When the recent flap over Mitt Romney’s tenure at Bain Capital, the investment firm, surfaced, the first name that came to mind was “Chainsaw” Al Dunlap.
I thought of Dunlap because Romney’s smiling face does not match the sneering Simon Legree image of a corporate raider. At least Dunlap played the part.
Dunlap was the champion corporate raider of the 1990s, a man who left a trail of job losses and diminished corporate values all over the map.
He married Scott Paper and Kleenex Corp. and left closed plants, shuttered because the merger created over capacity, empty towns and the surviving company with massive debt.
He did it again the Sunbeam Corp., but there the shady bookkeeping practices that shielded the board of directors from the hollowness of the takeovers he tried, drove the corporation near bankruptcy, and Dunlap out the door, as he was fired.
The other name that came up was the book, “Barbarians at the Gate,” the tale of the hostile takeover in the 1980s of RJR Nabisco by venture capitalists.
I remember at the time wondering why a cigarette maker like RJ Reynolds would want to buy a foodmaker like Nabisco, but at the time the tobacco companies were under a lot of pressure because their products were killing people, so it seemed like a good idea to make the transition from the maker of Winston cigarettes to become the maker of Oeros.
If we can’t kill you with smoke, we’ll kill you with saturated fat.
At the time these actions at first were reported with awe at the skill and audacity of the corporate raider. Dunlap in particular gloried in his nickname, happy to announce that he was laying off thousands of workers to increase shareholder value.
That is the phrase that ruined the American economy.
While off-shoring (what an awful phrase) has been going on forever– companies are always seeking the lowest labor costs: in the Fifties it was jobs being shipped to Puerto Rico, then Taiwan, then Singapore, now Mexico, China, Korea, the moves, while just as painful to the people and communities left behind now in the same type of activity, the moves lacked the cache of a buzzword.
Now we do it to increase shareholder value.
That’s all that Bain Capital did.
Merged companies, sold assets and fired employees. Sometimes it worked, and sometimes it didn’t. Recent news reports said it worked about one-third of the time.
A .300 batting average in baseball is pretty good. But I’m not sure that standard holds for corporate mergers.
But the measurement of that success rate depends on who you ask.
Bain Capital made a bundle and so did Romney, because all that mattered was the deal, not the result.
While Romney has a prettier reputation than Al Dunlap, he’s cut from the same cloth.
(One note about Romney. Never trust a rich guy who inherited his money and, as is the phrase, found himself on third base and declares he hit a triple. He took the good fortune his family had created and handed to him, and made his way. Good for him. Rich families need to have successful offspring or they soon become poor families. The difference is that Mitt’s father ran an auto company and manufactured goods. Portions of that company exist today as part of Chrysler Corp. That is a legacy. Mitt Romney made his money trading money and closing down companies. His legacy: I laid off thousands of people and got paid for it. In some societies that is a measure of failure.
Mitt Romney never had to decide whether to pay the oil bill or buy groceries, never worked the overnight shift at a convenience store to make ends meet, or never actually sweated for his wealth. Makes me think that I’d rather have a community organizer in the White House who has at least some tangible contact with average Americans.)
I guess the other part of this discussion that puzzles me is the acceptance of the rhetoric that surrounds all this by the average American. Union vs. non-union. Rich vs. poor. The leeches vs. the producers. The stealers of my tax dollars vs. me.
I was listening to a radio show the other night when a caller defended Romney as a man who eliminated “unproductive” workers in the name of shareholder value.
I wonder how unproductive these workers are when the companies that employs them are making millions. But in the name of shareholder value, those millions were not enough.
So, mister radio caller, define unproductive for me. If you are not returning maximum dollar for investment value for the corporation, you, too, are unproductive.
One last tie-in.
Saw a story about the Pfizer CEO declaring his desire to sell a couple of divisions that did not fit with the newest direction he hoped to take the drug maker. Of course, these division were businesses that Pfizer had chosen to buy, a couple of them more than once, in that drive to increase shareholder value.
Pfizer’s Morris County, NJ’s legacy?
A ghost town of white, empty office buildings in Morris Plains.
So welcome to the new American economy.
When jobs are fungible, skills disposable, and the products a company makes just names on little pieces of paper taped to a wall to be traded and shuffled like minor league baseball players, we all lose, even the money traders.
They just don’t know it yet.
They’re just one more deal, you know, from turning it around.
Michael Stephen Daigle
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