On Veterans Day 2009, a year after Barack Obama was elected president, the CEO of Emerson Electric, a Fortune 500 company based in St. Louis, bemoaned what he characterized as Washington’s hostility toward American business.
“What do you think I am going to do?” said David Farr. “I’m not going to hire anybody in the United States. I’m moving.”
Actually, Farr—who has raised substantial funding for Mitt Romney’s presidential campaign—started to move Emerson jobs offshore long before Obama entered the White House. Back in 2005, when George W. Bush was starting his second term, a report from Bain & Company praised Emerson for embarking on an explicit strategy to “aggressively move production offshore.” The consulting firm, where Romney earned his management stripes, called outsourcing to low-cost countries “imperative,” and an “elementary decision” in its report on Emerson. (A representative from Bain & Company would not confirm or deny that Emerson was a client.)
If Bain promoted outsourcing at Emerson, though, that would hardly come as a surprise. Romney’s well-documented business career largely mirrors Farr’s corporate strategy. In 1998, for instance, Romney was at the helm of Bain Capital affiliate Brookside Capital Partners Fund and invested $14 million in Global-Tech, a company that relied heavily on outsourcing US jobs to China.
But as a candidate for president, Romney has said he wants to make it more attractive for businesses to stay in America by lowering the corporate tax rate. Yet on the front page of Romney’s tax proposal, right below the corporate tax reduction, is a bullet point for a “territorial tax,” which would exempt companies from paying any levy on profits made overseas — and seems contrary to Romney’s promise of creating domestic jobs. The territorial tax could further motivate any number of U.S. corporations – like Emerson — to expand outside the country’s borders.
Pending that change, Farr has continued to make good on his promise to grow Emerson’s business elsewhere. With approximately 133,000 employees and 235 locations worldwide, Emerson manufactures products for a wide range of industries: automotive, food, mining, paper, and solar, among others. The company has cut 26,300 American jobs since 2009 and grown its profit margins through cheap production, primarily in China.
Does the territorial tax change in Romney’s platform reflect Farr’s influence? Farr has has given $52,500 to Romney’s campaign, and his wife Lelia has given $7,500. Individual Emerson employees have donated $61,000. Emerson’s Head of Government Affairs, Jim Carter, is a bundler for Romney, and has gathered another $27,500 for him. The company’s Political Action Committee has also given $10,000 to the former governor’s presidential campaign.
Farr’s personal contribution to Romney includes a single $50,000 donation, presumably from the $50,000-a-plate dinner he and his wife Lelia hosted with Romney’s wife Ann early this month. The Farrs raised $2 million for the campaign at the fundraiser. And according to financial disclosure filings, Romney has held between $15,000 and $50,000 of stock in Emerson.
Farr’s wife Lelia is a big Romney backer, too. Her over-the-top and at times inscrutable Twitter feed (@lelia888) is almost 100 percent political. On Sept. 26, she responded sarcastically to an Obama tweet about wanting to outsource fewer jobs, typing “Just like GM where 70% of the cars are made outside the USA?”—a remark that left her seeming ignorant of her husband’s line of work. On Oct. 16, the day before the second presidential debate, she tweeted, “Outsourcing: hit it out of the park, Mitt!” Lelia also tweets indictments of Obama almost hourly, calling him, among other things, “narcissistic,” “incompetent,” and a “spineless coward.”Click here for reuse options!
Copyright 2012 The National Memo