In Gaffney, S.C., Mitt Romney's Bain record clashes with campaign narrative

Mitt Romney campaigns Thursday at Cherokee Trikes & More in Greer, S.C. Nearby Gaffney has a history with Bain Capital.

New York Times

Mitt Romney campaigns Thursday at Cherokee Trikes & More in Greer, S.C. Nearby Gaffney has a history with Bain Capital.

GAFFNEY, S.C.

Gayle White's antiques shop was empty, just her and a million little cups, lamp shades and dusty postcards. The radio was tuned to Rush Limbaugh ranting against the Republican presidential candidates attacking Mitt Romney's business record.

"Nobody likes to fire anybody, but if you're going to make a business successful, sometimes you have to let people go," White said Tuesday, parroting Limbaugh. "It's not fun and nobody likes it, but it is capitalism. There's nothing wrong with capitalism."

That abstract view quickly fades into real-life experience in this small, economically struggling community. A company owned by Romney's private equity firm set up shop just outside Gaffney in 1988, with considerable government incentives, but closed four years later.

About 150 people lost their jobs as Romney and Bain Capital collected millions in profits. The history clashes with Romney's narrative as a successful businessman who can help turn around the economy.

"It makes me think twice about electing him for president," White said. "Some of these large companies, or investment firms like that one, can be pretty cruel."

The closing of the Holson plant, which made photo albums, had been mostly forgotten here, overshadowed by a succession of shuttered textile mills like the one White worked at making women's clothing. Now reporters and Romney's GOP rivals are scrutinizing his record as Bain's CEO and the past is on everyone's mind.

The reaction in Gaffney shows how Romney's business background, and its sometimes unpleasant details, could be a powerful factor as he tries to win the Jan. 21 South Carolina primary.

"I bet if Romney had to live here, he wouldn't have done it," said Tony Lipscomb, the owner of Harold's Restaurant who said he had been considering voting for Romney. "If that's his mind-set running a good business, then I don't think he's qualified."

Holson Co. was one of the world's premier makers of photo albums, and Bain acquired it in 1986, combining it with the Burnes picture frame company to form Holson Burnes.

In 1987, Holson announced it was relocating from Connecticut to Gaffney, pitching the South as a growth area. But it also got some sweeteners.

The Cherokee County Council authorized $5 million in industrial revenue bonds, and the governor handed out $200,000 in grants for water, sewer and electricity to the industrial complex on the outskirts of town.

After a year, Holson was talking about expanding operations. There were plans for a day care for workers, baseball diamonds and a running track.

But then came losses company officials attributed to the poor economy and changing consumer costs. Costs were slashed as the company, unbeknownst to the community or the roughly 150 people who worked there, was being prepared for sale.

Bain invested about $10 million in Holson Burnes and by 1992, when it pulled out of Gaffney, had earned roughly $22 million at an average rate of return that a Deutsche Bank financial prospectus said surpassed 20 percent, the Associated Press found.

A story in the Spartanburg Herald-Journal suggested the layoffs came with little notice.

"We had heard rumors, but we weren't sure," Margie Ratchford, 37, said at the time. "We heard they were going to close certain departments, not the whole thing."

Romney's campaign did not respond to a request for details about Holson, offering a broader response to the candidate's 25-year tenure with Bain.

"Bain Capital invested in many businesses; while not every business was successful, the firm had an excellent overall track record and created jobs," spokesman Ryan Williams said.

Romney says his work at Bain created about 100,000 jobs, a claim reporters have found hard to verify given the private nature of some records. In Greer, S.C., on Thursday, he acknowledged some job losses — "a few thousand" — but said his overall record was solid.

"I think any time a job is lost it's a tragedy," he said. "And every time that we invested in the business it was to try and encourage that business to have ongoing life. The idea of making a short-term profit actually doesn't really exist in business, because no one wants to buy something or buy stock in a company that's just going to be a short-term success."

Bain was always going to be an issue for Romney, but the fire was to come from Democrats, not Republicans. Rivals Newt Gingrich and Rick Perry landed in South Carolina this week with fists flying. Perry called him a "vulture capitalist;" Gingrich said Bain "looted" local businesses for profit.

A pro-Gingrich political committee has paid for a 30-minute, documentary-style video on Romney and the firm's alleged sins called the King of Bain.

On Thursday, the committee began airing 30- and 60-second TV ads in South Carolina featuring former workers. "A group of corporate raiders led by Mitt Romney. The company was Bain Capital. More ruthless than Wall Street," a narrator says.

The point resonates in Gaffney, where 12 percent unemployment exceeds the overall South Carolina rate of 9.9 percent.

Gaffney residents said they doubt Bain would have deliberately torpedoed a company.

"They may have thought they were going to do well and then didn't do well and took the money and ran. That's not totally right, but that is capitalism," said Lewis Dase, a 64-year-old retired government worker.

Still, he said it was wrong if the company exploited the community's generosity in the form of incentives.

"If he made a lot of money off it when it closed, that's not right," Dase said as he ate lunch at a diner down the road from the former plant, now owned by the Bic pen manufacturer.

Robert Weaver, the Cherokee County assessor, worked at Holson briefly during high school. He, too, likes Romney's business background but said the circumstances have made him reconsider.

"Was he just out there to make that buck? There's a lot of business folks out there that do care — I'm not saying he doesn't — about the community. But it gives me some concern," Weaver said. "As commander in chief, your responsibility is to make America strong, and that's with jobs."

At Ron's Jewelry, proprietor Vicki Irvin shrugged.

"It's not like everything he's touched has crumbled," she said. "I mean, we had some stocks last year that did well. We had some that didn't."

Mike Melton, who is director of special education for the school district, stepped into his brother's barbecue restaurant Tuesday and joined a discussion over Bain and the local economy.

"I see both sides," he said. "I'd have to know it was 10 million or 1 million the company made when the plant closed."

Someone mentioned the latest heartache in town: another wave of layoffs at a Freightliner truck chassis plant, which has been shifting jobs to Mexico.

"This county," Melton said, "we've taken a beating."

Times political editor Adam C. Smith contributed to this report.

About Gaffney, S.C.

. Population: 12,400

. Major industries: Nestle Corp.,
Timken Co.

. Unemployment rate: 12 percent
(Cherokee County)

. Known for: The Peachoid, a 150-foot-tall, 1 million gallon water tank shaped as a peach; two nearby Revolutionary War landmarks, Cowpens National Battlefield and Kings Mountain National Military Park.

Source: Times research, Gaffney visitors center

About Bain Capital

. A Boston-based private equity firm established in 1984 by Mitt Romney and William Bain Jr.

. Well-known companies it or its subsidiaries has invested in include AMC Entertainment, Burger King, Domino's Pizza, Dunkin' Donuts, the Sports Authority and Staples.

. As with other private equity companies, Bain also buys troubled companies, restructures them through layoffs and other cost-saving moves, then resells them for profit. From 1984 to 1999, with Romney as CEO, Bain acquired and sold about 150 companies.

. Romney left in '99 to rescue the Salt Lake City Olympic Games. The New York Times has reported that he negotiated a retirement agreement that has paid him a share of Bain's profits ever since, bringing the Romney family millions of dollars in income each year.

. Bain Capital now manages about $60 billion in assets.

In Gaffney, S.C., Mitt Romney's Bain record clashes with campaign narrative 01/12/12 [Last modified: Saturday, January 14, 2012 12:45am]

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