Mitt Romney Endeavors To Explain His Outsourcing & Offshoring Agenda To American Working Families
Wait! I titled this post incorrectly. Romney's not explaining anything to anyone. (CEO's rarely do; they feel they're entitled to blind obedience and knee jerk allegiance. After all, they sign the bonus checks.) Romney's actions as head of Bain speak for themselves. He profited immensely by sending good middle class manufacturing jobs to backwards low-wage countries without environmental or labor safeguards. Anything for a buck-- even the destruction of the American middle class. OK, that's the right-wing mindset... but them to expect working families and middle class voters to support your bid for the presidency? And based on a platform that would encourage even more of this economic mayhem? That's taking CEO entitlement to new
Romney would probably like to make hamburger out of the Washington Post reporter who reported his role in sending Americans jobs overseas. Romney's surrogates' hemming and hawing on the differences between outsourcing and off-shoring are almost comic... but more scary than funny. The rest of Romney's presidential campaign will be haunted by these words:
During the nearly 15 years that Romney was actively involved in running Bain, a private equity firm that he founded, it owned companies that were pioneers in the practice of shipping work from the United States to overseas call centers and factories making computer components, according to filings with the Securities and Exchange Commission.
Romney can yell and scream and demagogue against China all he wants now, but he has a long and disgraceful record of dismantling American companies and sending thousands and thousands of jobs to China, India and Mexico, while filling his offshore Swiss and Cayman Island bank accounts with millions of dollars in blood money. Speaking about China at a Toledo, Ohio fence factory a few months ago, the right-wing hypocrite told workers “They’ve been able to put American businesses out of business and kill American jobs. If I’m president of the United States, that’s going to end.”
[A] Washington Post examination of securities filings shows the extent of Bain’s investment in firms that specialized in helping other companies move or expand operations overseas. While Bain was not the largest player in the outsourcing field, the private equity firm was involved early on, at a time when the departure of jobs from the United States was beginning to accelerate and new companies were emerging as handmaidens to this outflow of employment.
Bain played several roles in helping these outsourcing companies, such as investing venture capital so they could grow and providing management and strategic business advice as they navigated this rapidly developing field.
Over the past two decades, American companies have dramatically expanded their overseas operations and supply networks, especially in Asia, while shrinking their workforces at home. McKinsey Global Institute estimated in 2006 that $18.4 billion in global information technology work and $11.4 billion in business-process services have been moved abroad.
...Until Romney left Bain Capital in 1999, he ran it with a proprietor’s zeal and attention to detail, earning a reputation for smart, hands-on management.
Bain’s foray into outsourcing began in 1993 when the private equity firm took a stake in Corporate Software Inc., or CSI, after helping to finance a $93 million buyout of the firm. CSI, which catered to technology companies like Microsoft, provided a range of services including outsourcing of customer support. Initially, CSI employed U.S. workers to provide these services but by the mid-1990s was setting up call centers outside the country.
...Two years after Bain invested in the firm, CSI merged with another enterprise to form a new company called Stream International Inc. Stream immediately became active in the growing field of overseas calls centers. Bain was initially a minority shareholder in Stream and was active in running the company, providing “general executive and management services,” according to SEC filings.
By 1997, Stream was running three tech-support call centers in Europe and was part of a call center joint venture in Japan, an SEC filing shows. “The Company believes that the trend toward outsourcing technical support occurring in the U.S. is also occurring in international markets,” the SEC filing said.
Stream continued to expand its overseas call centers. And Bain’s role also grew with time. It ultimately became the majority shareholder in Stream in 1999 several months after Romney left Bain to run the Salt Lake City Olympics.
Bain sold its stake in Stream in 2001, after the company further expanded its call center operations across Europe and Asia.
The corporate merger that created Stream also gave birth to another, related business known as Modus Media Inc., which specialized in helping companies outsource their manufacturing. Modus Media was a subsidiary of Stream that became an independent company in early 1998. Bain was the largest shareholder, SEC filings show.
Modus Media grew rapidly. In December 1997, it announced it had contracted with Microsoft to produce software and training products at a center in Australia. Modus Media said it was already serving Microsoft from Asian locations in Singapore, South Korea, Japan and Taiwan and in Europe and the United States.
Two years later, Modus Media told the SEC it was performing outsource packaging and hardware assembly for IBM, Sun Microsystems, Hewlett-Packard Co. and Dell Computer Corp. The filing disclosed that Modus had operations on four continents, including Asian facilities in Singapore, Taiwan, China and South Korea, and European facilities in Ireland and France, and a center in Australia.
“Technology companies, in particular, have increasingly sought to outsource the business processes involved in their supply chains,” the filing said. “.?.?. We offer a range of services that provide our clients with a one-stop shop for their outsource requirements.”
According to a news release issued by Modus Media in 1997, its expansion of outsourcing services took place in close consultation with Bain. Terry Leahy, Modus’s chairman and chief executive, was quoted in the release as saying he would be “working closely with Bain on strategic expansion.” At the time, three Bain directors sat on the corporate board of Modus.
The global expansion that began while Romney was at Bain continued after he left. In 2000, the firm announced it was opening a new facility in Guadalajara, Mexico, and expanding in China, Malaysia, Taiwan and South Korea.
In addition to taking an interest in companies that specialized in outsourcing services, Bain also invested in firms that moved or expanded their own operations outside of the United States.
One of those was a California bicycle manufacturer called GT Bicycle Inc. that Bain bought in 1993. The growing company relied on Asian labor, according to SEC filings. Two years later, with the company continuing to expand, Bain helped take it public. In 1998, when Bain owned 22 percent of GT’s stock and had three members on the board, the bicycle maker was sold to Schwinn, which had also moved much of its manufacturing offshore as part of a wider trend in the bicycle industry of turning to Chinese labor.
In the past I've written about Bain's role in the destruction of Warner Bros. Records, which was eventually sold off to the Russian Mafia as a money laundering operation. Perhaps Joni Mitchell, Lou Reed, Wilco and other vital American artists were dropped... at least Mitt Romney was able to deposit even more money into his Swiss and Cayman Islands bank accounts. And how does he respond to all these charges against him? Igor Volsky wasn't writing satire yesterday when he explained:
Mitt Romney’s campaign is responding to evidence that Bain Capital invested in companies that sent American jobs overseas by accusing the Obama administration of “outsourcing” telemarketing jobs to Omaha, Nebraska.
During an appearance on CNN’s State of the Union, Romney adviser Ed Gillespie continued the campaign’s dubious strategy of schooling reporters on the difference between “outsourcing” and “offshoring” jobs, insisting that a Washington Post investigation-- which found that Romney’s company “invested in a series of firms that specialized in relocating jobs done by American workers to new facilities in low-wage countries like China and India”-- misunderstood the complicated business jargon.
Gillespie said that he was “not aware” if companies tied to Bain shipped jobs overseas, before adding, “what happened in the story as near I can tell is that the reporter confused the notion of outsourcing.” “Now a lot of American companies outsource, they outsource domestically,” he said, noting that the Obama campaign outsources jobs to Nebraska and CNN contracts out video editing projects.
Pressed by host Candy Crowley, Gillispie seemed to deny that the companies featured in the Post story set up operations in foreign countries, but suggested that some of the firms Bain invested in did, in fact, ship jobs overseas:
CROWLEY: But your statement today that those companies, while he was head of Bain, did not outsource jobs?
GILLESPIE: In the Washington Post article, which is what we went back and looked at, no.
CROWLEY: So those specific companies, but there might be other companies…
GILLESPIE: Those specific companies are the ones we checked because that was the story and again I would encourage you to have the Washington Post reporter on and see if they can demonstrate to you or to the American voters the validity of the headline that was on that story, because like I say it was a breathless headline, but a baseless story.
But as well as the Washington Post is learning just who Mitt Romney really is, no set of journalists know better what a sleazebag he's always been than the Boston Globe. Yesterday they raised the Post one by breaking a story on Romney's dealings with notorious junk-bond king Michael Milken.
What transpired would become not just one of the most profitable leveraged buyouts of the era, but also one of the most revealing stories of Romney's Bain Capital career. It showed how he pivoted from being a relatively cautious investor to risking his reputation for a big payoff. It is one that Romney has rarely, if ever, mentioned in his two bids for the presidency, perhaps because the Houston-based department store chain that Bain assembled later went into bankruptcy.
But what distinguishes this deal from the nearly 100 others that Romney did over a 15-year period was his close work with Milken's firm, Drexel Burnham Lambert Inc. At the time of the deal, it was widely known that Milken and his company were under federal investigation, yet Romney decided to go ahead with the deal because Drexel had a unique ability to sell high-risk, high-yield debt instruments, known as "junk bonds."