Bain Capital and the Race to the Bottom in Manufacturing and Wages

From The Center For Media and Democracy:  http://www.prwatch.org/news/2012/10/11814/bain-capital-and-race-bottom-manufacturing-and-wages

by Mary Bottari
October 24, 2012

On the campaign trail, Mitt Romney wants to have his cake and eat it too. “Governments do not create jobs,” a stern Romney told CNN’s Candy Crowley twice during the second debate. Here in Wisconsin, however, he is running ads promising to “crack down on China” and create 12 million new jobs.

When attempting to square the circle, a look at Bain Capital’s investment strategies might be helpful. In 1984, Romney co-founded Bain Capital, a spin-off from Bain & Company, a global management consulting firm. A new accounting details Bain Capital’s history in shipping some 15,865 manufacturing jobs overseas (see chart below). Using a conservative multiplier, which takes into account other jobs in the supply chain or community dependent on those manufacturing jobs, Bain is responsible for some 31,730 lost jobs.

According to the analysis by Dr. Raymond Lenzi of Southern Illinois University-Carbondale, “Bain has followed a consistent pattern of buying American manufacturing plants and, within one to four years, shipping equipment and jobs to China, Mexico, and India. While Bain may have added some jobs in service companies in which they have invested (Burger King and Staples office supply for example) these jobs have little or no positive impact on the American economy since they pay much less than manufacturing jobs.”

What may be most shocking is the diversity of jobs that firms like Bain have decided the nation can do without. Bain has not only offshored Mr. Coffee, it is in the process of offshoring profitable high-tech, high-wage manufacturing jobs, the type of jobs that American workers were told would be the upside of terrible trade deals like the 1994 NAFTA and the 2000 China pact.

“Bainport” Illinois

Bain’s recent decision to close the Sensata Technologies plant in Freeport, Illinois is particularly galling. The plant, which employs some 170 workers, is high-tech, highly profitable, and efficient. It makes sophisticated sensors needed for vehicles including domestic General Motors and Ford cars. In 2011, the company had a net revenue of $1.8 billion and adjusted net income of $355 million. This represents “record levels for the company,” Sensata said in a financial report.

But blockbuster profits are not good enough for Bain who apparently can make more money by shipping the entire firm overseas. So they are.

Continue reading at:  http://www.prwatch.org/news/2012/10/11814/bain-capital-and-race-bottom-manufacturing-and-wages

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