If there’s one thing Mitt Romney wants you to remember as he campaigns for President, it’s that he’s all about putting people to work. “You’d have a President who has spent his life in business—small business, big business—and who knows something about how jobs are created,” the Republican candidate recently told voters in Florida. Romney spokeswoman Andrea Saul says the candidate’s business experience means he is better equipped than his rivals or President Barack Obama to “focus on job creation.”
What Romney doesn’t mention in his speeches is that he also knows a thing or two about eliminating jobs. Romney made his fortune sitting atop Bain Capital, a Boston private equity firm he co-founded in 1984 and ran until 1999. With cash from wealthy investors, Romney bought and sold companies at a rapid clip, sometimes helping to build them up and creating hundreds or thousands of jobs, sometimes taking them apart and sending employees packing. Whether the businesses boomed or filed for bankruptcy under his watch, Romney and his investors often came out ahead.
Private equity firms, of course, concentrate on returns, not head count. And Romney was great at it. On his most recent disclosure forms, from 2007, he listed his personal fortune at as much as $250 million. But if the story of his years at Bain is one of business success, it’s not one that fits easily with his efforts to market himself as a candidate who spent his career looking out for the little guy.
Romney is aware of this. In the past, political opponents have attacked him for business transactions in which he made money while employees lost jobs—and his current rivals for the White House are already preparing to do so again. That’s left Romney in the awkward position of trumpeting his business experience while shying away from it at the same time. His campaign refused to provide details about his Bain deals, and Romney declined to be interviewed for this article. In a statement, Bain Capital said the firm’s record “will undoubtedly” be distorted in the political debate. “We are proud of the role that our people-intensive, analytical approach has played in growing companies and delivering superior investment returns.”
Romney’s campaign points to a few prominent investments that he oversaw. “Bain Capital helped to launch or rebuild hundreds of companies, including household names such as Staples (SPLS), Domino’s Pizza (DPZ), and the Sports Authority,” his website says. Other Bain deals don’t find their way into Romney’s campaign literature. In 1994, Bain, together with Goldman Sachs (GS), bought Dade International, a medical diagnostics company in Deerfield, Ill. Michael Rumbin, who was a vice-president of technology at Dade, says he was told to cut half of his division’s research projects, eliminating those that had little chance of success and letting go people who worked on them. It had to be done, but it was a “relatively traumatic experience” for workers, he says. Dade was combined with other companies, got a new name, Dade Behring, and became one of the largest makers of diagnostic tests. Job cuts followed each acquisition as unnecessary plants were closed and redundant positions eliminated. At least 1,600 employees were dismissed from 1996 to 1999, according to Securities and Exchange Commission reports. Scott Garrett, who was Dade’s chief executive officer from 1994 to 1997, says the downsizing was a normal part of companies merging. “It’s very unfair to suggest that Mitt Romney was anything but a very good businessperson,” he says.
Bain and Goldman cashed in on their investment in June 1999, selling back shares to Dade for $365.4 million. Dade borrowed money to buy the shares. When a tough economy caused sales to decline and interest rates to rise, the company struggled to pay creditors. It wound up filing for bankruptcy. The company later emerged from its financial troubles, grew, and was eventually acquired by Siemens.
There are a couple of ways of looking at this story. The sympathetic way is that Romney and his partners took faltering companies such as Dade, set them on a path to success, and profited from their efforts. Jobs may have been lost along the way, but the companies prospered and hired new workers. Not everyone takes this view. “They leveraged this thing to hilt and got out when they could,” says Rumbin, whose own position was eliminated. “These guys worked there for two years and ended up as millionaires. I worked there for 25 years and I’m not a millionaire.”
It’s this sentiment that could make it difficult for Romney to campaign as a job maker. There are signs his GOP opponents may portray him as a moneyman who put personal profit above the interests of hardworking Americans. In a campaign video, former Utah Governor Jon Huntsman Jr., a onetime chemical company executive and a rival for the GOP nomination, takes a sly swipe at Romney. Huntsman “built things, built jobs—didn’t just buy them,” the narrator says.
Huntsman is following a script penned at the very beginning of Romney’s political career. In 1994, Romney tried to unseat Democratic Senator Edward M. Kennedy. Brandishing his business experience, Romney claimed to have created 10,000 jobs. He led in the polls until Kennedy went populist on him, relentlessly questioning Romney on layoffs at American Pad & Paper, which Bain had acquired. Romney never recovered and lost the race.
His record is likely to face even greater scrutiny this year. Democrats—and even Republicans—are eager to liken Romney to the Wall Street barons whose behavior helped spark the 2008 market collapse. “There’s a lot of doubt and suspicion about people who did what he did in terms of investment banking and the connection between their actions and job creation,” says Tad Devine, a Democratic strategist who made campaign ads against Romney in 1994. “Romney’s going to have to spend a lot of time expanding on his past and why things he claims as successes aren’t really failures.”