Did Romney really create 100,000 jobs?
As the GOP frontunner's record at Bain Capital comes under increasing scrutiny, his math looks fuzzy. Here's a look at jobs gained and lost via the hedge fund's work.
In the Republican presidential debates last weekend, Mitt Romney repeated his claim that he is an effective leader who created a “net net” of 100,000 jobs while he was working in the private sector.
But three recent reports, by the Los Angeles Times, the Associated Press and by FactCheck.org, the nonprofit, nonpartisan project run by the Annenberg Public Policy Center at the University of Pennsylvania, say that the Romney campaign has yet to offer convincing proof to back up the claim.
The best the campaign has done: providing a list to FactCheck.org of recent or current employment at three big companies where Bain invested: Staples (SPLS), which had 89,000 employees as of Dec. 31, 2010; Sports Authority, which had 15,000 employees as of July 2011; and Domino’s Pizza (DPZ), which has added 7,900 jobs since 1999.
But Romney left Bain in 1999, so it hardly seems plausible to suggest that he created the positions that make up the current head counts at those companies.
Besides, as FactCheck points out, Bain was not the sole investor or creator of these companies. For instance, at Sports Authority, investment also came from three other venture firms, William Blair Venture Partners, Phillips-Smith and Marquette Venture Partners. Then of course there was the work of the executives inside the company, like CEO Jack A. Smith.
Two other facts about Sports Authority: Kmart owned it for five years starting in 1990, and as of 2006, it has been owned by the private equity firm Leonard Green and Partners. So which entity deserves credit for its job growth?
Jobs lost after Bain
Then there are the job losses at the many companies Bain acquired. FactCheck credits reports in the New York Times and Politico for flagging the following cuts or displacements: 385 jobs lost at American Pad & Paper; 1,900 cuts or relocations at Dade International; more than 2,100 workers laid off from DDI Corp.; 2,500 cuts at Clear Channel Communications; and 3,400 at KB Toys.
In an early December story, the L.A. Times scrutinized a 2000 prospectus issued by Deutsche Bank, which Bain sent to potential investors, describing the impressive profits earned by Bain Capital. Romney headed the firm for 15 years, until he left to run the Olympics in Salt Lake City. During Romney’s tenure, Bain bought more than 115 companies, according to the Deutsche Bank document. Like other leveraged buyout firms, reports the Times, Bain often made money by laying off employees, getting government subsidies or re-selling companies quickly for a profit.
Of the top 10 investments Bain made under Romney, reports the Times, four declared bankruptcy within a few years of Bain’s involvement, “shedding thousands of jobs.” One example: GS Industries, formed by Bain in the early ‘90s by investing $24 million to buy and merge several steel companies. “Company managers cut jobs and benefits almost immediately,” says the Times, while Bain and other investors reaped management fees and dividends. In 2001, GSI went bankrupt and 700 workers lost their jobs and most of their benefits. But Bain had already made $50 million on its initial investment, reports the Times.
Bain declined to comment to the Times about GSI, but some 40 other steel companies did go bankrupt during the decade between 1994 and 2004.
Romney has also taken credit for another, smaller steel investment that was a job creation engine. In 1994, Bain invested $18.2 million in a manufacturing start-up, Steel Dynamics (STLD), which now employs 6,000 workers. Another example of an employment hike at a Bain company: Epoch Senior Living, which grew from a few hundred when Bain invested $26.4 million in 1998 to more than 3,000 employees when it sold in 2007.
So Bain and Romney deserve credits on both sides of the jobs ledger.
How much credit?
At times, Romney tones down his rhetoric and uses the words “helped create,” a more supportable claim. In Saturday’s debate, he conceded that “we’re only a small part of that, by the way,” when he talked about Bain’s role in job creation.
Maybe voters know that the 100,000 jobs claim is typical campaign hyperbole. But as Romney’s challengers mount attacks on his record at Bain, his fuzzy math is going to get more scrutiny.
Related at Forbes.com:
VIDEO ON MSN MONEY
I know that in the 80's, leveraged buyout firms made millions but only because they left the surviving company with huge debts. Almost inevitably, these companies later filed bankruptcy because they were unable to service the debts and the only winner was the buyout firm because much of the debt was a result of profits to the buyout firm.
Not saying that was the case with Bain but I would like someone to answer if Bain left the intact companies with mountains of debt.
How many jobs did Obama ever create in the private sector? Lets face it the only experience most politicians have for higher office is sleazy back room deals which screw the american public. Most have never had a real job in their life. No wonder our country is bankrupt.
Obamas idea of job creation is to spend a trillion dollars to create a thousand $40,000 a year jobs. The job of our government is not to hire everyone but to create an environment in which our businesses can compete. That means low taxes and fewer regulations. In order to lower taxes they first need to slash the Federal budget. Why don't they get it that most Americans would support them if they would do what is best for the country and not what is best for themselves or their party. Put America First.
Romney says he created 100,000 jobs.. I say Bullcrap!!! But, now if he wins the presidency, Romney has said that he will dismantle and shut down Amtrak... Well, there goes 20,000 plus jobs LOST!!! But he will give money to the Airlines who just rip you off time and time again for Bag Fees and change plane fees and
If you believe Romney and Perry both, they have cured the un-employment problem for Obama.
They just forgot to tell the ones that are without a JOB.
I understand that Romney is maybe getting Security from Tax Payers.
Why just doesn't he ask Perry and get the State Police to go Security. Perry does!
Or someone forgot to tell Texas that Perry's ego is the only thing that needs Security.
But... He LIKES being able to fire people, for Pete's sake.
ROMNEY/TRUMP 2012. Your'e fired!... twice!
One thing not discussed is was there a business plan in place when Romney left in 1999 that can show the growth patern that was expected at that time. Job creation doesn't always happen overnight and if he helped develop or sponsor the plan then he should get some credit when it happened. However, the reverse is also true. If he put a plan in place to decrease jobs or ship them overseas he should get the negative credit for that as well. Being involved when the plan was executed isn't always essential.
Me1956, When I was young I would ride the Atlantic Coastline and Seaboard Railroad Trains...Great memories. The Government took over the railroads and turned them into subsidized souless losers. Nothing is good about Government takeovers. I miss the privately owned Silver Meteor and Silver Comet...
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