Alternet / By Joshua Holland
On the day before an election that’s supposed to hinge on jobs, taxes and the middle class, Bain Capital, the company Mitt Romney founded, will close the doors of a factory in Freeport, Illinois, and ship 170 good, high-tech jobs to China.
The employees of Sensata Technologies were forced to train their Chinese replacements, and the American flag that long flew over the factory was reportedly removed while the Chinese engineers were visiting the site. A group of workers have set up camp across from the factory — calling it “Bainport” — and some supporters have tried to block the trucks hauling equipment out of the plant. According to Dave Johnson, there have been several arrests.
Sensata workers have asked to meet with Mitt Romney and hoped to enlist his help keeping their jobs in the United States, but he has refused, instead remaining on the campaign trail where he speaks often about “getting tough” with China.
The most important part of the story is that Sensata Technologies is profitable operating in Illinois. Net income last year was $355 million, up 16 percent from 2010. The company reported total revenues of $1.8 billion in 2011, up almost 19 percent from the year before. According to a company financial statement, “both 2011 net revenue and adjusted net income represent record levels for the company.”
So this has nothing to do with “making hard choices” in the process of turning around a failing business, which is how the Romney campaign describes Bain’s corporate raiding. Bain’s partners are looking for a modest boost in profits by locating the plant closer to the booming Asian automotive market (Sensata makes high-tech automotive parts). They’ll get a small tax break for relocating the plant – the one Mitt Romney insisted did not exist during the first debate – and possibly defer taxes on some of the income the company generates.
It takes both capital and labor to make a successful business like Sensata Technologies. In order to make a few more bucks, 170 of the people who helped make the company thrive will be cast aside like so much trash. The layoffs will surely have a ripple-effect in Freeport – a town of 25,000 with a declining population and a poverty rate well above the national average. The move is the epitome of corporate America’s lack of patriotism – it’s capital unmoored from any sense of responsibility for the people that make the profits or the communities where they live. The city passed a resolution Monday asking Romney to intervene.
But the Sensata story has, so far, had little impact on the presidential race, mostly because Mitt Romney has no direct involvement in the operations of the company he established (despite continuing to make millions as a “passive retired partner”). But this is reading the story of Bain Capital too narrowly. Mitt Romney is directly responsible for its business model.
As Tom Gaulrapp — a lifelong resident of Freeport and 33-year employee of Sensata – told the Huffington Post’s Amanda Terkel, “They’re still using his business model. He’s the one who taught them how to do this. These guys were put there by him. So you can say he doesn’t run the day-to-day operations, but he’s still at blame for the way they do business.”
Mitt Romney started the firm, and built it up on a strategy of buying firms with little money down, loading them with debt, raiding their pension funds and breaking their unions and then “harvesting them” – in his words – for a profit. Romney is the only person to ever serve as Bain’s CEO – since his departure, the firm has been run by a managing committee.
The story is bigger than Sensata, and bigger than Bain. The issue is the turn America’s corporate culture has taken, and what the consequences of its model are for our economy and, indeed, our society. And it is Mitt Romney’s embrace of that model – ravage capitalism that is loyal to no nation-state and blind to every human virtue but profit – that should be disqualifying.
In the New York Times, Chrystia Freeland, author of “Plutocrats: The Rise of the New Global Super-Rich and the Fall of Everyone Else,” wrote about the historical tendency of elites to self-destruct by extracting wealth from the broader community to such a degree that the society becomes dysfunctional and mired by social problems. She recalls how the Venetians became the most prosperous society in the world during the 14th century by opening their economy to a broad swath of the population. Then, at the height of its golden age, “the upper class acted to lock in its privileges, putting a formal stop to social mobility with the publication of the Libro d’Oro, or Book of Gold, an official register of the nobility. If you weren’t on it, you couldn’t join the ruling oligarchy.”
She then notes parallels to the United States, which featured one of the most egalitarian economies through much of the last century, but is now plagued by rising inequality and decreasing economic mobility. She writes:
The 1 percent cannot evade its share of responsibility for the growing gulf in American society. Economic forces may be behind the rising inequality, but as Peter R. Orszag, President Obama’s former budget chief, told me, public policy has exacerbated rather than mitigated these trends.
Even as the winner-take-all economy has enriched those at the very top, their tax burden has lightened. Tolerance for high executive compensation has increased, even as the legal powers of unions have been weakened and an intellectual case against them has been relentlessly advanced by plutocrat-financed think tanks. In the 1950s, the marginal income tax rate for those at the top of the distribution soared above 90 percent, a figure that today makes even Democrats flinch. Meanwhile, of the 400 richest taxpayers in 2009, 6 paid no federal income tax at all, and 27 paid 10 percent or less. None paid more than 35 percent…
Educational attainment, which created the American middle class, is no longer rising. The super-elite lavishes unlimited resources on its children, while public schools are starved of funding. This is the new [Venice]. An elite education is increasingly available only to those already at the top. Bill Clinton and Barack Obama enrolled their daughters in an exclusive private school; I’ve done the same with mine.
Much of this is the result of the 30-year assault on organized labor. It’s worth noting that Sensata Technologies is a non-union shop, which is a big reason the firm can move profitable operations abroad without much resistance.
Employment, in raw jobs numbers, should not be the defining issue of this election viewed in isolation. We also need to consider what kinds of jobs are being created. A recent study conducted by the National Employment Law Project (NELP) found that while only 21 percent of the jobs lost during the recession were low-paying (with median hourly wages from $7.69 to $13.83), a majority of those created during the recovery – 58 percent – have come with such low wages.
These trends are not Mitt Romney’s doing, but he is the walking, talking personification of what’s been happening in the American economy. Mitt Romney was an innovator in offshoring. He and his family will make a few more dollars as a result of shipping those jobs to China, at the expense of the workers who “built that” in the first place. That’s why the story of Sensata Technologies should have an impact in this race.
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Bainport is the tip of the iceberg. If we let companies like this continue to ship jobs and equipment off to China and other countries, what’s left? All of our country’s high ideals become superfluous if we show no support for those working hard and effectively to make quality products in the U.S.
Let’s work together, stand together, and fight together.
It will be a sad day in America if the Sensata story is not exposed during this last debate. In my opinion, if President Obama brings it up and people understand how Mitt Romney’s own business model and Bain Capital treatment of businesses brought us to where manufacturing is today, he will win the election. If he does not, I do not even want to imagine the consequences of his inaction.
romney left Bain in 1999, but since you can’t blame him for sending jobs overseas your going to blame his business model?
do you really believe romney should be held responsible for something that happened 13 years after he left the company?
Look, if Robme is running on his alleged prowess as a ‘fix it” expert from his years at Bain, notwithstanding his years as Governor, then this is what you should expect of his Presidency should he win. Further proof should be gleaned in voters’ discounting of Bush’s stint with EVERY company he working at going bankrupt prior to becoming Governor of Texas. Here is hoping that voters have learned their lesson on electing an empty suit again. Obama has proven his ability at handling the job in spite of great opposition from an obstructionist Rethug House of Ill-presentatives.
He hasn’t left the company any more than my father stopped practicing as a retired optometrist. You can’t be that dim, can you?
Romney’s interest in Bain Capital is held in a blind trust…that Mitt even admits (ago) that a blind trust is nothing more than a ruse.
Yes, he claims he knows how to create jobs because he has run companies. Well creating jobs is not one of Private Equity companies’s goal. They only focus on building value and how do you do that? In most cases sending jobs overseas or laying off people at all levels of a company. Wake up he tell us he knows how to do create jobs. Well I can say that i can create jobs too but can I really, He has no plan to help most Americans, he thinks only about the 1% ers, not everyday people who he uses to make money or if they don’t make him a lot of money to hell with them just ship the jobs to China. BTW, if you think he cares, why does he hide money overseas? To avoid taxes. Or why did he take his pay in the form of equity in Bain, cause it is only taxed at 15%. He shouldn’t even be allow to run for president with his track record.
He still holds millions of dollars worth of shares in Bain, so yes, he is still partly responsible for their actions. If he’s supposedly for creating jobs in America, he should have no investment in Bain’s actions, but he does, and he knows what they’re doing.
didnt think Romney had anything to do with Bain, anymore…….other than some history……
Romney has nothing to do with Bain Capital at present unless you count the fact that he is still making millions from it.
and you dont have a pension, 401k, or stock in any companies?
Pretty disingenuous to compare Mitt Romney’s relationship to Bain with my relationship to my pension portfolio. Pretty swell to have a blind trust handled by one’s personal lawyer.
Mitt- show us your taxes!
” Mitt- show us your taxes!”
obama, show us your college transcripts!
Actually, the college transcripts of both Obama’s are public record at this point. Mitt’s taxes however, are still absent and that’s not likely to change.
he showed what he’s legally required to…….
Romney’s shown us about 1/8 as much as what he asked of his running mate. He’s shown us about as much as the way he’d be able to balance the budget while slashing taxes on the rich and increasing military spending.
This Romney guy is more secretive than Nixon.
Not a secret: This is a guy who declared the federal government should let Detroit fail. This is a guy who protested in favor of the Vietnam War as long as it wasn’t him doing the fighting and dying. This is a guy who has shown little, if any, empathy for hard-working Americans. Turn out the vote! Whip this guy and his billionaire financiers.
everything wrong with our economy. you never should ever complain.
Nope.
…uh, and cashing company checks… If you receive that much money from a company, you are beholden to what the company does.
Hello……Jobs have been going to China since Clinton signed the free trade agreement.
So….We in Manufacturing have to compete with people who work for little or nothing.
Then…We have all the regulations, rules and taxes. The big ‘O’ has done nothing….
If you have a business in the U.S. you have two choices. Move it to China, or go out of business. It has nothing to do with Mitt. Look at all the businesses that are there. Its hard to find things made in the U.S.
did you even read the article? The company was making record profits. How does that translate to “Move to China or go out of business”?
Also, there was a study done last year that concluded that for skilled labor jobs (like these high tech jobs), American workers are more productive than chinese (and others) workers. So why ship the jobs off? Its what Bain Capital does. It buys a majority of stock in a company, takes over to “improve” the company, then either ships the jobs oversee’s to save a buck or dismantles the company and sells it off in pieces.
Steve thats the fault of American shoppers being to lazy to look for items made in the USA. Why not promote buying US rather than defend the outsourcing of production to countries like China… I know , its easier to roll over and die….PATHETIC!
Veronica – glad you said it – we want to pay less and make more. Does not stand up. In Canada we are worse – we shop US border cities where employees earn lower wages than Canada, and we drive back to collect our benefits from goverment. Everyone (almost) is selfish, and complains about the others. But leadership from the “leaders” used to be part of our way of life.
Loved the reference to Venice – those that ignore history are destined to repeat it. Here we go, sadly.
He still collects from Bain…he has an agenda…like someone else said, this is one of many he has/Bain has, shipped overseas…just like his “blind trusts”