The Kansas City Star reported that Bain Capital, a company once operated by GOP presidential candidate Mr Mitt Romney, was involved in the 2001 bankruptcy and closing of one of Kansas City's oldest manufacturing plants.
Bain, founded in part by Mr Romney, owned a controlling interest in GST Industries Inc, a steel manufacturer that declared bankruptcy in February 2001. As part of the bankruptcy, the company closed the GST Steel plant in northeast Kansas City, laying off 750 workers.
Mr Romney was not a part of the bankruptcy. He founded Bain in 1984 but left in 1999, two years before the filing and closure, although he is believed to have received income from the company after leaving. It isn't known how much money, if any, Mr Romney earned from Bain's stake in the steel plant.
Bain's involvement with GST Steel was detailed Friday by the Reuters news agency. In the story, former workers said Bain had mismanaged the acquisition, loading up the company with debt while earning profits for itself and in the end abandoning some of its pension commitments.
Bain's business practices have been an issue in the GOP presidential primary, with critics claiming the former Massachusetts governor has been responsible for layoffs and job elimination. In campaign appearances and debates, Mr Romney has admitted Bain bought some businesses that did not succeed. But he says overall Bain has bought and developed companies that have added employees.
Bain, with Mr Romney at the helm, bought the former Armco Worldwide Grinding System business in 1993, including part of the massive steel plant near the Blue River in northeast Kansas City. A steelworks had operated on the site since the 1880s. At its peak, when it was known as Armco Steel, the plant employed 4,500 people.
That workforce had dwindled dramatically by the time GST Steel took over operations, making steel rods and grinding apparatus. By 2001, facing increased competition from cheaper imported steel and several years after a bitter labor dispute at the plant GST Industries filed for bankruptcy and closed the subsidiary Kansas City operation, dismissing the remaining employees. A spokesman for the company said GST Steel lost USD 25 million in 2000.
The company also said it could not meet full pension and health care commitments to retirees, the Reuters story said. In August 2002 the federal government, through the Pension Benefit Guaranty Corp, said the company had under funded its pension obligations by USD 44 million.
The pension agency stepped in to pay basic benefits to the plant’s retirees. The benefit paid to GST Steel workers was less than the benefit promised in contract negotiations. Pension agency benefits were paid for by premiums provided by pension plans and not directly from taxpayers.
In a statement to Reuters, Romney campaign spokesman Mr Ryan Williams said that "Bain Capital invested in many businesses. While not every business was successful, the firm had an excellent overall track record and created jobs."
But Mr Brad Woodhouse, a spokesman for the Democratic National Committee, said in a statement that "This is a template of what Mitt Romney did as a corporate buyout specialist."
(Sourced from www.kansascity.com)
