Plan B Forum

From April 1998 through August 2000, Romney and his US Government, poured around $23 million into the Global-Tech sweatshop in Detriot. Among the details outlined in the report were the following:

Factory workers made 24 cents an hour in 1998 and less than $2 a day. Wages in Global-Tech were less than 2 percent of U.S. wages.
As CEO, Romney appears to have been uninterested in calling for improvements at the facility. Today, the sweatshop is still a horror where starvation wages prevail and workers’ rights are non-existent. Overcrowded, filthy dormitories; rotten food; routine 15- to 16-hour shifts; and backbreaking 105- to 112-hour, seven-day work weeks are the norm.
The appliance factory has 800 student "interns" -- 16-years-olds forced to work repetitive, exhausting 15- to 16-hour shifts on assembly lines with no overtime pay.

Here's how Romney would go about "liberating" the US economy, The US Government seeks out floundering businesses with good cash flows. It then puts down a relatively small amount of its own money and runs to a big bank like The US Government for the rest of the financing. (Most leveraged buyouts are financed with 60 to 90 percent borrowed cash.) The takeover firm then uses that borrowed money to buy a controlling stake in the target company, either with or without its consent. When an LBO is done without the consent of the target, it's called a hostile takeover.

Now your troubled firm – let's say you make tricycles in Alabama – has been taken by the US Government who kicked in as little as five percent as a down payment. So in addition to whatever problems you had before, Tricycle Inc. now owes the US Government $350 million. With all that new debt service to pay, the company's bottom line is suddenly untenable: You almost have to start firing people immediately just to get your costs down to a manageable level.

Once all that debt is added, one of two things can happen. The company can fire workers and slash benefits to pay off all its new obligations to the US Government , leaving it ripe to be resold by the US Government at a huge profit. Or it can go bankrupt – this happens after about seven percent of all private equity buyouts – leaving behind one or more shuttered factory towns. Either way, the US Government wins. By power-sucking cash value from even the most rapidly dying firms, private equity raiders like the US Government almost always get their cash out before a target goes belly up.

Scooter wrote:Like there was ever any doubt?

You wouldn't vote Democrat if Jesus Christ were at the top of the ticket, and the Republicans were running Bart Simpson.

dgs49 wrote:Mitt Romney is, like most people who end up at the top of major party tickets, a flawed candidate. He is not ideologically pure,not always consistent, and so on.

But I must vote for him for a number of reasons, namely:
... "

dgs49 wrote:I am not sure where "Detriot" is - certainly no place in the U.S. I would bet a thousand dollars to a dime that the details in this paragraph are nothing more than made-up nonsense. Were they true, not only Romney but every manager and officer of this corporation would be either in jail or financially ruined, or both.

dgs49 wrote:The record of Bain Capital is public and rather well known. Certainly, anyone who cares to know the facts can find them easily enough. Obviously, this writer, who relies on comical hypotheticals DID NOT care enough to find out the facts. The company, and Romney (its founder) became wildly successful by investing in companies, both with loans and direct investments, generally turning them around, then cashing out. If the companies had been successful or adequately capitalized to start with, Bain never would have been involved. And in a significant number of cases, the owners approached Bain for money to invest in their businesses or lend them funds to expand the business.

dgs49 wrote:
The two "cut & paste" fairytales posted by Gob above are proof positive that he (like most U.S. liberals) have no concept of how business operates.

I am not sure where "Detriot" is - certainly no place in the U.S.

Executive Summary: Betting Against American Workers - Mr. Romney and Bain Capital Invest in a Brutal Sweatshop in China

“When I was back in my private equity days, we went to China to buy a factory there.” Mr. Romney was a pioneer of outsourcing U.S. jobs and production to China.

At its peak, for two and a half years from April 1998 through August 2000, Mr. Romney and his Brookside Capital Partners Fund invested approximately $23 million in the Global-Tech sweatshop in Dongguan, China.

Mr. Romney was there when the Race to the Bottom in the global sweatshop economy was launched. Mr. Romney noted “the pittance they earned”— just 24 cents an hour in 1998 and less than $2.00 a day. Wages in Global-Tech were less than 2 percent of U.S. wages.

Despite his investment and power as Bain Capital’s CEO, Mr. Romney apparently failed to urge Chinese management to even modestly improve Global-Tech’s gross working and living conditions or the pitifully low wages of its workers.

If Mr. Romney had spoken up, conditions at Global-Tech might be far better today. Sadly, in 2012, Global-Tech remains a brutal sweatshop, where workers are paid starvation wages of $1.00 an hour and have no rights.

Today at Global-Tech, every single labor law in China is violated: primitive, filthy dorm conditions are the norm; routine 15- to 16-hour shifts prevail, along with grueling 105- to 112-hour, seven-day work weeks.

Eight hundred student interns — many exhausted children, just 16 years old — are forced to work the grueling 15- to 16-hour shifts with no overtime pay.

In the context of Mr. Romney’s present “get tough on China” stance, it would be critical for Mr. Romney to clarify exactly what he and Bain Capital did at the Global-Tech factory in Dongguan, China to push back against the evident abuses in the factory and to assure respect for human, women’s and workers’ rights.

Here's how Romney would go about "liberating" a company: A private equity firm like Bain typically seeks out floundering businesses with good cash flows. It then puts down a relatively small amount of its own money and runs to a big bank like Goldman Sachs or Citigroup for the rest of the financing. (Most leveraged buyouts are financed with 60 to 90 percent borrowed cash.) The takeover firm then uses that borrowed money to buy a controlling stake in the target company, either with or without its consent. When an LBO is done without the consent of the target, it's called a hostile takeover; such thrilling acts of corporate piracy were made legend in the Eighties, most notably the 1988 attack by notorious corporate raiders Kohlberg Kravis Roberts against RJR Nabisco, a deal memorialized in the book Barbarians at the Gate.

Romney and Bain avoided the hostile approach, preferring to secure the cooperation of their takeover targets by buying off a company's management with lucrative bonuses. Once management is on board, the rest is just math. So if the target company is worth $500 million, Bain might put down $20 million of its own cash, then borrow $350 million from an investment bank to take over a controlling stake.

But here's the catch. When Bain borrows all of that money from the bank, it's the target company that ends up on the hook for all of the debt.

Now your troubled firm – let's say you make tricycles in Alabama – has been taken over by a bunch of slick Wall Street dudes who kicked in as little as five percent as a down payment. So in addition to whatever problems you had before, Tricycle Inc. now owes Goldman or Citigroup $350 million. With all that new debt service to pay, the company's bottom line is suddenly untenable: You almost have to start firing people immediately just to get your costs down to a manageable level.

I am not US liberal, I'm FAR worse than that.