Right now a company named Sensata is moving equipment out of a factory in Freeport, Ill. and shipping it to a factory in China. Sensata will be laying off all of the American workers, but first they are making the workers train their Chinese replacements. The workers’ last day is the day before our election. Here’s the thing: this company is owned by Bain Capital, and Mitt Romney — who says he is against shipping jobs to China — will make a fortune from the move to China.
The Sensata employees have set up a camp outside the factory that they call Bainport and are trying to stop the Bain trucks that are moving the equipment out for shipment to China. These soon-to-be-jobless workers have asked Romney to come help them.
This is a tremendous opportunity for Mitt Romney. As the former head of Bain Capital and with all the visibility of a presidential campaign, he could step in and help these workers. It offers him the chance to demonstrate to voters that he means the things he says on the campaign trail, and is not just saying these things to get votes. But Romney has refused.
Mitt Romney says on the campaign trail that he will crack down on China and is against companies shipping jobs to China. These are very popular positions to take — the public overwhelmingly wants to see things made in America again, and understands that China’s trade cheating is costing us dearly. So a candidate for president would certainly say he is for doing this. But when it comes time to show that he will actually means it and will do something about it, it looks as though Romney is not doing it. These workers have asked for his help, but he won’t do it. Voters should know about this, and make up their own minds about whether Mitt Romney means what he says, or just says what he needs to say to win.
Bain Capital And Sensata
Mitt Romney started the “private equity” firm Bain Capital. Bain’s business model is to purchase companies using “leveraged buyouts” that borrow huge sums using the purchased company’s own assets as collateral, uses the borrowed money to immediately pay itself, then cuts costs by doing things like sending jobs to China, cutting wages and manipulating tax rules to cut taxes owed, along with standard big-business practices like consolidating business units, taking advantage of economies of scale not available to smaller competitors, squeezing distribution channels for price cuts, and other practices that bring competitive advantages. (See So DID Mitt Romney Really “Create Jobs” At Staples? and Truthout: Romney & Company Shipped Every Single Delphi UAW Job to China.) After reorganizing the purchased companies and cutting costs — namely: you — Bain then “harvests” them for profit.
One company that Bain Capital purchased — after Romney’s time as CEO — is Sensata, a sensor manufacturer that makes key components for our automobile supply chain. Sensata then announced it is closing the factory in Freeport, Ill., and sending all of the manufacturing and jobs to China. This is significant because China is engaged in an effort to capture the automobile manufacturing supply chain, and sensors are a key strategic chokepoint. China built a factory for Sensata, and offers other incentives to the company to move manufacturing there.
So Bain is currently moving all of the equipment out of the Freeport factory, preparing to shut it down and lay off all of the American workers. Bain/Sensata brought in Chinese workers and made the Freeport workers train them. Bain/Sensata is moving the equipment out of the Freeport factory and shipping it to China right now.
The Sensata employees heard Romney on the campaign trail, and somehow got the idea that he opposes sending our jobs to China just because he says that he opposes sending our jobs to China. So the Sensata workers asked him to come to Freeport/Bainport and help them. Read on to learn about Romney’s response to the Sensata workers, and how Romney is actually making big money right now from shipping their jobs to China.
“The week before they came they took the American flag down outside the plant. The week after they left they put it back up.”
Romney Making A Fortune From Sensata Sending Jobs To China
While Mitt Romney no longer manages Bain Capital, he still has millions of dollars in Bain funds and will personally make a fortune from this company moving to China – both from profits and from tax breaks. (What you and I consider a fortune, Romney might consider a drop in the bucket.)
A must-read news report by Sharon LaFraniere and Mike McIntire in The New York Times explains. As Romney Repeats Trade Message, Bain Maintains China Ties (emphasis added, for emphasis),
Mr. Romney also has millions invested in a series of Bain funds that have a controlling stake in Sensata Technologies, a manufacturer of sensors and controls for vehicles, aircraft and electric motors that employs 4,000 workers in China. Since Bain took over the operation in 2006, its investment has quadrupled in value. Bain continues to own $2.6 billion worth of Sensata’s shares.
Two years ago, Sensata bought an operation that made automobile sensors in Freeport, Ill. At the first meeting with the plant’s 170 workers, Sensata managers announced that by the end of 2012 all the equipment and jobs would be relocated, mostly to Jiangsu Province. Workers have staged demonstrations, pleading for Mr. Romney to intervene on their behalf.
Chinese engineers, flown to Freeport for training on the equipment, described their salaries as a pittance compared with Freeport wages. Tom Gaulrapp, who has operated machines at the factory for 33 years, said he fears he will go bankrupt after he loses his job on Nov. 5.
“This goes to show the unbelievable hypocrisy of this man,” he said of Mr. Romney. “He talks about how we need to get tough on China and stop China from taking our jobs, and then he is making money off shipping our jobs there.”
Please read the entire New York Times report, As Romney Repeats Trade Message, Bain Maintains China Ties. There is much more there about Romney, China, Bain and the huge gap between what Romney says on the campaign trail, and how Romney made his current $400,000/week income and how Bain Capital still makes its money.
Also see this Huffington Post report, Mitt Romney Gets Tax Break Off Firm Sending Jobs To China,
According to his recently released 2011 tax returns, Romney transferred $701,703 worth of Sensata stock to the Tyler Charitable Foundation, a 501(c)3 tax-exempt nonprofit controlled by Romney. The gift is listed on page 323 of the pdf, on form 8283 (below).
Moving the stock to his nonprofit brings Romney twin benefits. First, he gets to deduct the full value of the stock. At a 35 percent tax rate, that’s nearly a $250,000 benefit. At 15 percent, it’s just over $100,000.
Second, Romney is able to avoid paying capital gains taxes on the stock price increase. Romney’s returns list no cost for the stock, and indicate he obtained them as part of a partnership interest in Bain. Avoiding capital gains taxes on the full increase would save an additional $100,000. In 2010, Romney gifted $170,000 worth of Sensata stock to his charity, saving $25,000 in capital gains taxes that year.
Cheryl Randecker, a Sensata worker facing an imminent layoff, said, “I could pay off my house with that [$25,000], and he doesn’t need it anyway.”
So there you have it. Mitt Romney says he opposes sending jobs to China, and says he will “crack down” on China. But he refuses to do things that he could do right now that would make an actual difference right now. And it turns out that right now he is making big money from Sensata and other companies that are sending people’s jobs to China right now.
Laying off American workers – usually shipping the jobs to China – and pocketing their wages for themselves is the story of the rise of the wealth of the 1%, and the decline of the American middle class. It is the Romney/Bain/Sensata business model. And the remaining workers have to do the jobs of the laid-off workers, often for lower pay, and are threatened with losing their jobs, too, if they don’t like it.
This is an advertisement titled “Economic Traitor,” that is being aired by superPACs Workers’ Voice and Patriot Majority, based on Sensata:
Click here to see all of CAF’s coverage of Sensata.
Bain Of Our Existence – The Go-To place for stories and info about Bain Capital.
For more information, photos and stories from the Sensata workers, please visit bainport.com.
From UnitedNY, if Bain Capital was your psychologist:
PATIENT (LYING DOWN on couch): I think he’s depressed. I mean, he is a good kid but he just keeps to himself. I can’t get him to talk or spend time with the family and barely does any chores.
BAIN: Have you consider outsourcing? (hold shot of PATIENT)
PATIENT (confusion) You want me to outsource my son? (TURNS HEAD towards BAIN in surprise)
CUT to Bain face
BAIN: Yes, you can find some very obedient children in China or Bangladesh, even the Philippines.
(P.S. The reason I use #Sensata in the titles is because on Twitter the “hashtag” helps get the word out.)
This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.
Sign up here for the CAF daily summary