It’s a familiar story: Mitt Romney’s Bain Capital takes over a company, the company is ruined, and Romney and his investors make millions. But few of these stories look worse than the circumstances surrounding GST in Kansas City.
Reuters reports today on the “steel skeleton in the Bain closet” — a Missouri steel company called GS Technologies, which had been operating since 1888. Romney and his team took over in late 1993, and the only folks who benefited were at Bain Capital. (via T.O.A.)
Less than a decade later, the mill was padlocked and some 750 people lost their jobs. Workers were denied the severance pay and health insurance they’d been promised, and their pension benefits were cut by as much as $400 a month.
What’s more, a federal government insurance agency had to pony up $44 million to bail out the company’s underfunded pension plan. Nevertheless, Bain profited on the deal, receiving $12 million on its $8 million initial investment and at least $4.5 million in consulting fees.
Romney ruined plenty of companies, and laid off thousands of American workers, but what makes the GST story especially interesting is that bailout.
[Romney’s] supporters say the pension gap at the Kansas City mill was an unforeseen consequence of a falling stock market and adverse market conditions. But records show that the mill’s Bain-backed management was confronted several times about the fund’s shortfall, which, in the end, required an infusion of funds from the federal Pension Benefits Guarantee Corp.
The Republican took a chance on a company and decimated it. The workers lost; the community lost; and when GST needed federal intervention, the taxpayers lost*. But Romney and his investors still took home millions.
This is, incidentally, the same business failure featured in the new MoveOn.org ad, which we discussed yesterday.
Steel worker and Army veteran Donny Box worked at that mill for 32 years. “We lost our jobs, they made millions,” Box says in the ad. “Mitt Romney wants to call himself a ‘job creator’? Mitt Romney doesn’t care about jobs. He cares about money.”
Update/Correction: upyernoz argues persuasively that the Pension Benefits Guarantee Corp. relies on a business’ funds for unfunded pension liabilities. It’s a good point.