Mitt Romney: Learn to Love Bankruptcy.

Son of auto exec and venture capitalist Mitt Romney says don't bail out Detroit.

But as Walter Reuther, the former head of the United Automobile Workers, said to my father, “Getting more and more pay for less and less work is a dead-end street.”

The need for collaboration will mean accepting sanity in salaries and perks. At American Motors, my dad cut his pay and that of his executive team, he bought stock in the company, and he went out to factories to talk to workers directly. Get rid of the planes, the executive dining rooms — all the symbols that breed resentment among the hundreds of thousands who will also be sacrificing to keep the companies afloat.

Good for dad. But as this story reminds us, Mitt made money "buying up companies and cashing out within three to five years, often after closing factories or laying off workers to beef up the bottom line."

A typical example of Bain's approach was its experience with another office-supply company called Ampad, which it acquired in 1992. In 1993, the company had $11 million in debt; by 1999, that number had grown to nearly $400 million, and the firm eventually declared bankruptcy. But despite Ampad's failure, Bain made a fortune, raking in more than $100 million while driving the company into the ground and destroying hundreds of jobs in places like New York (where 185 people were thrown out of work in a plant closing near Buffalo) and Indiana (where the firm fired 200 workers from a paper factory).

Maybe Reuther meant to say: “Getting more and more pay for less and less work is a one-way street.”

Comments

[Jim]

As a kid who grew up in Michigan, even 400 miles from Detroit, I can't help but know and be related to lots of people who spent their careers in the auto industry.

One recent Ford retiree I know well was able to earn $130k a year, plus benefits. Near as I can tell from his stories, he spent a lot of time at work filing grievances with the UAW and generally avoiding the productive work that contributes to the company's bottom line. Another acquaintance worked for GM for years, during which time many expensive tools came home in his lunchbox. His more clever thefts were apparently the crowning achievements of his career, to hear him talk about it.