* On September 18, 2012, Bruce Rauner appeared on a panel in Chicago to discuss Illinois economics and taxes. He was asked about Jimmy John’s CEO Jimmy John Liataud’s decision to leave Illinois…
“I’m deeply saddened, outraged and ready to fight to make that not the case for you [Liataud] and your fellow entrepreneurs. We have got to change the direction of our state. And the rest of us in this business community who’ve been here for our whole lives to say ‘enough, no more, we’re not going to stay in this death spiral, we want great entrepreneurs to stay and thrive and build your companies and your jobs here in Illinois.’ That’s what our future’s about.
“Backstory on us, I’m in the venture capital business, private equity business. We’ve helped start almost a hundred companies. We’ve financed the growth of hundreds of companies. And we’ve been integral to the location decision of where they will base their operations, where they will base their headquarters. We’ve been the driving factor in much of that decision.
“It’s driven me nuts for decades that we are unsuccessful in convincing many of the entrepreneurs that we back to headquarter in Illinois. And many of the companies that we’ve helped started in Illinois have decided to leave the state. I know dozens of business owners who’ve left. I know dozens of others who are ready to leave. I know many successful business executives who were born and raised here and they changing their residency. They’re changing it to Florida, they’re changing it to Texas, they’re changing it to Nevada. We’ve got to say ‘Enough. No more.’
“And it’s, it’s in part about taxes, but it’s really about confidence and value. We’ve got to have confidence in our, in our government institutions. And in Illinois, for good reason, we have almost none.
“I mean, I, if we, if you were going to invest in a new plant that would come to Illinois, I’d like to say yes, but I’d have to say no.”
* The Quinn campaign wants you to focus like a laser on that last sentence, so a top official sent along this short clip…
Out of context, that could very well work in an ad.
* But I think the “we’ve been integral to the location decision” line could also be important. Why? Well, yesterday, Rauner said this…
“I have never closed a plant and moved those jobs overseas or that sort of thing. That’s not what my business was. Never done that.”
* Now, let’s get back to H-Cube, the outsourcing company mentioned in the governor’s new TV ad. The company eventually changed its name to Zenta. The governor’s campaign passed along some intel on the company, including this…
Zenta Downsized 25 Person Group to 12, Trained Indian Managers, and Began “Transferring Process Related Functions to India.” According to a case study listed on the Zenta website in November 2009: “[The] Client had a 110,000 loan, $25 billion residential master servicing portfolio in an industry with shrinking margins and increasing client service demands. Zenta Solution…Downsize 25 person group to 12. Remaining U.S. employees refocused on client management. Train Indian managers in U.S. Brought in experienced U.S. management. Indian managers return to Chennai to train new team…Begin transferring process related functions to India. Results: Reduced operational costs by 60%… Developed a leading third party master servicing platform in the U.S.” [Zenta.com, 11/09]
* From the DGA…
According to Rauner American job loss to low-wage markets like China, India and Mexico by announcing that “Not every job should be in America.”
Now that he’s squarely on the record concerning outsourcing at the expense of American jobs, here are a few questions for the tycoon who told a blatant falsehood concerning the outsourcing strategies of his own companies:
Question 1: What about Zenta?
“GTCRauner formed an outsourcing company in 2005 that, at its very outset, made clear it would deliberately exploit cheap labor in places such as India, China and the Philippines. Combining under the Zenta brand name, the conglomerate was designed specifically to send a wide range of American white-collar work overseas. In some cases, low-wage workers from places like India came to the United States to be trained by the very people whose jobs their firm would take. Rauner’s firms claimed they pioneered the outsourcing of jobs in the financial services and real estate markets. In fact, sending jobs overseas to exploit cheap labor was their guiding principle. They exploited American workers, too, and were successfully sued for labor violations.”
It’s pretty clear that Rauner wasn’t telling the full truth when he said “I have never closed a plant and moved those jobs overseas or that sort of thing. That’s not what my business was. Never done that.” He apparently did do that.
* And that “Not every job should be in America” line is gonna come back to bite Rauner for sure. From Illinois Freedom PAC…
Yesterday, Bruce Rauner fiercely defended his record of outsourcing U.S. jobs, saying “not every job should be in America.”
Neal Waltmire, Communications Director for Illinois Freedom PAC, released the following statement in response to Rauner’s remarks:
Spoken like a true vulture capitalist, Rauner defends his record of destroying middle class jobs and shipping them out of the United States.
When candidates for Governor speak of creating jobs, we assume they are talking about here in Illinois. But when Rauner talks job creation he means in foreign countries, conveniently leaving out the American jobs that will be destroyed in the process.
Rauner’s statement proves once again that his barometer of success is not creating middle class jobs or growing local companies. His primary metric is how much profits he and his billionaire buddies can suck out of our economy.
Rauner - and the executives he picks to run his companies - will do just about anything to make money, even if it means destroying middle class jobs, abusing and neglecting vulnerable citizens, and bankrupting companies.
Tom Gaulrapp, a Freeport resident whose job was outsourced to China in 2012, hit the nail on the head when he told a group in Rockford last month that this election is about “keeping one of these vulture capitalists who thinks it’s a good idea to pack up our jobs and move them somewhere else, to keep him from being in the governorship of Illinois.”
* Then there’s Polymer Group. From another opposition research file that was tossed over the transom…
Rauner was on the Board of Directors, including the audit committee, of Polymer Group until 2003. Under GTCR and Rauner’s leadership, Polymer posted five straight quarters of losses starting in late 2000 through 2002. While the company wasn’t making money, Rauner and GTCR were loading it up with debt. And in 2001-2002, Polymer defaulted on its loans to creditors three times and its bond rating was slashed to “D” by S&P. To cut costs, the company laid off 500 workers, 14% of its workforce and moved some jobs to foreign countries. Later, in May 2002, Polymer Group filed for bankruptcy. Despite all of this, according to the Daily Deal, GTCR “managed to escape with a profit.” […]
Polymer Group Laid Off 500 Employees, 14% Of The Workforce. “Johnston said the corporation is progressing with plans to lay off more than 500 employees, or 14 percent of the work force, to trim costs. He said less than half of the cutbacks are complete, but most of the reduction will be finished by early 2002. [Post And Courier, 1/1/02]
The jobs were moved to Canada, which isn’t “overseas,” but still technically a foreign nation. And keep in mind that Rauner said his firm exerted control over operation and HQ sitings.
* But the Rauner campaign is countering with its own claims of Quinn outsourcing. From a press release…
“The fact is Pat Quinn is invested in the Caymans and has engaged in business outsourcing as governor. Pat Quinn has clearly reached all out desperation mode with his new false and misleading attack. Only a failed governor who wants to cover up his own record of tax hikes and job losses would make outrageous claims like these.” – Rauner Spokesman Mike Schrimpf
The Quinn Administration Gave Maximus A Two-Year, $76.8 Million Contract To Scrub The State’s Medicaid Rolls. “The Department of Healthcare and Family Services, which administers Medicaid, said the verification process is “well within the time frame mandated by the new law.” The state last Thursday finalized a contract with Maximus Health Services to conduct the review. The company gets paid on a per-case basis and is expected to earn about $76.8 million during the two-year contract.” (Doug Finke, “GOP: Quinn Administration Slow To Review Medicaid Eligibility,” The State Journal-Register, 9/18/12)
Maximus Describes Itself As Providing “Business Process Outsourcing.” “MAXIMUS (NYSE: MMS), a leading provider of government services worldwide, announced today that several case studies highlighting the Company’s Business Process Outsourcing (BPO) and Business Process Management (BPM) solutions were recently featured in the Gartner research report, ‘Use BPM to Drive Revenue, Not Just Efficiency.’” (Press Release, “MAXIMUS Business Process Management Highlighted in Gartner Research Report,” Maximus, 1/15/13)
AFSCME Denounced The Maximus Contract As “Outsourcing.” “‘It’s time to end this failed experiment with outsourcing a critical public watchdog role to a private, for-profit corporation,’ AFSCME director Bayer said. ‘The arbitrator’s order will bring oversight back to state government where it is directly accountable, and save money in the process.’ The backdrop to the Maximus contract was a backlog in Medicaid eligibility redeterminations caused by staff shortages in the departments of Human Services (DHS) and Healthcare and Family Services (HFS). Rather than hire sufficient staff, the state outsourced the work to a for-profit company. Council 31 filed a grievance, contending that outsourcing violated provisions of the collective bargaining agreement.” (Press Release, “Arbitrator’s Order Will End Wasteful Outsourcing, Return Medicaid Oversight To State Government,” AFSCME Council 31, 12/18/13)
Maximus Still Has Numerous Contracts With The State Of Illinois, And Was Paid $44,892,852.22 In FY2014. (State Contracts Database, Illinois Comptroller, Accessed 6/4/14)
*** UPDATE *** From the Rauner campaign…
POLYMER GROUP’S U.S. OPERATIONS EXPANDED SIGNIFICANTLY DURING GTCR’S INVOLVEMENT
In 1996, The Polymer Group’s U.S.-Based Manufacturing, Warehousing and Research & Development Facilities Occupied 1,781,500 Square Feet In Four States. (SEC Form S-1/A, Polymer Group, 5/7/96)
By 2003, The Polymer Group’s U.S.-Based Manufacturing, Warehousing And Research & Development Facilities Had Increased By More Than 1 Million Square Feet (To 3,051,677 Square Feet) In Ten States. (SEC Form 10-K, Polymer Group, 4/14/03)
They don’t say how many jobs were added, however. Warehousing facilities are highly automated these days.