Tag: carrier deal
6 Reasons Why Trump Is Too Weak To Save American Jobs

6 Reasons Why Trump Is Too Weak To Save American Jobs

Donald J. Trump believes he can bully and bribe companies into keeping jobs in America. Shortly after his election, he “persuaded” Carrier, an Indianapolis division of United Technologies, to refrain from exporting 700 jobs to Mexico. Meanwhile, Rexnord, a maker of bearings and ball bearings also in Indianapolis, announced its decision to move 300 jobs to Monterrey, Mexico. Trump, of course, expected that after a tweet or two, Rexnord, a tiny company, would quickly capitulate. Not happening.

The most powerful man in the world is getting a rude awakening about corporate power. Rexnord is thumbing its nose at the president by actually moving every one of those jobs…and the bully-in-chief can’t stop them. Why is that?

1. Trump is trumped by financial strip-mining.

Rexnord is moving for obvious reasons: The new Mexican workers will make $3 an hour while the Indianapolis workers make $25 an hour. But the real motivation for moving stems from Wall Street’s favorite pastime—stripping a company of its wealth through stock buybacks.

To please demanding financiers, Rexnord, in 2015, agreed to buy back $300 million of its own stock. By going into the market to buy its own shares, the price of the stock rises, thereby enriching these hedge fund investors virtually overnight. (Nineteen hedge funds hold about $200 million in Rexnord stock.) The stocks rise because 1) the act of buying large amounts of them in the open market bids up their price; and 2) the company’s total earnings are now spread over fewer shares.

The move to Mexico isn’t just about profits; it’s about financing the stock buybacks.

2. Trump’s deregulation agenda empowers the financial strip-miners.

From the New Deal until 1982, stock buybacks were virtually outlawed. They were considered a dangerous form of stock manipulation—a leading cause of the 1929 Wall Street crash.

During the Reagan administration, stock buybacks were legalized and financial strip-mining took off with a vengeance. Trump’s deregulatory mantra means stock buybacks will continue unabated as will the pressure to move jobs to low-wage areas.

3. Trump ignores (or is clueless) about the massive extent of financial strip-mining.

In 1980, a mere 2 percent of corporate profits went to stock buybacks. By the crash of 2007-’08, more than 75 percent of ALL corporate profits went to buy back the companies’ own shares. Our entire economy is being financially strip-mined by such stock manipulation. (Unfortunately, Trump does not have the attention span to read William Lazonick’s excellent analysis, “Profits Without Prosperity.”)

4. Trump doesn’t dare challenge how CEOs are paid.

Not only do hedge funds profit from financial strip-mining, they are aided and abetted by corporate executives who often derive more than 90 percent of their pay from stock incentives. As a result, CEOs run their companies with only one goal in mind—raise the price of the stock.

With those incentives in place, Rexnord executives could care less about Trump’s tweets. They are moving to Mexico to fund the stock buybacks that enrich the value of their own stock incentives.

5. Trump’s administration is loaded with Goldman Sachs strip-miners.

Trump’s economic advisors, nearly all produced by Wall Street, could care less about Rexnord moving to Mexico. After all, they grew fabulously rich by financing such moves, pressing companies for stock buybacks and profiting from trade deals. Rexnord knows that Trump’s economic team has no interest at all in limiting the stock buyback scam.

6. Trump can bully immigrants but not Wall Street.

It is frightening to see Trump unleash ICE on powerless immigrants, but bend over backward to placate financial elites. A bully attacks the weak and cowers before the powerful.

To repeat, stock buybacks are how Wall Street makes money in a hurry—money that is squeezed out of the workforce by shifting jobs to lower-wage areas. Wall Street will not tolerate any interference in the way it strip-mines companies. And Trump knows it.

Working people will soon know it as well. The Rexnord workers once believed Trump would come to their rescue, especially after he supposedly saved 700 jobs at Carrier just up the road. He didn’t and they no longer do.

Millions more voted for Trump because they believed he would save their jobs from a similar fate. But as financial strip-mining continues unabated, these workers will learn that President Trump is not president of Wall Street. Their jobs will be sacrificed on the altar of stock buybacks. You can’t tweet away financial strip-mining.

Neither Donald Trump, nor even Bernie Sanders, can stop financial strip-mining on their own. It’s a powerful process that has been in motion for nearly 40 years. To reverse the runaway inequality it creates will require nothing short of a dedicated mass movement, the likes of which we haven’t seen for more than a generation.

As historian Michael Merrill points out, there have been four great struggles in American history:

  1. The struggle against royal power which was replaced by the power of a new constitutional democracy.
  2. The battle against slave power which through a civil war was replaced by power of free labor.
  3. The battle against corporate power which was tamed by government regulation and union/worker power on the job.
  4. The fourth great battle is happening right now: It’s the battle against financial power, with the outcome very much in doubt.

These previous victories, always partial with battles still ongoing, were not the result of spontaneous uprisings. They required vision, leadership, education, organization, and mass involvement. Each required a sustained effort over many decades.

Today we need to relearn the art of building mass movements like those created by the abolitionists, the Populists, the labor movement, and the civil rights movement.

To make any progress at all against financial power, we must come out of our issue silos and join together in a common movement. We need to recognize that the financial strip-mining of our society negatively impacts nearly every issue we care about. We need to recognize that the battle against financial power and the runaway inequality it creates, links us together.

Is such a mass effort emerging right now as tens of thousands of people take to the streets and come together in town hall meetings all over the country? Perhaps. But only if these disparate resistance efforts coalesce into a powerful unified movement to take back our country from the power of finance. We have no choice but to try.

Les Leopold, the director of the Labor Institute, is currently working with unions and community organizations to build the educational infrastructure for a new anti-Wall Street movement.

IMAGE: U.S. President-elect Donald Trump  greets a worker as he tours a Carrier factory with Greg Hayes, CEO of United Technologies (L) in Indianapolis, Indiana, U.S., December 1, 2016. REUTERS/Mike Segar

Billionaire Wilbur Ross, Trump’s Commerce Pick, Has Offshored 2,700 Jobs Since 2004

Billionaire Wilbur Ross, Trump’s Commerce Pick, Has Offshored 2,700 Jobs Since 2004

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.

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 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.

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.

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)

IMAGE: U.S. President-elect Donald Trump looks on as Wilbur Ross departs after their meeting at Trump National Golf Club in Bedminster, New Jersey, U.S., November 20, 2016.  REUTERS/Mike Segar

How Trump Could Kill A Plan To Get You Overtime Pay

How Trump Could Kill A Plan To Get You Overtime Pay

Reprinted with permission from ProPublica.

Donald Trump ran for president as the billionaire who would champion working people.

As the president-elect put it in one of the major economic speeches of his campaign: “Too many of our leaders have forgotten that it’s their duty to protect the jobs, wages and well-being of American workers before any other consideration.”

One of the first tests of Trump’s pledge to help workers will come in how his administration handles the complicated rules that govern who has the right to time-and-a-half overtime pay.

Business groups and Republican state attorneys general sued to stop an Obama administration rule that would expand who gets overtime pay. A federal court temporarily blocked the rule in November. Now the Trump administration will decide whether to continue defending the rule in court.

At stake is the possibility of overtime pay for about 4 million workers around the country.

To get a sense of how big a deal that is: The still-sketchy deal to save factory jobs at a Carrier plant in Indiana — the subject of numerous Trump tweets and extensive media coverage — affected 1,000 or fewer workers.

Here’s how overtime works now

Most employees in the country have the legal right to time-and-a-half overtime pay if they work more than 40 hours in a week.

But there’s a major exception to that: white-collar workers. So who qualifies as a white-collar worker?

The government has a test for that. To be considered a white-collar worker who does not qualify for overtime pay:

  • You have to be paid a salary and not by the hour.
  • You have to make more than $455 per week — the equivalent of $23,660 per year.
  • And you have to work in certain types of jobs, including executive, administrative or professional positions. That has nothing to do with your title, but rather is defined by the nature of your job. For example, executive employees have to, among other things, supervise other workers.

Labor advocates say some employers have been playing games with who is considered a white-collar worker.

There have been a series of lawsuits and settlements outlining how, for example, the dollar store industry classifies employees as managers to avoid paying overtime. Some workers classified as managers spent much of their time doing the same manual labor as their subordinates.

Halliburton in 2015 agreed to pay $18 million in back wages for overtime to about 1,000 employees who worked as pipe recovery specialists and drilling advisers, among other jobs. The company acknowledged it had improperly classified those workers as exempt from the overtime rules. Walmart paid a $4.8 million settlement in 2012 for not paying security guards and other employees overtime they were due.

The Obama administration argues that the current overtime salary threshold, which was last raised in 2004 and has been eroded by inflation, is outdated.

According to the Department of Labor, in 1975, 62 percent of full-time salaried workers were eligible for overtime based on their pay. That compares to just 7 percent today.

The Obama rule would make another 4 million people eligible for overtime

The most important change made by the Obama administration was raising the salary threshold below which you generally have the right to overtime pay, regardless of your job duties.

The new level — which is currently on hold because of the pending lawsuit — is $913 per week, or $47,476 per year. That’s double the old standard of $23,660 per year.

The Department of Labor has calculated that the new rule could benefit 4.2 million workers around the country.

The affected workers would either start getting overtime for any time worked over 40 hours a week, or their salaries would have to be increased above the new threshold.

Business groups opposing the rule, most prominently the U.S. Chamber of Commerce, argued that “the salary threshold is going to result in significant new labor costs and cause many disruptions in how work gets done” including by reducing “workplace flexibility, remote electronic access to work, and opportunities for career advancement.”

Some employers, acting on the expectation that the rule would go into effect, have already raised salaries. The biggest name on the list is Walmart, which bumped starting pay for some managers from $45,000 to $48,500 in order to exempt them from overtime pay.

Politico reported that other employers that had promised pay increases, including several universities, have now cancelled the raises in light of the uncertainty around whether the rule will actually go in effect.

Trump’s pick for labor secretary has attacked the idea of expanding overtime, and the president-elect himself seems skeptical

When Trump was asked about the rule in August, he spoke of “a delay or a carve-out of sorts for our small business owners.” It’s not clear from his comments that Trump actually knew the details of the pending Obama changes.

The Trump transition team didn’t response to a request for comment. The Department of Justice also declined to comment about what could happen in the lawsuit after Jan. 20.

Andrew Puzder, Trump’s pick to be secretary of labor and the CEO of a fast-food company, has spoken out strongly against the overtime rule.

In a 2014 Wall Street Journalop-ed, Puzder warned against “rewarding time spent rather than time well spent.”

“What they lose in overtime pay they gain in the stature and sense of accomplishment that comes from being a salaried manager,” Puzder said of workers trying to climb the management ladder.

The fate of the rule depends on how things play out in a lawsuit that will drag on past the inauguration

In September, business groups including the U.S. Chamber of Commerce along with 21 states sued to block the new overtime rule.

In late November, a federal judge in Texas temporarily blocked the rule from going into effect, which was supposed to happen Dec. 1. The judge also signaled he is likely to eventually side with the business groups, though it’s not clear when that ruling will come.

As of right now, the case is proceeding on two fronts, in both the district court and appeals court. The only thing that’s known for sure is the litigation will continue past Jan. 20.

At that point, the Trump administration could decide to stop defending the rule or not to appeal any judgment against it.

Fearing that outcome, the AFL-CIO is trying to intervene in the case, hoping to continue defending the new rule if the Trump administration drops it. The district court hasn’t yet ruled on that motion.

IMAGE:Employees work at the checkout counters of a Walmart store in Secaucus, New Jersey, November 11, 2015. REUTERS/Lucas Jackson

It’s Time To Banish ‘Trump Says’ Headlines — They Don’t Work

It’s Time To Banish ‘Trump Says’ Headlines — They Don’t Work

Reprinted with permission from Media Matters for America.

The New York Times made the same headline misstep twice in four days.

Typing up reports based on President-elect Donald Trump’s tweets and staged announcements, the Times presented as breaking news — and in a very Trump-friendly manner — the contents of his latest utterances:

  • “Trump Says He Has Hacking Information Others ‘Don’t Know’” (December 31)
  • “Trump Says Intelligence Officials Delayed Briefing on Russian Hacking” (January 3)

Obviously, public pronouncements from incoming presidents can, and should, be treated as news. The problem with the “Trump says” formula (and similar variations) that the Times and other news outlets have adopted since Election Day is that what Trump said was, at best, either baseless or openly disputed.

There’s no indication Trump will ever reveal new information about U.S. government allegations that Russians unleashed cyberattacks against the Democratic Party. (And it certainly didn’t happen on “Tuesday or Wednesday” this week, as Trump originally suggested.) An aide quickly downplayed the notion that Trump would even try.

And while Trump claimed his intelligence briefing on the hacking topic was “delayed” from Tuesday until Friday, as the Times article itself makes clear, “senior administration officials disputed it, saying that no meeting had been scheduled for Tuesday.”

Trump’s claims falling apart shouldn’t be a surprise, though, since the president-elect has shown himself to be a committed liar who will falsify all kinds of information.

And therein lies two ongoing problems. One: How does the press treat a new president who is a habitual liar, the likes of which we’ve never seen in U.S. presidential politics? And two: How does the press treat an incoming president whose primary form of communication is Twitter, which means he refuses to take most press questions or be held publicly accountable for his claims?

Those parallel-track problems then produce a third one: lazy, misleading headlines that play right into Trump’s strategy of routinely lying while also being historically inaccessible to reporters. Within that sphere, I’d suggest there’s a very specific headline problem — the “Trump says” formula. Solution? Ban uncritical, context-free “Trump says” headlines. It’s a good first step.

Yes, most politicians, on occasion, like to bend and twist the truth to their favor. But Trump has been cracking the truth in half, and in full public view, since he entered the presidential race in June 2015. (Here’s a list of 560 documented falsehoods Trump told in the span of only four weeks during the campaign.) People like that don’t deserve the benefit of the doubt, and benefit of the doubt is what drives “Trump says” headlines.

The headlines often revolve around what Trump has stated on Twitter. Or misstated on Twitter, to be more accurate. With no real access to him, journalists are reduced to a this-is-what-Trump-said-today style of reporting, as if they’re covering the utterances of a reclusive royal family member.

If Trump’s tweeted claims are almost always disputed and often proven wrong, the dispute should be the headline; that’s what the news of the day is, not the fact that Trump floated some new nonsense; not what “Trump says.” If Trump tweeted that the moon was made of cheese, news organizations shouldn’t produce a “Trump says” headline for him, while also quoting experts in the article itself who confirm the moon is not a dairy-based orbital.

As Times columnist Paul Krugman noted this week:

Another problem is that the timid mentality behind “Trump says” headlines often leads to timid reporting.

Note that last week Trump made news when he claimed responsibility for Sprint bringing back 5,000 jobs to the United States. Trump insisted that the jobs were coming back “because of me.”

That boast immediately produced a rash of Trump-friendly headlines. And yes, it produced plenty of “Trump says” headlines:

WSJ: “Trump Says Sprint Bringing 5,000 Jobs Back to U.S.”

New York Post: “Trump says Sprint is bringing 5,000 jobs back to US”

Reuters: “Trump says Sprint to bring 5,000 jobs back to U.S.”

But those Sprint jobs were part of a previously announced, pre-election jobs initiative by the telecommunications giant. Which means this Bloomberg headline was perhaps the most accurate: “Trump Seeks Credit for 5,000 Sprint Jobs Already Touted.”

By choking off access with the press, Trump has produced a media thirst for presidential pronouncements and tidbits of news; tidbits that now arrive on the form of inaccurate tweets. The press needs to stop rewarding Trump’s strategy with passive and misleading “Trump says” headlines.

IMAGE: U.S. President-Elect Donald Trump speaks at event at Carrier HVAC plant in Indianapolis, Indiana, U.S., December 1, 2016. REUTERS/Chris Bergin