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Mitt Romney's Private Equity Nightmare - Businessweek
And the hits, they just keep coming.
Back in 1992, Bain acquired a manufacturer called American Pad & Paper, or Ampad. Bain then used Ampad as a vehicle to buy and restructure similar companies. Following standard roll-up strategy, Bain closed factories and laid off workers in anticipation of selling off a leaner, more profitable company via an initial public stock offering.
Two years into the roll up, Bain had Ampad acquire an office supplies plant in Marion, Ind., a manufacturing town 70 miles northeast of Indianapolis. At the time, Johnson worked the night shift making hanging files. We come back from the July 4th holiday, and this is what we find posted, Johnson says, producing from the Romney box a one-page notice: As of 3 p.m. today, July 5, 1994, your employment with SCM Office Supplies Inc. will end. Most of the 258 employees were allowed to reapply for jobs at reduced wages and benefits. Johnsons pay fell 22 percent, he says, from $10.05 an hour to $7.88. Dismayed to see their old union contract torn up, the Marion workers negotiated with Ampad management for several months, then called a risky strike. In early 1995, Ampad called the unions bluff, closed the plant, and laid off the remaining workers.
And the hits, they just keep coming.