|Questions Coming About Lost Jobs in Norwood?|
The Norwood workers were axed about two years after Romney's Bain Capital Inc., created Alliance Laundry Systems LLC in a $358 million buyout of Raytheon's commercial laundry business. The work in Norwood was shifted to a plant in Marianna, Florida where state officials offered a $600,000 economic development grant.
The Daily Bellwether has tracked down an 11-year-old Cincinnati Enquirer story by then business writer Cliff Peale that notes the elimination of the jobs by Bain Capital. The headline said "Alliance Laundry Shrinking Work Force" and mentioned that Norwood officials had not been told about the decision to fire the workers. In other words, Norwood and state economic development officials were kept in the dark and could not attempt to match Florida's incentive package. They had no opportunity to counter Florida's incentives, nor could they bid to keep the 130 jobs in Ohio. Romney has portrayed himself as a job creator throughtout his business career. But plant closings and lost jobs won't play well in Ohio, an industrial state that has suffered mightily as factories have shut down, moved South or shifted production to Asia. As the state's March 6 primary nears, there is going to be increasing discussion about private equity capitalism -- whether it creates huge financial benefits for a few at the top, or whether it gutpunches hourly workers and pushes them into unemployment lines.
There is no doubt that Bain Capital -- the venture capital firm Romney founded in 1984 -- owned Alliance Laundry LLC. Here's the company's 13-year-old news release announcing the purchase:
RIPON, Wis.--(BUSINESS WIRE)--May 5, 1998--Alliance Laundry Systems LLC announced today that it has completed the acquisition of Raytheon Commercial Laundry (RCL), the commercial laundry equipment manufacturing business of Raytheon Company (NYSE:RTNA)(NYSE:RTNB), for approximately $358 million.
Alliance Laundry Systems, headquartered in Ripon, Wisconsin, was founded by the senior management team of RCL and Bain Capital, Inc. of Boston, one of the nation's leading private equity firms, for the purpose of this acquisition. The new, privately held Company will be led by Tom L'Esperance, Chairman and Chief Executive Officer, and formerly President of RCL.
"We are pleased to complete this transaction and to join in partnership with Bain Capital," L'Esperance stated. "As our new name suggests, this is a continuing alliance of three of the premier brand names in our industry, Speed Queen(R), UniMac(R) and Huebsch(R). The new independent company is committed to maintaining its position of market leadership by offering superior quality products and innovative services and solutions."
Alliance Laundry Systems is the largest commercial laundry equipment manufacturer in North America, with plants in Ripon, Wisconsin; Marianna, Florida and Madisonville, Kentucky. Its products are marketed to coin stores, multi-family housing locations, and on-premise laundries and dry cleaners throughout the world. "This acquisition represents the next chapter in the success story of this business," said Jeff Brothers, Senior Vice President Sales and Marketing. "We have no plans to alter the strategies that have made the business successful." The Company does not anticipate any changes in employment levels as a result of this transaction.
Bain Capital's Managing Director, Edward Conard, added, "We are excited by the prospect of investing in Alliance Laundry Systems. This is a unique opportunity to partner with a strong management team, operating a well-established enterprise in a stable industry, with solid brand equity in its products."
Bain Capital, founded in 1984, is a private equity firm, which focuses on identifying companies where it can add value by committing the firm's capital, managerial expertise, and strategic planning capabilities. The firm manages over $2.0 billion in capital and to date has made over 100 equity investments. Bain Capital's portfolio currently consists of companies that generate revenues of approximately $10 billion.
CONTACT: Nicolazzo & Associates
Richard E. Nicolazzo, (617) 951-0000
Romney was in charge at Bain when Alliance Laundry was created. He left active management in 1999 to take over the Salt Lake City Winter Olympics. Romney remains a Bain shareholder and has a $250 million personal forture with Bain largely the source of his wealth. There seems to be little doubt that the Norwood plant was targeted for elimination quickly after the takeover. Alliance signed a one-year lease for the plant in early 2000 when it bought the operation from George Strike, then a partner in the Cincinnati Reds (Strike sold his Reds stake to Lindner in 2005). About three months after Alliance acquired the Norwood facility, the closing was announced in order to achieve "significant efficiencies."
Within five years, Alliance said it would shutter the Marianna, Florida plant -- the site where the Norwood jobs were sent. In October 2005, the company said it was taking those jobs to Wisconsin. More pain in a small town. The press release is available here. This time, 400 jobs were eliminated so that "efficiencies will be gained . . ."
While blue collar workers took in on the chin, Bain seems to have profited handsomely from the plant closings and job cuts. In January 2005, it sold its majority shares in Alliance Laundry for about $450 million to the pension fund for Ontario, Canada's teachers. That's a $92 million gain. Taxpayers helped the profits roll in in. And what is ironic is that Romney's venture capital firm leveraged government economic development aid to consolidate and move plans around the U.S. Alliance Laundry got $1.25 million in loans and grands from Wisconsin when it shifted the Florida work north. The aid package included $1 million in federal Community Development Block Grant money. When Romney complains about citizens getting government assistance, it might be prudent to remember his investment portfolio has benefited from taxpayer subsidies.