Wilbur Ross, Trump's Commerce pick,
offshored 2,700 jobs since 2004
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[January 17, 2017]
By Andy Sullivan
WASHINGTON (Reuters) - Billionaire Wilbur
Ross, chosen by Donald Trump to help implement the president-elect's
trade agenda, earned his fortune in part by running businesses that have
offshored thousands of U.S. jobs, according to Labor Department data
attained by Reuters.
As a high-stakes investor a decade ago, Ross specialized in turning
around troubled manufacturing companies at a time when the U.S. economy
was losing more than 100,000 jobs yearly due to global trade. A Senate
confirmation hearing on his nomination to become commerce secretary is
set for Wednesday.
Supporters say Ross saved thousands of U.S. jobs by rescuing firms from
failure. Data attained by Reuters through a Freedom of Information Act
request shows that rescue effort came at a price: textile, finance and
auto-parts companies controlled by the private-equity titan eliminated
about 2,700 U.S. positions since 2004 because they shipped production to
other countries, according to a Labor Department program that assists
workers who lose their jobs due to global trade. [For a graphic click
http://tmsnrt.rs/2iYIJWa]
The figures, which have not previously been disclosed, amount to a small
fraction of the U.S. economy, which sees employment fluctuate by the
tens of thousands of jobs each month. But Ross's track record clashes
with Trump's promise to protect American workers from the ravages of
global trade.
Recently, Trump claimed credit for saving 800 jobs at a Carrier Corp.
factory in Indiana, even touring the plant to shake hands with
employees. He has targeted Ford Motor Co <F.N> and other automakers to
keep hundreds of jobs inside the U.S. borders.
That disconnect could draw attention at his hearing, one of many
scheduled this week for Cabinet nominees ahead of Trump's Jan. 20
inauguration.
"He is not the man to be protecting American workers when he's shipping
this stuff overseas himself," said Don Coy, who lost his job at the end
of 2016 when a company Ross created - International Automotive
Components Group - closed a factory in Canton, Ohio and shifted
production of rubber floor mats to Mexico, eliminating the final 16 jobs
in a factory that once employed 450 workers.
Ross resigned from the IAC board of directors in November 2014 and was
named chairman emeritus.
Ross did not respond to several requests for comment. His offshoring
activities are not unusual in an era when globalization has lowered
international trade barriers. Auto-parts maker Delphi Corp., for
example, has offshored 11,700 U.S. jobs since 2004, while textile makers
have offshored at least 17,000 jobs since then, the Labor Department
said.
As IAC shuttered its Canton plant in the final months of 2016, Ross
argued on behalf of Trump that free-trade agreements hurt the United
States.
"When Ford offshores new production facilities to Mexico, that both
boosts the Mexican economy and reduces investment in this country," he
wrote in September in a Washington Post opinion piece penned with Peter
Navarro, another Trump economic adviser who has been tapped to direct a
White House trade council.
In a bid to reverse offshoring, Trump has threatened to impose "a big
border tax" on automakers that choose to build cars in Mexico rather
than the United States and has talked of resetting free-trade deals such
as the North American Free Trade Agreement (NAFTA).
A Trump transition spokesperson said personnel decisions at Ross's
auto-parts and textile companies were driven by the need to put
operations near customers and keep U.S. plants competitive, echoing
arguments made by other auto industry executives who face pressure from
Trump.
"Few people have done as much to defend American jobs and negotiate good
deals for American workers as Wilbur Ross," said the spokesperson, who
asked not to be named.
The offshoring figures for Ross's companies came from the Labor
Department's Trade Adjustment Assistance (TAA) program, which provides
retraining benefits to some workers who lose their jobs due to
outsourcing or cheap imports. The program does not cover everybody who
is hurt by global trade: service-sector workers were not eligible until
2009, and those who don't apply for the program don't show up in its
records.
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Unemployed autoworker Donald Coy, who was laid off from Ross's
auto-parts plant, when it closed its doors in December 2016, is
pictured in front of the former manufacturing plant in Canton, Ohio,
U.S., January 14, 2017. REUTERS/Aaron Josefczyk
Only 1.6 million factory workers qualified for TAA benefits between
2001 and 2010, a time when the United States shed 6 million
manufacturing jobs.
Despite Trump's campaign rhetoric about countries like Mexico and
China taking U.S. jobs, the TAA figures show globalization has
claimed fewer jobs in recent years. The program covered roughly
80,000 workers last year, down from about 340,000 in 2009. [For a
graphic, click http://tmsnrt.rs/2iYGJgR]
CUTTING JOBS TO SAVE OTHERS
Ross amassed a fortune, estimated by Forbes magazine at $2.5
billion, by buying up companies in struggling industries and
returning them to profitability. Labor leaders such as United
Steelworkers president Leo Gerard have said that Ross over the years
saved thousands of manufacturing jobs.
In one case, Ross bought two struggling North Carolina fabric makers
out of bankruptcy to create International Textile Group (ITG) in
2004, as textile import quotas were being phased out. Between 2005
and 2011, the company laid off 1,268 U.S. workers as it set up
operations in Mexico, China and Nicaragua, TAA records show. ITG CEO
Ken Kunenberger told Reuters that those job reductions were
primarily due to competition from cheap imports.
ITG now operates six U.S. plants, down from nine in 2007, according
to its annual reports. Ross sold the company in October for an
undisclosed sum.
Ross also created International Automotive Components Group in 2007
to buy up auto-parts makers around the world as the industry
struggled with overcapacity and slowing sales. TAA filings show IAC
eliminated 853 U.S. jobs because it shifted work from the United
States to Mexico.
"We tried every trick in the book to get them to stay but they just
weren't interested," said Tim Scott, who served on the city council
in Carlisle, Pennsylvania when IAC decided to close its plant there
in 2009, shifting work to Mexico and Tennessee.
An IAC spokesperson said the company has expanded in Mexico to be
near the automakers that buy its parts, a common business strategy
in the sector.
IAC has expanded its workforce in Mexico and Canada by 42 percent to
8,500 since 2008, and by 10 percent in the United States to 11,000
over the same period, spokesman David Ladd said.
In another venture, Ross combined several mortgage lenders into
Homeward Residential Holdings Inc. in 2007, just as the housing
market was collapsing.
Homeward laid off 596 employees in Florida and Texas and shifted
their work to India in 2012, according to TAA filings. That was a
sizeable portion of the company's global workforce, which it pegged
at 2,800 a few months after the layoffs were announced.
Ross sold Homeward in October 2012 for $750 million, which delivered
a further return on top of $900 million in profits the company had
already generated.
"Homeward has been profitable in each year of its existence," he
said in a press release.
(Additional reporting by Howard Schneider; Editing by Kevin
Drawbaugh and Edward Tobin)
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