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* 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
* Details…
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.
posted by Rich Miller
Wednesday, Aug 20, 14 @ 10:53 am
Sorry, comments are closed at this time.
Previous Post: You gotta do what you gotta do
Next Post: *** UPDATED x4 - Rauner promised return to NBC5 before primary - Quinn camp says Rauner “proposed a phony alternative of concocted venues” *** Rauner proposes attending four candidate forums, three public debates, one private debate
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It’s different when rich guys do it, duh….
Comment by OneMan Wednesday, Aug 20, 14 @ 10:58 am
This type of story/hit on Rauner is what frustrates the press a d is why I couldn’t “turn the corner” and support Rauner once I read or heard or saw the hypocrisy;
You rarely get the full, 100% ownership of the truth. It starts with the “all baloney”, than the doubling down on what Rauner wants the narrative to be, to the “we answered that already” to the final twist of claiming zero accountability to something that could have been knocked down with one truthful statement.
…and with this, the Rauner Crew pivots to shield Rauner himself from answering anything.
I appreciate what they try to do, but the continued never answering anything is tiresome and at done point all this shielding is less about the craft of good politics.
Comment by Oswego Willy Wednesday, Aug 20, 14 @ 11:01 am
As someone mentioned in the other thread, “offshore” or “overseas” is the idea, not outsourcing, which could also just be privatization.
Rauner will say whatever he thinks people in the room want to hear, regardless of facts or his beliefs, to make the sale. That’s why he’s always backpedaling on previous statements.
It’s an obnoxious trait, just as common in business as it is in politics. But it ain’t straight-shooting. Whatever you think you’ve been sold, better get it in writing.
Comment by wordslinger Wednesday, Aug 20, 14 @ 11:02 am
==It’s driven me nuts for decades that we are unsuccessful in convincing many of the entrepreneurs that we back to headquarter in Illinois.==
That kind of implies that it isn’t all Pat Quinn’s fault doesn’t it? Decades? Seems to be an ongoing problem according to Rauner. Kind of hard to blame all the state’s woes on Quinn when you say stuff like this.
Comment by Demoralized Wednesday, Aug 20, 14 @ 11:11 am
The sound bite can be edited to help Quinn, but the entire statement, in context, may be one of the best things that Rauner has said to date about the business climate in Illinois.
Nobody likes outsourcing, but it is a reality. Even the government does it. Parking and traffic tickets in some Illinois municipalities are collected out of state. Should those be Illinois jobs? I recall that Illinois vehicle plates are no longer made in Illinois either. So it goes.
Comment by Under Further Review Wednesday, Aug 20, 14 @ 11:13 am
@Demoralized:
Doesn’t exactly make the case that he will be successful at bringing jobs to Illinois as governor, does it?
Quinn surely can point to several success stories, but according to Rauner he has been an absolute failure at creating jobs in Illinois, worse he has been losing them.
In his own words!!!
Comment by Yellow Dog Democrat Wednesday, Aug 20, 14 @ 11:15 am
@Wordslinger–”Whatever you think you’ve been sold, better get it in writing.”
The citizens of this state and nation certainly understand this very well after years of Blago, Quinn and Obama.
Comment by Wally Wednesday, Aug 20, 14 @ 11:16 am
==That kind of implies that it isn’t all Pat Quinn’s fault doesn’t it?==
He wouldn’t have any blame in it if he moved to creat a structure and climate in Illinois that made them want to stay. Instead of creating that bridge, though, he’s made the river deeper and wider
Comment by Anonymous Wednesday, Aug 20, 14 @ 11:17 am
Jimmy John’s in its sixth year of leaving Illinois. LOL.
Comment by MickJ Wednesday, Aug 20, 14 @ 11:18 am
Outsourcing can mean a lot of things but my general feeling is that a company is getting the same or similar work done for less money.
So, they’re paying a consulting firm to do a job? What do you bet between total compensation, the person doing the job is receiving less. How does that benefit anyone except the CEO,etc who is getting a larger bonus for firing 1,000 people?
This problem did not begin 4 years ago. It all began back in the 80’s and it keeps getting worse and worse. There is no easy solution. And if there was a easy way to solve the economic issues in the US and IL, Congress and the President doesn’t have the nerve to take care of it.
Comment by Belle Wednesday, Aug 20, 14 @ 11:23 am
Bruce Rauner has denounced the Medicaid scrubbing from the perspective of it not being enough. So is his plan to hire more government works to do this job?
Comment by Precinct Captain Wednesday, Aug 20, 14 @ 11:25 am
Let no one be deceived, BR is Gordon Gecko. Period.
Comment by Skeptical Wednesday, Aug 20, 14 @ 11:32 am
Could someone tell Mitt the Maximus contract was a demand from Durkie’s predecessor, Billboards Cross, because he did not trust state workers?
Let’s get a quick Durkie quote about how awful this one is and let Patty Bellock huff & puff for awhile too — opps
And it Mitt admitting Cayman investments are kinky by blasting PQ?
Comment by CircularFiringSquad Wednesday, Aug 20, 14 @ 11:33 am
The Democrats need to sort out their anti-Rauner messages to voters.
There is no central winning message. The idea that if they complain enough about his houses, his money, his businesses, his business past, his tax havens, his lifestyle - and on and on, that voters are going to understand that they need to overlook the chance to elect a successful businessman as governor.
Voters know we need jobs, a better economy, a balanced state budget, increased state revenue that doesn’t wreck markets, better education, lower taxes, and someone who won’t be going to jail.
Democrats need to focus on why voters should alter their priorities because of the charges they are leveling against Rauner. They need to tie it up somehow into a message that is PRO-QUINN.
All they’ve been doing all summer is complaining about things which are somewhat relevant, but not telling us a thing why we should vote for Quinn.
Whatever happened to positive campaigning? All I’ve been seeing is “gotcha” crap that political folks seem to think is some kind of magic bullet to take down an opponent.
And worse, all Quinn has been doing is harping about Rauner’s money and business dealings. Is that all he’s got? Voters have got to be asking themselves after seeing another Quinn compliant, “what’s that got to do with me and my life?”
This campaign sucks because the attacks against Rauner have no meaning or context. This might be a blue Democratic state, but please stop assuming everyone understands all the ideological crap behind these attacks.
Keep it simple.
Level one simple charge against your opponent THEN tell or show voters why your candidate is better.
Why is that seemingly so hard to do?
Comment by VanillaMan Wednesday, Aug 20, 14 @ 11:43 am
–He wouldn’t have any blame in it if he moved to creat a structure and climate in Illinois that made them want to stay. Instead of creating that bridge, though, he’s made the river deeper and wider–
A structure, a climate, a bridge and a river. Just how many metaphors can you mix while saying nothing?
Comment by wordslinger Wednesday, Aug 20, 14 @ 12:00 pm
Bringing up the Maximus contract granted by Quinn’s people was tic for tac. What Rauner is doing in terms of off shoring is common and is the nightmare aspect of globalization. I won’t justify it.
I totally appreciate that Democrats like Quinn find the practice objectionable. But do they check the histories of their own donors for purity in relation to off shoring jobs, eliminating jobs, or hiding profits offshore? Have they sent back any of this tainted money?
Obama clearly took money from such characters see this story http://www.bloomberg.com/news/2014-08-13/obama-donors-embrace-corporate-inversions-he-criticizes.html
Quinn’s taken more than $1 million from Fred Eychaner who owns Newsweb Corp which now prints many smaller newspapers and effectively also put many printers out of work too. He is Quinn’s largest individual donor I believe.
Fred Eychaner is in many ways admirable for his donations. But he is a tough no nonsense business operator. Here is a discussion of that perspective from the company’s operations president Rodd Winscott: “We are starting to see the cost benefits. … One of the areas of savings is in labor. We are able to run a 72-page newspaper, in five sections, with one to two operators. We have overcome the need to use digitally enhanced paper, and can now use the same grades as we use for our offset operation. This saves on double inventories and premium digital paper prices.”
Fred Eychaner effectively has through his business practices helped to eliminate many unionized off set printing jobs because of the use of technology. It doesn’t make him a capitalist monster for doing it, its part of the trap we all find ourselves in being part of our very competitive economy. From another perspective Eychaner’s business has allowed small newspapers to survive in printed form that otherwise might not have survived by lowering their printing costs.
Quinn needs to find a new tactic. I am not a Rauner supporter, but there is a deep level of hypocrisy in this supposedly class war strategy coming from a Democrat Party that takes plenty of money from people not so dissimilar from Mr. Rauner.
Comment by Rod Wednesday, Aug 20, 14 @ 12:12 pm
It’s incredible that Rauner would criticize the Maximus contract when his “model” for governing, Mitch Daniels, is the king of privatization for companies like Maximus (privatizations which have turned out to be disastrous in some cases, as with IBM). There is no doubt that Rauner himself would try to outsource as many state jobs as he could. And Republican legislators can’t seem to stop talking about what a terrible thing it was when Quinn reduced the scope of the Maximus contract because of pressure from AFSCME.
Comment by Eugene Wednesday, Aug 20, 14 @ 12:23 pm
@VMan:
You would be perhaps the worst political advisor in history if you don’t think negative campaigning has any place. You think Quinn is going to do well simply by telling us about himself and what he has done? Hardly. You have to pound and pound and pound your opponent hard also. It’s just the way the game is played and you have consistently displayed an immense amount of disconnect from this reality.
Comment by Demoralized Wednesday, Aug 20, 14 @ 12:57 pm
CircularFiringSquad
Thank you for mentioning the GOP connection to Maximus. Hearing them speak, they were expecting the sort of “success” rates MSI claimed. Sounded too good to be true.
Comment by Anyone Remember Wednesday, Aug 20, 14 @ 12:59 pm
Eugine,
Not sure he is criticizing it as much as pointing out that Quinn as Gov has done the same thing that he is complaining about Rauner doing.
It would be a bit like me complaining buffets are bad (Rich can attest to the irony of that)
Comment by OneMan Wednesday, Aug 20, 14 @ 1:08 pm
Rod -
I warned the Rauner staff before.
You are not doing yourselves any favors by constantly attacking one of the state’s leading gay rights activists.
Comment by Yellow Dog Democrat Wednesday, Aug 20, 14 @ 3:26 pm
Has Jimmy John really left? Good.
Comment by Cheryl44 Wednesday, Aug 20, 14 @ 3:32 pm
I think Maximus ran the food stamp program in Indiana when Indiana “privatized” it. Indiana subsequently went after them for overpayments.
Comment by Emily Booth Wednesday, Aug 20, 14 @ 7:33 pm
if you don’t think negative campaigning has any place
I have repeatedly said that it does. You seem to be unable to read my postings with an open mind, or you would know that.
Comment by VanillaMan Thursday, Aug 21, 14 @ 7:55 am