Kansas City’s GST Steel was a successful company that had been making steel rods for 105 years when Mitt Romney and his partners took control in 1993. They cut corners and extracted profit from the business at every turn, placing it deeply in debt. When the company eventually declared bankruptcy, workers were denied their full pensions and health insurance, and the federal government was forced to step in and bail out the pension fund.
1993Mitt Romney and his partners invest $8 million to acquire majority control of an Armco steel mill in Kansas City, Missouri, and rename it GS Technologies
“Bain got its money back quickly. The new company issued $125 million in bonds and paid Bain a $36.1 million dividend in 1994.”
Reuters, 1/6/121995Romney and his partners merge GS Technologies with a mill in South Carolina, calling the new company GS Industries. The company’s total debt grows to $378 million.
“In 1997, with Armco's pension guarantees set to expire in one year, the United Steelworkers local at the Kansas City plant was worried that GS was not setting aside enough money to cover pension obligations and other benefits in the event of a shutdown.”
Reuters, 1/6/12—James Sanderson, who had worked at the mill since 1974McClatchy, 1/14/12We were doing well and then Bain Capital bought us and they took everything they could out of the company without making the investments we needed to stay competitive. … They ran the company into bankruptcy.
2001With more than $500 million in debt, GS Industries files for bankruptcy and informs workers that the company will not honor the guarantees it had promised them—including severance pay, health insurance, life insurance and pension supplements.
—Joe Soptic, employee for 28 years, whose wife died of lung cancer after he lost his GST health planReuters, 1/6/12I worked hard all my life and played by the rules, and they allowed this to happen.
2002The U.S. Pension Benefit Guaranty Corporation determined that GST had underfunded its pension plan by $44 million. The federal agency stepped in to cover the basic pension payments, but workers never recovered the full pensions they had been promised.
Even with the bankruptcy and subsequent bailout, Mitt Romney and his partners made millions on the GST Steel deal. They played by their own set of rules, and profited even as workers lost their jobs and the local community suffered.
It’s this same experience that Mitt Romney now cites as his qualification to be president, and the same economic philosophy he would bring to the entire country.