Lowry: Mitt Romney, vampire?

Mitt Romney went into the wrong line of work. If only he had been a lecturer in constitutional law, he wouldn't have a business record vulnerable to distortion by a desperate incumbent president.

Barack Obama's hands, in contrast, are clean. He taught at the University of Chicago Law School and didn't make the mistake of attempting to start, acquire or turn around companies. He has no business failures because he has no business successes — if you don't count selling books about himself to the adoring multitudes.

The president's re-election campaign is out with a scorching advertisement hitting Romney for one of Bain Capital's flops, a steel firm that it bought and that eventually went under. This is an instance, according to one of the former steelworkers appearing in the ad, of "vampire" capitalism. The nefarious Romney swooped down on the thriving company and drained it of its life force. If it were a business-school case study, it could have been authored by Bram Stoker.

Or so we're told. GS Industries is hardly the morality tale the Obama re-election campaign makes of it. Bain Capital, a private equity firm, didn't acquire the company to drive it into the ground for fun and profit. Bain wanted to make it work — despite its outdated equipment, union strife and punishing competition, foreign and domestic. Bain failed, but not for lack of trying over the course of seven years.

Soon after Bain acquired it in 1993, the steel company announced a $98 million plant modernization and merged with another firm to form, in the words of a Reuters report, "one of the largest mini-mill steel producers in the U.S."

This is a funny way to go about deliberately destroying a company. Bain loaded the firm up with debt and took out a dividend, but it reinvested part of the dividend in the operation. It reportedly spurned a potential offer to buy the firm around the end of 1997.

All the effort went for naught. The management proved incompetent. Cheap imports undercut prices. And the firm was unionized, a factor common to steel companies that couldn't survive the new low-cost environment.

GS went bankrupt in 2001 (two years after Romney left Bain, as it happens). It was a messy affair, with the U.S. Pension Benefit Guaranty Corp. picking up the pieces from the company's underfunded pension. Its experience wasn't unusual, alas. Dozens of steel companies died in the same period, including the iconic Bethlehem Steel. If the workers at GS had never heard the name Mitt Romney, there is still a good chance they would have been out of jobs.

Employment in the steel industry has undergone a historic contraction. From 1980 to the beginning of the new century, the steel industry in the United States lost more than half its workers. Japan and Germany also experienced declines in employment, as advances in productivity made it possible to produce more with fewer people. Far from causing this trend, Bain was trying to find a way to ride it out.

Where it failed with GS, it succeeded with Steel Dynamics. In the mid-1990s, Bain invested in and raised capital for the technologically innovative mini-mill that became one of the largest U.S. steel companies. It eventually sold its stake in 1999, making a massive return for its investors, while Steel Dynamics is now generating $6 billion in revenue and employing more than 6,000 people.

If this were a government-subsidized green-energy project rather than the inspired work of imaginative executives and sharp-eyed financiers, President Obama would have already given a celebratory speech at its plant.

Even if the Obama account of GS were fair (it's not), it's dishonest to discuss it without connecting it to Steel Dynamics and the larger context of private equity's role in American capitalism's creative churn. Cheap and unworthy, all that can be said for the attack on Bain is that it meets the standards of the Obama re-election campaign.