In case you’re wondering if I hold Mitt Romney responsible for the decline of the cable-box-repair company Contec and the loss of hundreds of jobs in Schenectady, the answer is, I do not. Contec would probably have laid off all those workers over the years and filed for Chapter 11 bankruptcy protection the other day even if Mitt Romney had never been born.
I do remember when Contec, already employing 200 people, broke ground for a new expanded plant at the corner of State Street and Brandywine Avenue back in the year 2000, and I remember the flush in the cheek of city officials.
Contec seemed to be just what the urban-revitalization doctor ordered — a company that hired and trained people with few job skills, most of them ethnic minorities, from the poorer neighborhoods of the city. The pay was not great, but the benefits were good, and the work was steady.
For so-called equity firms like Bain Capital, however, it was just another poker chip, just a mechanism for gambling, really. You buy it, you sell it, you trade it, you do with it what needs to be done to make a buck, and you keep moving.
Bain Capital, Romney’s old outfit, bought it in 2008 from Maryland-based American Capital, which in turn had bought it in 2006 from Rhode-Island-based Nautic Partners, which had owned it for only a year.
American reported at the time that it made $57 million on the sale and recorded $98 million in profit during its two years of holding it, none of which, I’m bound to note, had anything to do with that tiresome saw “creating jobs.”
Bain had a new way to play the chip — sack the Schenectady workers and farm out the repair work to Matamoros, Mexico, just across the border from Brownsville, Texas, for which purpose it built a plant there five times the size of the Schenectady plant. That was three years ago.
Gone was the flush in the cheek of Schenectady officials. I myself remembered the $780,000 put up by the Metroplex Authority out of sales tax receipts to help Contec expand, with only $300,000 of that to be repaid, but I was diplomatic enough to say nothing about it. Getting suckered on such deals is too common to make a lot of noise about.
Contec did leave behind 85 “corporate support” employees in Schenectady, after cashiering several hundred repair workers, so it was not a total loss.
I don’t know when Mitt Romney left Bain. He says he left in 1999 and had no role after that, but the company’s filings with the Securities and Exchange Commission continued to list him as the company’s “sole shareholder, sole director, chief executive officer and president” for the next two years.
In any event, he was gone by the time Bain picked up Contec and shifted its work to Mexico and then went on to file for protection from bankruptcy.
But I don’t see that that matters. It was the same game that he played, the game of make a buck as fast as you can and keep moving. Buy a company, gut it, reconfigure it, merge it with something else, do whatever you need to do, then sell it for a profit if everything goes right.
I think it’s something that a candidate for public office ought to keep quiet about. It seems hardly a qualification for running a government, no matter how good he might have been at it, but that shows how little I know.
A large part of the country seems to believe that “what we need is a businessman” to run things, and the theme keeps recurring. Not too long ago it was Ross Perot who embodied it — a guy who made millions selling data-processing services to the government. Now it’s Buy-It-‘n’-Flip-It Mitt.
After these past few years of being flipped, Contec Holdings now lists $500 million in debts as against $100 million in assets, so the game seems to have played out with that particular chip. Too bad for Schenectady.
I tried to inquire of Contec how things are going at what remains of the Schenectady operation, but an alleged spokesperson did not get back to me, so I don’t know. Maybe I should have called Matamoros.
Anyway, it’s just one small example of the glories of a free market and the entrepreneurial spirit that made this country great.