Romney's role at failed Bain-owned supplier challenged
Photo credit: Bloomberg
DETROIT -- Defunct auto supplier Cambridge Industries got ensnared this week in the Obama campaign's recent attacks on Republican Mitt Romney over his time at Bain Capital.
And while Bain, the investment firm Romney helped create in the 1980s, was the majority shareholder in the company, a top executive at Cambridge at the time said he never met Romney.
"Mitt Romney wasn't even there," said Donald Campion, then Cambridge CFO, in an interview Friday.
The Obama campaign highlighted Cambridge as an example of a company that suffered job losses because of investment decisions made by Bain Capital, which as Cambridge's majority shareholder took the firm into bankruptcy in 2000.
Bain decided in November 1999 not to inject more cash into Cambridge. With $459.7 million in debt, Cambridge entered Chapter 11 bankruptcy in May 2000 and was sold to Meridian Automotive Systems Inc. that July.
After the sale, Meridian eliminated more than 1,000 jobs, according to reports this week. But Romney left Bain in February 1999 to lead the Salt Lake City Olympic Organizing Committee.
The Obama campaign used those job losses as part of its recent assault on Romney and his ties to Bain, even creating www.romneyeconomics.com to link Romney to debt and job losses caused by Bain.
Campion joined Cambridge in May 1999 to help turn around the company.
Bain bought 39 percent of the company in 1995, becoming a majority shareholder in 1997. The Obama campaign alleges that Bain "went on an 'aggressive acquisition binge' racking up hundreds of millions of dollars in debt and laying off hundreds of workers, while paying itself millions of dollars in management fees," according to a report in The Detroit News.
Cambridge paid Bain at least $9.9 million in fees, while adding $278 million debt, the Obama campaign claims, the News reported.
Campion said Bain has some of the "smartest and savviest" investors in the world, and criticized the Obama campaign for dragging the Cambridge saga into the campaign. He noted that Bain, along with Richard Crawford, Cambridge's founder and only other shareholder, mutually decided to sell the supplier.
"It's unfair to cherry pick," Campion said.
When reached by telephone on Friday, Crawford's assistant said he was out of the country on vacation and unable to comment.
In 2000, Crawford, CEO of the Crawford Group, an investment firm that he founded, told Plastics News, an affiliate of Automotive News, that he had a history of purchasing "three-legged, one-eyed dog" companies, many of whom were losing millions of dollars annually, and turning them around.
In a 1995 interview with Plastics News, after Bain made its initial investment in the company, Crawford said the Boston-based firm would allow Cambridge to continue its role as a "consolidator," adding that Bain provided a "tremendous depth of resources."
Private sector credibility?
Obama has been criticized by Democrats and Republicans for his persistent focus on Romney's time at Bain, but speaking in Chicago on Monday, Obama said the private equity firm should be an issue in the fall campaign.
"If your main argument for how to grow the economy is 'I knew how to make a lot of money for investors,' then you're missing what this job is about," Obama said.
In an interview with TIME magazine this week, the presumptive Republican presidential nominee defended his record, and countered Obama's claims that his experience in the private sector made him unqualified to be president.
"You learn through life's experience. The President's experience has been exclusively in politics and as a community organizer," Romney said. "Both of those are fine areas of endeavor, but right now we have an economy in trouble, and someone who spent their career in the economy is more suited to help fix the economy than someone who spent his life in politics and as a community organizer."
You can reach Joseph Lichterman at email@example.com.