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. 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. …

The truth began to dawn: U.S. companies had gone soft. They were increasingly uncompetitive and stuffed with excess costs. The door to change was opened and, with the assist of a depressed stock market, in walked the so-called corporate raiders. Their objective was to buy fat but enduring firms with largely borrowed funds, trim the excess and ultimately sell back to the public a leaner more profitable company. Sometimes this was done with the cooperation of management, sometimes not.

Between 1979 and 1989, there were over 2,000 leveraged buyouts worth more than $250 billion. Kohlberg, Kravis, Icahn, Peltz, Pickens, Bass and many others played the game. Wilbur Ross stepped into the all-but defunct steel industry and bought LTV Steel, Bethlehem and certain other companies which he combined to make the International Steel Group. By renegotiating pensions, cutting the workforce and changing union work rules, Ross kept the companies alive.