On the eve of South Carolina’s Jan. 21 Republican primary, a local steel union leader debunked as “totally false” Romney’s claim that he created hundreds of jobs when his company took over Georgetown Steel in the Palmetto State.
“The experience we’ve had here at Georgetown Steel contradicts Romney’s ‘job creator’ statement,” said James Sanderson, who started working at the mill in 1974 and was elected president of United Steelworkers Local 7879 in 1988. He said in a phone interview that the mill was doing well, earning profits until Romney’s outfit, Bain Capital, took over.
Under Romney’s leadership, the mill slashed 1,750 jobs, padlocked a division that had existed for 100 years and eventually sank into bankruptcy.
The evidence gives strong credence to charges by rival Republican presidential candidates that Romney is a “vulture capitalist” who fattened the profits of Bain Capital by stripping manufacturing companies of their assets and terminating the jobs of thousands of workers. It has exposed as a hoax Romney’s argument that as a corporate CEO he knows how to create millions of good jobs.
“We take exception to his claim that he comes in and takes over companies that are ailing. That wasn’t the case here at Georgetown,” Sanderson said. “We were doing well, making money, doing very well financially. But shortly after Bain Capital came in 1995, the conditions deteriorated quickly at our plant. They took everything they could out of the company. They stopped investing in new equipment. The equipment was not maintained.”
Bain Capital assigned Mark Essig to manage the plant, Sanderson charged, and a team of managers “who didn’t know anything about steelmaking were put in charge. They were just bean-counters.”
According to an investment prospectus obtained by the L.A. Times, Bain Capital acquired GS Industries, parent corporation of Georgetown Steel, for $24.5 million in 1993. By 2000, Bain had reaped $58.4 million in profits from the takeover, largely through stripping the mill of assets and paying their executives – Romney in the first place – huge bonuses and stock options. Bain was sucking about $900,000 annually from GS Industries in the form of dividends and annual “management fees.”
When GS Industries merged with Armco Steel in 1995, it employed 3,800 workers worldwide, and had $1 billion in assets, the largest producer of carbon wire rods in the U.S. But within years of Bain Capital’s takeover of the company, it owed $554 million in debts against assets of $395.2 million. It filed for bankruptcy in 2001.
“Romney, founder of Bain Capital in 1984, was in charge of the firm for most of the time it owned GS Industries,” the Myrtle Beach Sun Times reported. The paper quoted retired Georgetown Steel worker John Ethridge, who charged that Romney’s outfit “treated us like dirt.”
Less than a year after taking over Georgetown Steel, Bain Capital cut the workers’ profit-sharing plan twice without telling the workers. The first they heard was when they noticed that the profit-sharing benefit was cut from $5.60 an hour to $1.25 an hour in their paychecks. Soon, the profit sharing disappeared from their checks permanently.
Georgetown Steel survived, bought by Mittal Steel in 2005. The mill now employs 250 hourly and salary employees. USWA Local 7879 still represents the workers. “At Georgetown Steel, in South Carolina, its ‘Union Forever!'” Sanderson told this reporter.
But steelworkers were not the only ones to feel Romney’s whip. Just down the road was a photo album manufacturer, owned by the Holson Burnes Group. Bain Capital bought the company for $10 million and stripped it, raking in $22.6 million in profits between 1986 and 1992 when HBG declared bankruptcy, terminating the jobs of 150 workers.
Romney meant it when he announced recently on the campaign trail that he enjoys “firing” people.