes and assisted-living apartments, Experian, the California-based consumer credit reporting firm, companies in steel-making such as GS Industries and Steel Dynamics, and others.
And the anointed Romney-job-defender was no other than former Minnesota Governor, and former presidential candidate, Tim Pawlenty who appeared on Rachel Maddow’s program :
MADDOW : Mitt Romney has to explain the part of his private sector experience that was about closing businesses and sending all the American jobs overseas.
PAWLENTY: Rachel, now, come on, be fair.
MADDOW: I am.
PAWLENTY: Bain Capital, if you look at the net job increases, when he was at Bain Capital, the number of jobs under his supervision increased, didn`t decrease. Now, there`s individual companies that had a hard time or went bad. But overall, it was a net job increase, not increase.
MADDOW: A net job increase being associated with big companies like Staples, but you go to a place like Marion, Indiana, and you talk to them about how Bain and Company left them in the lurch and shipped their jobs overseas, took the jobs back and made them worse jobs. And if they didn`t want them back, they got shipped overseas. That`s as much of the record as Staples is. So, I —
PAWLENTY: Rachel, let`s — if you look at Bain Capital, Mitt by all accounts was a successful leader there, well liked. And people at Bain had high regard for him, not just as a leader but as a person.
Number two, if you look at the whole Bain story, and private equity firms buy and sell companies, hold them for periods of time and did that over many years. So, are there going to be some companies that had difficult times, went bankrupt, had layoffs? Of course. But if you look at the full record and be fair minded about it, you`re going to see that the story is one of a net job add.
And so, I know you want to be fair minded. I hope you`ll look at the whole story, not just one slice of it.
Ah, for all those “selective” listeners, remember, it’s about “net job increases” and only during Romney’s time at Bain which ended in 1999.
So for that reason, the 700 workers who were fired from GS Industries after Mr. Romney left Bain should not be counted … regardless that those employees lost not only their jobs but health insurance, severance and a chunk of their pension benefits as wells as GSI retirees who also lost their health insurance and other benefits. Bain partners received about $50 million on their initial investment, a 100% gain.
The crown jewel in Mr. Romney’s “job creation” image derives from Staples, Inc. but the question should be : How much does Mr. Romney deserve for Staples growth ?
As you ponder that, think about Earl Bakken and his brother-in-law, Palmer Hermundslie and the company they created, Medtronic. Two guys in a garage … today a major corporation employing 38,000 people worldwide. How much credit does the venture capitalist deserve versus the inventor ?
Staples, Inc. may be a familiar retail storefront but is their story known ?
In 1986, the company’s founders – Thomas G. Stemberg and Leo Kahn – opened the first Staples store — actually, the first office supplies superstore–in Brighton, Massachusetts.
Stemberg’s plan called for the elimination of the middleman in office supply distribution. Traditionally, manufacturers of paper and other items sold their goods to one of six major wholesalers around the country. The wholesalers then sold their goods to office supply dealers and stationery stores. The dealers sold supplies to large corporations, while stationers catered to small businesses and individuals. Along the way, however, the two layers of middlemen between the factory and the customer drove up costs dramatically.
With his Staples store, as he planned to call the outlet, Stemberg would collapse those two layers into one. Because supplies would be purchased directly from manufacturers, the store would be able to offer much lower prices than its competitors in the heavily fragmented retail environment.
Stemberg made presentations to venture capitalists in the Boston area and was met with an enthusiastic response.
From one store, the expansion pace quickened and in 1998, there were 914 stores. That year, Staples also acquired Quill Corporation for about $685 million in cash and stock as part of its effort to expand beyond retail outlets. The privately held Quill, based in Lincolnshire, Illinois, was a seller of office supplies via catalog and through direct (or “contract“) sales to businesses.
Mr. Romney left Bain Capital in 1999 … yet, the question must be asked, who deserves the credit …. Mr. Stemberg or Mr. Romney ?
Oh, sure Mr. Romney made boatloads of money on his investment … but was he just the “banker” or the “hands-on manager” ?
Yes, there were jobs created … but how many ? Do we count the total number of employees under the corporate umbrella … and if so, weren’t companies such as Quill already employing people, as such only incremental employees should be counted. By Tim Pawlenty’s “selective” analysis, the assertion is “on the number of jobs under his supervision increased”.
But, there is another aspect that deserves consideration … once again, Tim Pawlenty’s “selective” analysis “there`s individual companies that had a hard time or went bad” … I guess that would include those would include the “elimination of the middleman in office supply distribution”.
As a country, did the number of workers increase … or did they just shift ?
Medtronics created jobs …. Did Staples ? One created an industry … one changed the distribution method.
Oh, and by the way, after Mr. Romney left Bain (and therefore Staples), things did not go as well …
During the latter months of 2000, the retail market for office supplies began foundering. The boom years of the 1990s were over, and the growth of small businesses and home offices–the core of Staples’ customer base–was fading away. Furthermore, the firm had made a number of investments in various Internet services that were offered through its web site, which proved to be a money-losing strategy. Staples announced in January 2001 that it would take a $206 million write-off related to various web investments. As a result, net income for fiscal 2000 totaled just $59.7 million, compared to $315 million for the previous year.
Mr. Romney’s timing makes Tim Pawlenty’s “selective” comment “under his supervision” so meaningful.
But why is Tim Pawlenty even talking about Mitt Romney’s job creation at Bain … isn’t the more relevant question : How effective was Governor Romney in creating jobs … after all, the voters will elect an Executive not chose a venture capitalist … using numbers from the Massachusetts Executive Office of Labor and Workforce Development Romney created an average of 12,850 jobs per year … admittedly, every job increase is a good thing, but I wonder if Tim Pawlenty was still a candidate instead of being a spinmaster, would he consider 12,850 jobs an accolade or would candidate Pawlenty be citing that during Mitt Romney’s term as Governor of Massachusetts, the state had the forty-seventh best rate of job growth. And were the jobs created “good paying jobs” … considering that during Romney’s tenure Massachusetts lost more than 48,000 manufacturing jobs.
But heck, let’s remember Tim Pawlenty’s other assertion … Mitt was “well liked” … yep, that does it for me … I’m printing bumper stickers “Romney/Pawlenty in 2012 … Selectively Well Liked”
Actually, the pairing makes sense … while Minnesotans know of Governor Tim Pawlenty’s frequent absences during his last years in office, many probably did not know that Governor Romney was absent from his state for more than 200 days during his last year in office.