As Peek says, if Mitt Romney could articulate this story it would go a long way to helping him in his quest for the White House. Unfortunately for him, and perhaps for the country, Mr. Romney seems singularly unable or unwilling to defend himself by explaining to the public exactly what private equity firms actually do. His failure to do this is like George W. Bush redux.
Here's Peek's lede:
Eastman Kodak’s recent bankruptcy is a timely reminder of how sleepy managements can throw thousands out of work – and of the role private equity firms like Bain Capital have played in rescuing American companies. Kodak, the paternalistic giant, was blindsided by Fuji Photo decades ago and then by the rise of digital photography. The organizational structure was a mess.So how did firms like Bain change all this? Read Peek's account at the link. Why other candidates, specifically Newt Gingrich and the departed Rick Perry, both of whom claimed to be market conservatives, would criticize this sort of activity is difficult to understand. It makes them sound more like Occupy Wall Streeters:
At one time, while giant Canon was working with three different printer engines, Kodak was developing 66, so “silo-ed” was its operations. It is quite possible that outside investors like Bain Capital, with eyes uncluttered by past allegiances, could have saved Eastman Kodak – and at least some of the jobs that have been lost.
Mitt Romney’s campaign has failed to make that point. What was his campaign staff thinking? How could they be caught flat-footed by Newt Gingrich’s attacks on the candidate’s business career, his prime credential in the race to unseat President Obama? Supporters have been shocked that Romney has not countered criticisms of his experience at Bain Capital -- an appalling lapse that cost him South Carolina and has him now trailing in Florida. While others have spoken up for private equity investing, the campaign remains mute. Romney needs to tell the story that will resound with voters -- the story of America’s reboot.
During the ‘70s....upstart foreign competitors (mostly from Japan) were gobbling up market share. More alarming, the newly visible rivals were selling a better product. Quality control programs embraced by Japanese steel, auto and machinery producers meant a vast reduction in reject rates; they were not succeeding because of price alone. They delivered better value.
Some of our better managed companies (Caterpillar, Deere) rallied to this increased competition; others – including auto companies situated far from the California docks where Toyotas rolled off ships in the thousands -- didn’t have a clue. When OPEC sharply jacked up oil prices, the trickle of economical Toyotas and Hondas into the U.S. became a torrent. In 1965 the U.S. imported 25,538 cars from Japan. By 1975, that figure had soared to 695,573; a decade later, we imported 2.5 million automobiles from Japan – a 100-fold jump in 20 years. By contrast, sales of U.S.-made cars and trucks actually dropped between 1965 and 1985 – from 8.8 million to 8.2 million.
Similarly, Japanese steel producers clobbered U.S. manufacturers in the 1970s, producing cheaper and higher-quality products in modernized plants built after World War II. By the late 1970s our domestic industry was in trouble; five companies received $300 million in loan guarantees from the Carter administration. Later presidents tried to help the industry’s long decline by imposing import quotas (Reagan) and offering loan guarantees (Clinton) to no avail.