Mitt Romney's Company Played Major Part in Shipping American Jobs Overseas

[libby]

 From the front page of today's Washington Post:

Romney's Bain Capital invested in companies that moved jobs overseas

By Tom Hamburger, Published: June 21, 2012

Mitt Romney's financial company, Bain Capital, 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.

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.

While economists debate whether the massive outsourcing of American jobs over the last generation was inevitable, Romney in recent months has lamented the toll it's taken on the U.S. economy. He has repeatedly pledged he would protect American employment by getting tough on China.

"They've been able to put American businesses out of business and kill American jobs," he told workers at a Toledo fence factory in February. "If I'm president of the United States, that's going to end."
Speaking at a metalworking factory in Cincinnati last week, Romney cited his experience as a businessman, saying he knows what it would take to bring employers back to the United States. "For me it's all about good jobs for the American people and a bright and prosperous future," he said.
For years, Romney's political opponents have tried to tie him to the practice of outsourcing American jobs. These political attacks have often focused on Bain's involvement in specific business deals that resulted in job losses.

But 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.

While the export of jobs has been disruptive for many workers and communities in the United States, outsourcing has been a powerful economic force. It has often helped lower the prices that American consumers pay for products and created a global supply chain that has made U.S. companies more nimble and profitable.

Romney campaign officials repeatedly declined requests to comment on Bain's record of investing in outsourcing firms during the Romney era. Campaign officials have said it is unfair to criticize Romney for investments made by Bain after he left the firm but did not address those made on his watch. In response to detailed questions about outsourcing investments, Bain spokesman Alex Stanton said, "Bain Capital's business model has always been to build great companies and improve their operations. We have helped the 350 companies in which we have invested, which include over 100 start-up businesses, produce $80 billion of revenue growth in the United States while growing their revenues well over twice as fast as both the S&P and the U.S. economy over the last 28 years."

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.
Another Bain investment was electronics manufacturer SMTC Corp. In June 1998, during Romney's last year at Bain, his private equity firm acquired a Colorado manufacturer that specialized in the assembly of printed circuit boards. That was one of several preliminary steps in 1998 that would culminate in a corporate merger a year later, five months after Romney left Bain. In July 1999, the Colorado firm acquired SMTC Corp., SEC filings show. Bain became the largest shareholder of SMTC and held three seats on its corporate board. Within a year of Bain taking over, SMTC told the SEC it was expanding production in Ireland and Mexico.

In its prospectus that year, SMTC explained that it was in a strong position to meet the swelling demand from other manufacturers for overseas production of circuit boards. The company said that communications and networking companies "are dramatically increasing the amount of manufacturing they are outsourcing and we believe our technological capabilities and global manufacturing platform are well suited to capitalize on this opportunity."

Just as Romney was ending his tenure at Bain, it reached the culmination of negotiations with Hyundai Electronics Industry of South Korea for the $550 million purchase of its U.S. subsidiary, Chippac, which manufactured, tested and packaged computer chips in Asia. The deal was announced a month after Romney left Bain. Reports filed with the SEC in late 1999 showed that Chippac had plants in South Korea and China and was responsible for marketing and supplying the company's Asian-made computer chips. An overwhelming majority of Chippac's customers were U.S. firms, including Intel, IBM and Lucent Technologies.

A filing with the SEC revealed the promise that Chippac offered investors. "Historically, semiconductor companies primarily manufactured semiconductors in their own facilities," the filing said. "Today, most major semiconductor manufacturers use independent packaging and test service providers for at least a portion of their . . . needs. We expect this outsourcing trend to continue."
Research editor Alice Crites contributed to this article.
© The Washington Post Company

[The Troll]

    I knew, I knew, I knew.      I told everybody, I told everybody       It's true facts, It's true facts.   

  But do the Republican Sheeple care, do the Republican Sheeple care.           Do they give a damn, do they give a damn. 

  And the Republicans can't blame Golden Mittens or George W. for it.      They were in a coma a deadly coma for eight, 8 long, long, long years.  They don't know what happen during those 8 long, long, long years.  When the Republican Party with the help of numb nuts George W. Bush broke the nation, the United States of America.  If I was religious, I would say God bless America. 

[libby]

 

[libby]

I'm sure the news about Romney's involvement in moving American jobs overseas was overshadowed by the Sandusky trial verdict, but Obama's camp saw it and was quick to take advantage of it. Here's the follow-up from today's Washington Post:


Obama cites Washington Post story on Bain outsourcing to criticize Romney

By David Nakamura, Published: June 22, 2012

TAMPA — President Obama seized on a published news report on Friday to launch a new attack on Republican challenger Mitt Romney, accusing the former businessman of outsourcing jobs to foreign countries during his successful run as the head of a private equity firm.

Obama cited a Washington Post story published Friday that reported that Bain Capital, the firm co-founded by Romney, had invested in companies that specialized in sending jobs abroad to facilities in low-wage countries such as China and India. The president contrasted the story with his proposals — not yet approved by Congress — to give tax cuts to U.S. companies that bring jobs back from overseas.

"Today, it was reported in The Washington Post that the companies his firm owned were 'pioneers' in the outsourcing of American jobs to places like China and India — pioneers!" Obama told a crowd of 2,500 at Hillsborough Community College. "Tampa, we do not need an outsourcing pioneer in the Oval Office. We need a president who will fight for American jobs and fight for American manufacturing. That's what my plan will do. That's why I'm running for a second term as president of the United States."

Earlier Friday, the Romney campaign sharply criticized the Post report. Romney spokeswoman Andrea Saul called it a "fundamentally flawed story that does not differentiate between domestic outsourcing versus offshoring nor versus work done overseas to support U.S. exports."

Saul continued: "Mitt Romney spent 25 years in the real world economy so he understands why jobs come and they go. As president, he will implement policies that make it easier and more attractive for companies to create jobs here at home. President Obama's attacks on profit and job creators make it less attractive to create jobs in the U.S."

The Post article described investments made by Bain Capital in firms that specialized in relocating jobs done by American workers to new facilities in low-wage countries.
The article, citing filings with the Securities and Exchange Commission, detailed investments made by Bain in six companies that either provided overseas outsourcing help to American companies or moved or expanded their own operations outside the United States. Mostly, these involved overseas call centers and factories making computer components.

After Obama's speech in Tampa, the Romney campaign issued another statement, saying Obama "continued to talk about anything but his record on the economy."
Before the article was published, the Romney campaign declined requests for comment.

© The Washington Post Company

[The Troll]

  Well the child molester a great Republican backer is going to jail for life.  Maybe he can get a cell with Bernie Madoff who was another Republican supporter and they can talk about the good old day when they stuck it in everyone's butt.  Now the Golden Mitten can hide, the golden stick man must walk or burn. 

  I'm telling all Republicans, if you can't do the time, then don't do the crime.   

[me]

http://factcheck.org/2012/07/factcheck-to-obama-camp-your-complaint-is-all-wet/


Home • The FactCheck Wire • FactCheck to Obama Camp: Your Complaint is All Wet
FactCheck to Obama Camp: Your Complaint is All Wet
Posted on July 2, 2012
Bookmark and Share

The Obama campaign complains that we got a key fact wrong in our June 29 article, "Obama's 'Outsourcer' Overreach." We strongly disagree. We find the Obama campaign's evidence to be weak or non-existent, and contrary to statements Romney has made on official disclosure forms under pain of federal prosecution.

The Obama complaint claims we erred in saying Mitt Romney gave up active management of Bain Capital in early 1999 to run the 2002 Winter Olympics, insisting we were then wrong in saying Romney was not responsible for shipping U.S. jobs overseas.

In fact, if the Obama campaign were correct, Romney would be guilty of a federal felony by certifying on federal financial disclosure forms that he left active management of Bain Capital in February 1999.

And after reviewing evidence cited by the Obama campaign, we reaffirm our conclusion that Romney left the helm of Bain Capital when he took a leave of absence in 1999 to run the Salt Lake City Organizing Committee for the 2002 Winter Olympics – as he has said repeatedly — and never returned to active management. The Obama campaign's recent ads thus mislead when they point to investments made by Bain, as well as management decisions made by companies in which Bain invested, after that time.

The Obama campaign's objections are contained in a six-page letter sent to us (and  — without notice to us — to other news organizations as well). It cobbles together selective news snippets and irrelevant securities documents in an attempt to show that Romney was still running Bain Capital on a part-time basis while he was also running the Olympics committee.

In a nutshell, the Obama campaign is all wet on this point.

Romney Committing Felonies?

If the Obama campaign is correct, then Romney is guilty of lying on official federal disclosure forms, committing a felony.  But we don't see evidence of that.

Here's what Romney has said:

    Mitt Romney Public Financial Disclosure Report, Aug. 11, 2011: Mr. Romney retired from Bain Capital on February 11, 1999 to head the Salt Lake Organizing Committee. Since February 11, 1999, Mr. Romney has not had any active role with any Bain Capital entity and has not been involved in the operations of any Bain Capital entity in any way.

Romney's signature appears on the line that states: "I certify that statements I have made on this form and all attached schedules are true, complete and correct to the best of my knowledge."

Making false statements to the federal government is a serious crime (under 18 USC 1001) carrying possible fines and up to five years in federal prison. But we don't see that the Obama campaign has come close to showing that Romney has committed any such crime.

Romney is supported by the current management of Bain. We re-checked with Bain spokesman Alex Stanton, who released a statement about Romney's departure date:

    Bain Capital, July 2: Mitt Romney retired from Bain Capital in February 1999. He has had no involvement in the management or investment activities of Bain Capital, or with any of its portfolio companies since that time.

Where's the Evidence?

So what does the Obama campaign have in rebuttal? Very little, and none of it convincing in our judgment.

Much of the Obama campaign's letter is devoted to quoting portions of documents filed with the Securities and Exchange Commission. In summary, the letter states there are "at least 63 filings with that agency after March 1, 1999 that list various Bain entities and describe them as 'wholly owned by W. Mitt Romney.'" That's true, but not relevant.

We have never disputed that Romney remained the owner of Bain while he was running the Olympics committee. The issue always has been, who was running Bain? Nothing in the SEC documents contradicts what Romney has certified as true.

On that point, the Obama campaign cites snippets of a few news clippings to make a case that Romney was still a part-time manager of Bain after he left to run the Olympics. But a close reading shows these news accounts don't contradict Romney either.

For example, the Obama letter quotes from a Boston Herald story ("Romney looks to restore Olympic Pride") that cites a partial quote from Romney saying that he intended to stay on at Bain as a part-timer. Here's the quote in a fuller context.

    Boston Herald, Feb. 12, 1999: Romney said he will stay on as a part-timer with Bain, providing input on investment and key personnel decisions. But he will leave running day-to-day operations to Bain's executive committee.

First, the Obama campaign simply ignores Romney's stated intent to "leave running day-to-day operations" to others. And in any case, Romney's statement that he would remain a "part-timer" is merely a statement of intent, issued just as he was leaving for the Olympics job and before he knew how much time it would consume. It is not evidence of what actually happened.

And as to what happened later, the evidence is clear. According to an Associated Press story that ran just two months later, Romney quickly discovered that he was working 16-hour days on the Olympics, leaving no time for Bain (or even his own wedding anniversary).

The AP story (which we retrieved from the Nexis database) began this way:

    The Associated Press, April 4, 1999: Sixty days ago, Mitt Romney was preparing to take time off work — one week a month — so he could travel with his wife while her health would still allow it. Now, he can't even get free for their 30th anniversary celebration, and the trip to Hawaii for her 50th birthday has been canceled.

    "I have a lot to learn, and a lot to catch up on. So I am going full-bore," says Romney, who has been working 16-hour days, seven days a week. "It is a more intense experience than I had anticipated."

    His wife, Ann, is more blunt: "It's like he walked into an empty elevator shaft."

The AP story goes on to say that Romney "immersed himself in books on sports management" and "has answered about two dozen e-mails and letters a day, spent a quarter of his time dealing with the media, and juggled meeting requests from city officials, board members and business owners."

It also quotes an accountant friend who was assisting Romney, Bob White, as saying "Right now he's doing two, maybe three full-time jobs" running the Olympics.  Romney's wife, Ann, is quoted as saying that her husband had been working 112 hours a week at first, causing her to move to Salt Lake City to be with him. Since her arrival, she said, he had cut his Olympics work to 84 hours a week.

The Obama campaign's letter says a reporter learned in a 2000 interview with Ann Romney that her husband was "dividing his time between running Bain and running the Olympics," but in fact those words don't appear in the news clip it cites.

The Nov. 11, 2000 Boston Globe story (which we read in full via Nexis) paraphrases Ann Romney this way: "The [Olympics] project is running smoothly now, though still requiring so much of Mitt Romney's time that he has had to lessen his involvement with Bain Capital, his investment firm." And he did indeed "lessen" his involvement, giving up all management control according to what he has certified repeatedly. The Globe story goes on to quote Ann Romney as saying the couple is still living in Salt Lake City and that "[w]e're still coming home [to Boston] for Thanksgiving." Nowhere is she quoted as saying he has spent any time managing Bain.

Similarly, the Obama campaign cites a Washington Post story from 2007 that quotes a Romney lawyer, R. Bradford Malt, as saying that he "finally resigned and reduced his role at the company to that of a passive investor in 2001." That's true, but we read that to mean only that Romney went from being an absentee owner to being a passive investor. Nowhere was Malt quoted as saying Romney took any active role in managing Bain after leaving to run the Olympics.

And just to be sure, we checked with Malt. He said:

    R. Bradford Malt, July 2: After leaving Bain Capital in February 1999, Mitt Romney devoted 100% of his time and energy to the overwhelming task of rescuing the Winter Olympics, which were in a state of disarray when he took the job. Because of the demands of this job, Mr. Romney was not involved in the management or activities of Bain Capital or any of its portfolio companies in any way.

    When it became clear that he would not be returning to Bain Capital, Mr. Romney entered into a retirement agreement formalizing transfer of control based on his February 1999 separation date from Bain Capital.

Another example of the weak evidence cited by the Obama campaign is a Salt Lake Tribune story from the time Romney left the Olympics to run for governor of Massachusetts. The campaign quotes Romney as saying he was then giving up control of all Bain's voting stock, and paraphrases Romney as saying that the divestiture affected "only the management and control of the company."

That's true, but it's not evidence that Romney had been running the company, even on a part-time basis. A full reading of the article makes clear that Romney said he did not intend to "resume" his managment duties, and wanted to let his partners know that they would not have to "move over one office" to make room for him.

    Salt Lake Tribune, Aug. 21, 2001: The transition was ensured when Romney informed the 26 managing directors of Bain Capital recently that he was "going limited." That meant he no longer intended to resume his duties as managing partner and chief executive of the company, which started or took part in 140 corporate acquisitions since 1984 and has more than $ 12 billion in assets.

    In doing so, he gave up control over all of Bain Capital's voting stock, dividing the shares between the two dozen directors. The divestiture had no financial ramifications, Romney said, affecting only the management and control of the company.

    The split was finalized now, Romney said, so that Bain Capital's directors would not have to wonder whether they would hear "We're back . . . everyone move over one office" after the 2002 Olympics and Paralympics are over.

For all these reasons, we respectfully reject the Obama campaign's request that we amend our original story.

We re-state our conclusion that "some of the claims in the [recent Obama] ads are untrue, and others are thinly supported." And we suggest that should Obama campaign officials discover any actual evidence that Romney personally participated in any management decisions at Bain after February of 1999, they should produce it to a federal prosecutor.

– Brooks Jackson and Robert Farley, with Eugene Kiely

[The Troll]

  So what you are saying is that the Golden Mitten did not send Massachusetts state jobs to India while he was governor of that state.     Also you're saying that Romney and Bain Capital did not outsource or off shore any jobs while Mitten and Bain was working together.  Is that what you're saying.     

  If you are, you're lying.    out there believe her in what she is trying to say.   

[me]

  So what you are saying is that the Golden Mitten did not send Massachusetts state jobs to India while he was governor of that state.     Also you're saying that Romney and Bain Capital did not outsource or off shore any jobs while Mitten and Bain was working together.  Is that what you're saying.     

  If you are, you're lying.    out there believe her in what she is trying to say.   

Read the article Troll. 

[Exterminator]

Relax, Troll, it's understandable that jobs would not be a priority for someone who never really worked.

[me]

Relax, Troll, it's understandable that jobs would not be a priority for someone who never really worked.

You mean like Obama?  You didn't read the article did you Ex?

[The Troll]

  We know that old Mitt, company he bought, he didn't out source the company that made it's money of the abortion trade.  He and his company just took $34 Million and left the Golden Mitten as a overseer.  How about that