voters or fans?

Voters or Fans? 

 

When it comes to the ongoing presidential race it seems to me that the Middle/Working/Lower Classes are like the fans at the final World Series Game.  We get to buy a ticket, suck up cheap beer and gobble junk food, stomp and cheer like crazy, shove each other around if we're not rooting for the "right team", and go slightly nuts when our team wins. 

But when the dust has settled and the grounds keepers come out, and the custodians haul out the big trash bins, we shove our way out of the stadium and go about our lives as if nothing had happened.

"Wait'll next year!" the losers holler.  "Your mudder wears jockey shorts!" the winners shout back. 

 

Carl Jarvis

 

To: Blind Democracy Discussion List

Sent: Sunday, June 10, 2012 8:16 PM

Subject: More on Bane Capital

How 1 mill thrived, 1 failed after Bain invested Profits for Mitt Romney, firm in both deals

By Brian MacQuarrie and Bobby Caina Calvan Globe Staff

June 05, 2012

FORT WAYNE, Ind.

As depicted in a campaign ad for President Obama, Mitt Romney and Bain Capital's single-minded pursuit of riches led to bankruptcy
and hundreds of layoffs at a Kansas City steel mill. In a dueling ad for Romney, Bain's seed money for a start-up steel mill in Indiana created thousands
of good-paying jobs. One industry, two deals, opposite outcomes. At GS Industries in Kansas City, Mo., the 750 workers lost their jobs and much of their
health and pension benefits. At Steel Dynamics in Butler, Ind. - 600 miles to the east - the mill's brisk business produced jobs that paid steel workers
an average of $80,000 a year. CHAD RYAN FOR THE BOSTON GLOBE A lot of things would probably be different if they weren't around," said Dan Keller, who
works for Steel Dynamics. The common denominator is that Romney and his Bain Capital partners profited from both investments at both plants. Now each is
being used to bolster political claims in a heated presidential race that will hinge on Romney's track record as a businessman and Americans' fears about
job losses. An on-the-ground look at the fortunes of these two Midwestern steel factories illuminates how Bain - which Romney built into one of the leading
private equity companies in the United States - augmented its own investments with large amounts of debt and community taxpayer support to make forays
into a rapidly changing segment of heavy industry. A lot of things would probably be different if they weren't around. In one case, Bain tried to prop
up a traditional steel maker that was struggling. In the other, it bet on innovative technology and was able to declare a bigger and more lucrative victory.
These guys are risk-based investors. You do it for a reward," said Keith Busse, chairman of Steel Dynamics, the successful Indiana plant. Sometimes you
win, and sometimes you lose. Bain invested $18 million in Steel Dynamics in 1994. In 1999, according to a Deutsche Bank report, the firm sold its minority
stake for $104 million in a company that now employs 6,500 people and is the fifth-largest steelmaker in the United States. A lot of things would probably
be different if they weren't around," said Dan Keller, 52, one of the company's earliest employees. High-paying jobs wouldn't be here. In Kansas City,
Bain's experience as the largest stakeholder in GS Industries was dismally different. We made the best steel in the country," said Vernon Corliss, 69,
who worked at GS Industries in Kansas City, and suffers from lung-damaging asbestosis. And they took everything away from us - our jobs, our pensions,
our health insurance - and that's not right. Bain invested $8 million in 1993 in what had been a plodding, old-line mill that was hemorrhaging jobs and
losing business to cheaper imports. It later reinvested $16 million in the plant that it received from the sale of some GS Industries foreign assets. It
extracted $36 million in dividends before the plant went bankrupt in 2001, according to Reuters. That would suggest a profit of over $12 million, but Bain
officials say the firm made $8 million on GS Industries. Bain and its partners bet that modernizing the plant, coupled with the prospect of continued profits
from the steel balls it made for grinding, would justify the investment. The company also manufactured steel rods and such mundane items as wire hangers,
barbed wire, and chain-link fencing. We liked the management team," said Paul Edgerley, a Bain managing director who analyzed GS Industries before the
investment. We felt like it was a good chance to take an antiquated facility and update it. That calculus was badly shaken by the Asian financial crisis
in 1997, which opened the floodgates for cheap imports to the United States and accelerated GS Industries' slide into bankruptcy in 2001. In addition to
the loss of jobs for 750 union workers, the federal government stepped in to cover $44 million in underfunded pensions. WILLIAM LOUNSBURY FOR THE BOSTON
GLOBE Jeff Jones, who worked at GS Industries for its final seven years, said Bain's and Romney's decision set up the mill for failure. Although Romney
left Bain in 1999 to be lead organizer for the 2002 Winter Olympics in Salt Lake City, he continued to profit from the firm's investments. I never thought
of Bain Capital as a job creator. I thought of them as a wealth maker," said US Representative Emanuel Cleaver, who was mayor of Kansas City when Bain
bought the steel mill and now serves as cochairman for the Obama campaign. I watched it with my own eyes go downhill. A sense of betrayal still resonates
among former employees at GS Industries, whose sprawl of factories once employed more than 4,500 people near the confluence of the Missouri and Blue rivers.
It was a good living," said Jeff Jones, who worked at the steel mill for its final seven years. He blames Bain Capital - and Romney, in particular - for
what he says was a decision to set up the mill for failure. He says he never had anything to do with this, but in fact he had everything to do with closing
down the plant," Jones said. Michelle Applebaum, a steel industry analyst based in Chicago, said that judgment is simplistic and flawed. They took a failing
steel mill that would have been closed if they hadn't put the money in," Applebaum said of Bain. The company didn't fail because Bain was making money.
Mark Essig, who served as chief executive of GS Industries from 1998 to 2002, oversaw the plant's closure. The combination of low prices and high costs
made the Kansas City plant a huge money loser," Essig said. We tried to do everything we could to change the fortune of that plant. More than 600 miles
to the east, at the Steel Dynamics mill in Indiana, Bain is not the four-letter word it is in Kansas City. Here, at the first mill built by a nonunion
company that posted $8 billion in net sales last year, the steelworkers average $80,000 in income that includes performance-linked bonuses, corporate officials
said. Spread across 1,100 acres of former farmland, the Butler plant - a so-called minimill - makes thin steel sheets through a revolutionary, streamlined
process that the lumbering behemoths that once epitomized the American industry could not replicate. For Bain, the potential of this low-cost technology
- which uses smaller, electric-arc chambers to turn scrap metal into molten steel - was enormously attractive. The advantages were many: new methods, proven
management, and delivery times that were half of what the old companies, encumbered by inefficient blast furnaces, could meet. The mill received about
$37 million in state and local tax incentives to build in northeastern Indiana rather than Michigan or Ohio, where the company also looked, including the
benefits of a special income-tax levy on county residents for infrastructure improvements. Company officials said taxpayer support was important to create
jobs, while others saw "corporate welfare. Unlike many of its competitors, Steel Dynamics' cheaper costs helped it prosper despite the imports that badly
damaged the domestic industry. Even though it's very risky to do start-ups, we felt like they had good experience to build this kind of mill, with new
and more efficient technology that would make it competitive globally," said Edgerley, who also vetted the Steel Dynamics investment. In both Kansas City
and Butler, GE Capital, the investment and financing arm of General Electric, approached Bain to suggest a partnership. Edgerley and a team of Bain Capital
employees investigated the investment risks and decided that both businesses could be successful, although GS Industries looked to be the more difficult
venture. To Edgerley, the echoes of the deals, as they are playing out in TV spots, are often painful. We try to partner with management teams to make
businesses more successful and grow. Look, it hasn't always worked, but it has in the vast majority of cases," Edgerley said. It's being politicized, and
I hate it. Brian MacQuarrie can be reached at macquarrie@globe.com . Bobby Caina Calvan can be reached at bobby.calvan@globe.com . MacQuarrie reported
from Fort Wayne, Ind.; Calvan from Kansas City, Mo.