“Bain Capital is the model of how to leverage brain power to make money. They are first rate financial engineers. They will do everything they can to increase the value. The promise (to investors) is to make as much money as possible. You don’t say we’re going to make as much money as possible without going offshore and laying off people.”
~Howard Anderson, a professor at M.I.T.’s Sloan School of Management
Let me sum this story up for you. Bain Capital buys a company with the promise of new jobs – invests a bit of money in return for a $5 million tax credit in South Carolina. They touted how many jobs they were going to create in South Carolina. Within 4 years – the profitable factory went bust so they closed it …layed off 150 people and moved some of the operations to New Hampshire with the promise of new and exciting jobs. Within 7 months – they lay off half of the workers and ship off most of the jobs overseas. 20% profit later … it was a great deal for Bain Capital – not so much for middle class Americans.
Just think about how much he can accomplish in 4 short years.
The New Yorker sums up the story of Bain Capital and Holson Burnes HERE:
The owner of the plant was Holson Burnes Group, a maker of picture frames and photo albums, which was one of Bain Capital’s first acquisitions. In the late eighties, according to the A.P. story, South Carolina officials lured Holson Burnes to Gaffney with a package including $5 million in industrial bonds. The factory opened in 1988 and soon employed more than a hundred people. But in 1992, Holson Burnes closed it down, laying off about a hundred and fifty workers. Some of these jobs were moved to New Hampshire, but eventually Holson Burnes shifted most of its production overseas.
For Bain Capital and Romney, the investment in Holson Burnes proved a profitable, if relatively minor, venture. According to the Deutsche Bank prospectus, the buyout firm invested about $10 million in the company and realized about $23 million, making an annual return of about twenty per cent.
Boston.com has the details of the Bain Capital purchase of the Holson Burnes Group HERE:
Just as executives closed down operations here and sold its South Carolina factory to the Bic Corp., residents 900 miles away in Claremont, N.H., were preparing for the new jobs. The company said in spring 1992 that the expansion in Claremont “will allow us to focus our attention on our rapidly growing base” of products.
But the prospect of new jobs — similar to expectations in Gaffney — was short lived.
Within seven months, Holson Burnes began issuing furloughs to half its Claremont employees. Even if things looked up, the company told its workers, it would not rehire most of its clerical or managerial staff.
Exact numbers of layoffs were never announced. Some workers estimated that 85 to 100 employees were affected, telling the local Claremont Eagle Times that entire departments had been “decimated.”
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