Workers at Bain-owned plant appeal to Romney to save their jobs

Wed Jul 18, 2012 3:39am IST

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* Bain-owned company to relocate U.S. jobs to China

* Romney invested heavily in funds that control firm

* Workers call on candidate to stop outsourcing

By Andy Sullivan

July 17 (Reuters) - As Republican presidential candidate Mitt Romney faces a withering attack over outsourcing and layoffs by his former firm, Bain Capital, employees at a Bain-owned company are appealing to Romney to stop their jobs being shipped overseas.

Romney has played no part in Sensata Technologies Inc.'s decision to move its auto-sensor business to China. But he owns millions of dollars worth of Bain funds that hold a controlling stake in the Massachusetts-based company.

The planned closure of its plant in Freeport, Illinois, could create further headaches for Romney, who is struggling to divert attacks by President Barack Obama and his campaign that portray him as a job killer who does not understand ordinary Americans.

While Obama is way ahead in polls in Illinois and the factory closure would not affect the presidential race there, it is the kind of incident that could feed his campaign's portrayal of Romney as insensitive to job cuts by big business.

In their most effective line of attack, Obama and his fellow Democrats have featured Bain-owned companies that went out of business or laid off workers in negative ads against Romney that are hurting his approval ratings in swing states.

The plant's employees are calling on Romney to use his influence with former Bain colleagues to keep the plant open.

The workers signed a petition asking him to help, and the Freeport City Council passed a motion on Monday urging the candidate to step in to save the jobs.

"If he wanted to, all he needs to do is call up the management of Bain Capital and say, 'Look, don't do this,'" said Tom Gaulrapp, who has worked at the factory for 33 years.

Romney does not know about Sensata's plan to transfer the business to China by the end of the year, his campaign said.

" Gov. Romney is not familiar with this issue and has not been involved in the management of Bain since 1999," said Romney campaign spokesperson Amanda Henneberg.

The jobs at the Freeport plant have been on the chopping block for more than a year.

Sensata bought the business in January 2011 with the intention of moving it closer to the Chinese auto-parts manufacturers that buy the bulk of the company's sensors, which monitor everything from oil pressure to engine temperature, according to a spokesman.

INVESTMENT IN SENSATA

Anyone who owns a mutual fund or retirement account may benefit when a U.S.-based company decides to boost profits by moving operations overseas.

As a major investor in Sensata, Romney could gain from an outsourcing move that is likely to cut costs and increase the company's presence in emerging markets.

Romney owns at least $7.8 million in eight Bain funds that collectively hold 51 percent of Sensata's shares, according to a disclosure report he released in June.

Romney earned between $1.4 million and $9 million in 2011 from dividends, interest and capital gains from those funds, which also invest in other companies, the report shows.

Presidential candidates are only required to list a rough estimate of the value of their assets, which accounts for the wide gap in the estimates of his earnings.

It is not possible to say how much Romney has made from Sensata directly because private-equity firms typically do not release detailed financial statements.

Sensata struggled during the global recession of 2008-2009 but has turned a profit lately. It predicted in April it would earn between $2 and $2.20 per adjusted share for the 2012 financial year.

The company's share price has risen from $18 at its initial public offering in March 2010 to close at $26.56 on Tuesday, outpacing the Dow Jones Industrial Average by nearly twice as much in percentage terms.

According to The New York Times, Romney negotiated a retirement agreement with Bain Capital in 2001 that paid him a stream of the company's profits through 2009. It also gave him the right to invest in new Bain deals.

Romney has not managed his investments directly since 2003, when he set up a blind trust under Massachusetts law when he became governor.

Romney and his wife Ann own between $18.76 million and $59.3 million in Bain funds, according to his most recent financial disclosure form. The actual value could be much higher because disclosure requirements are loosened for investments that are owned jointly with a spouse; several funds are listed only as worth more than $1 million.

Obama and his fellow Democrats charge that Bain invested in companies that shipped U.S. jobs overseas while Romney was in charge in the 1990s.

They also say that Romney's proposal to eliminate taxes on U.S. companies' overseas earnings would encourage businesses to create jobs abroad, rather than in the United States.

"He made money investing in companies that have been called pioneers of outsourcing," Obama said at a rally in San Antonio on Tuesday.

Romney allies say that current tax law is driving companies to set up shop overseas. Republican Senator Rob Portman, a possible vice presidential pick, pointed to companies like Eaton Corp. that have moved their headquarters to take advantage of low tax rates in countries like Ireland.

"Because of tax policy we're fighting at a disadvantage," Portman said at the Reuters Washington Summit last month.

Independent fact-checking organizations say there is no evidence that Romney was directly involved in offshoring decisions when he headed Bain.

Still, Democrats' attacks have prompted some voters to re-assess Romney. A Rasmussen Reports survey on Monday found that 41 percent of people said Romney's business experience was a reason to vote against him, up from 33 percent in May.

Americans are now equally divided on the issue, the poll found.

FOCUS ON RETURNS

As an investment firm, Bain is primarily focused on maximizing its returns, not boosting employment.

Bain Capital says it has created hundreds of thousands of jobs in it 28-year history. The Boston-based firm says revenues have grown at 80 percent of the more than 350 companies in which it has invested. Well-known companies like Staples Inc. reached success with Bain's help.

Sensata was created in 2006 when Bain bought Texas Instruments Inc.'s sensors and controls business. The company now employs 11,400 people worldwide. Almost all of its products are manufactured outside the United States, in countries such as Mexico, China, Bulgaria and Malaysia.

Sensata bought the Freeport plant as part of an acquisition of Honeywell International's auto-sensor business in late 2010. The 170 jobs there were at risk from the start of the purchase.

"The decision was made as part and parcel of the acquisition. If we'd been forced to keep the facility we probably wouldn't have bought the business in the first place," Sensata spokesman Jacob Sayer said.

Bain declined to comment on the factory closure.

In their first meeting with their new employers when the deal was completed in January 2011, workers at the plant were told their jobs would be eliminated by the end of 2012.

Chinese workers have since been brought in to learn how to operate the equipment. The first batch of layoff notices went out last week, Gaulrapp said.

FILED UNDER:
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Comments (1)
AlexPerriera wrote:
Hi advisor Ed Gillepsie says Romney left a life he loved to serve a country he loved more. I’m wondering how that love for country translates to hiding millions of dollars in offshore tax havens like Switzerland and the Bahamas. Wouldn’t that money be safe in American financial institutions. Doesn’t he have faith in the country he supposedly loves, to keep his money here? Doesn’t he have faith that his money could be grown by investing in American companies here at home, instead of making other countries richer by investing his money there. At the end of the day, despite whatever anyone may say about Obama, he doesn’t stash his millions in Swiss or Bahamian bank accounts. He invests his money in American companies and holds accounts with American banks here in the good old U.S.A. And what is with Romney hiding his tax statements? I mean, if you’ve led a clean business life and followed a scrupulous code of conduct in your personal life and ideals of the American way, your tax returns would reflect it. You cannot claim to hide behind the excuse of privacy when you’re running for the highest office in the land. People want to know and need to know whether you are someone they can trust with the stewardship of the most powerful country in the world. People need to know you are someone who will look after their interests in a moral manner that befits the ideals of America. If his stashing money in offshore accounts is true and he is hiding his tax returns because they will reflect the values of someone who is willing to bend rules to suit his financial needs, that needs to be made public so that as citizens we can make the informed choice of whether to vote for him. There is just no excuse he can use to justify having off-shore accounts or hiding his tax returns if he wants my vote. And I’m as conservative republican as they come.

And now John Sununu has come out saying he wishes Obama would learn how to be an American. Does Sununu advocate being an American by taking millions of dollars out of America and stashing them in foreign tax havens, so that hard working Americans can be deprived the benefits of that money going back into the American economy? Does he advocate that we should learn to be Americans by hiding behind questionable tax avoidance loopholes to increase our wealth at any cost, because that is supposedly the American way? I think Sununu needs to get real. Romney should just release his tax returns, bring back his hundreds of millions from foreign offshore accounts and invest in America and then trust us to vote for him according to his actions.

Jul 18, 2012 10:43am IST  --  Report as abuse
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