May 21, 2012
Mitt Romney's
Private Equity Nightmare
"The Randy Johnson-Ampad video has landed, and that could be bad news for Mitt Romney.
Back in February, we profiled Johnson and gave Bloomberg Businessweek readers a heads-up that he would star in an Obama campaign assault on Romneys past as a private equity mogul and the Republicans claims that his years at Bain Capital were devoted to job creation.
Well, the assault began last week with an ad about a former Bain-owned steel company called GST, and today the Obama team sent Johnson into the fray with a video about
another ex-Bain property, office-supply manufacturer Ampad, a name thatll be
rocketing around YouTube and the political blogs.
Randy Johnson, a plainspoken union organizer who once worked for Ampad in Marion, Ind., embodies the blue-collar case against private equity, Romney-style.
As we reported in February:
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.