IMAGE: Billionaire investor Wilbur Ross, chairman of Invesco Ltd subsidiary WL Ross & Co, departs Trump Tower after a meeting with U.S. President-elect Donald Trump in New York, U.S., November 29, 2016. REUTERS/Lucas Jackson
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
WASHINGTON (Reuters) – When billionaire investor Wilbur Ross salvaged two North Carolina textile mills from bankruptcy in 2003 and 2004, one of the first things he did was head to Washington to immerse himself in trade law and policy.
China’s accession to the World Trade Organization had unleashed a flood of textile imports across U.S. borders, and Ross – now President-elect Donald Trump’s pick for commerce secretary – took an unusual hands-on approach, advocating for “safeguard” tariffs to help the ravaged domestic industry.
“He was not the first outside investor to come into the industry and buy a major asset. He was the first and to my knowledge only major outside investor who took on that same sort of attitude that the more home-grown CEOs had,” said Auggie Tantillo, who has lobbied for textile makers in Washington for almost 40 years.
Ross’ history owning and defending embattled steel and textile manufacturing companies that have relied on border duties to protect their industries means he will bring a unique approach to the commerce secretary job, departing from the traditional role of cheerleading for free trade and big business.
If confirmed by the U.S. Senate, Ross, 79, who is personally close to Trump, will be a lead player shaping U.S. trade policy, working alongside Robert Lighthizer, a lawyer known for his work with beleaguered U.S. manufacturers whom Trump has tapped as U.S. Trade Representative, and Peter Navarro, an economist and China hawk who will serve as a White House adviser.
Free trade advocates worry the Trump trade triumvirate will be too quick to use tariffs to keep imports out, raising costs for manufacturers that rely on imported parts – or even sparking retaliatory trade wars.
“The three of them – those guys put together – can create a lot of mischief,” said Dan Ikenson, a long-time trade policy economist now with the Cato Institute think tank.
Ross, who is set to appear at a Senate hearing on his nomination on Thursday at 10 a.m., did not respond to a request for comment.
A spokesman for Trump’s transition team said Ross would draw on his experience “saving and creating” manufacturing jobs if confirmed, and would push to expand exports and reduce imports.
“MR. PROTECTIONISM”
In a Senate questionnaire ahead of his hearing, Ross said he has owned or had a significant stake in more than 100 businesses over 55 years.
The Economist has called Ross “Mr. Protectionism,” a term Ross told CNBC he sees as “pejorative” and inaccurate because he said the threat tariffs would be a used as a negotiating tool.
Ross has worked with allies in trade unions and other industry groups hurt by imports to push for tariffs and quotas, even starting his own coalition in 2003.
Though the coalition was short-lived, Ross’s trade rhetoric about the trade deficit and currency manipulation has remained consistent – and was echoed on the campaign trail by Trump.
Ross called the 20-year-old North American Free Trade Agreement (NAFTA) with Mexico and Canada the “poster child for unbalanced trade and investment,” in a letter to The Wall Street Journal.
He has accused Mexico of importing auto parts from China for vehicles it shipped duty-free into the United States.
But his companies have also produced goods in Mexico. The 2007 annual report for his International Textile Group called NAFTA “advantageous to the company” because of its factories there.
And Ross supported the Central America Free Trade Agreement, saying he believed it fixed some of what he saw as loopholes in NAFTA.
Ross has drawn an unusual endorsement for his manufacturing chops – from the United Steelworkers union, which backed Trump’s Democratic opponent Hillary Clinton in the election.
Leo Gerard, president of the USW, in an interview last month said Trump’s team understands that trade remedy laws themselves need to be modernized to make it easier to impose sanctions and duties before industries are hurt and jobs are lost.
“We have a lot of suggestions for when there’s a new trade team,” Gerard told Reuters.
(Additional reporting by Andy Sullivan; Editing by Caren Bohan and Leslie Adler)
IMAGE: Billionaire investor Wilbur Ross, chairman of Invesco Ltd subsidiary WL Ross & Co, arrives at Trump Tower to meet with U.S. President-elect Donald Trump in New York, U.S., November 29, 2016. REUTERS/Mike Segar
WEST PALM BEACH, Fla./WASHINGTON (Reuters) – U.S. President-elect Donald Trump plans to put his pick for Commerce Secretary, billionaire investor Wilbur Ross, in charge of his get-tough trade policy, a transition team spokesman said on Tuesday.
It is a signal of how Trump, who is also interviewing candidates to be the U.S. Trade Representative (USTR), plans to elevate a crackdown on competitors in the world market and the overhaul of trade deals that he says have hurt U.S. factory jobs.
The USTR will not be merged with Commerce, but Trump transition team spokesman Jason Miller made clear that most trade policy decisions would be steered by Ross, who made a good part of his fortune by investing in distressed steel companies that benefited from stiff import tariffs imposed by former President George W. Bush in the early 2000s.
“Mr. Ross not only has negotiated some very good deals over his lifetime, he’s also the person who worked closely with the president-elect on crafting his trade policy over the administration,” Miller told reporters during a daily transition briefing. “Mr. Ross will be playing a big role in any trade particulars in this administration.”
The move also marks a notable shift from how President Barack Obama ran his trade policy.
“It looks like the USTR office is being downgraded and subordinated to Commerce,” said Derek Scissors, a trade expert at the American Enterprise Institute, a right-leaning think tank in Washington.
“That’s a big change because USTR is this small elite trade agency right across from the White House.”
Trump, who takes office on Jan. 20, blamed multilateral trade deals with Mexico and China for the loss of U.S. jobs, a core message during his campaign, and said he would push to renegotiate the agreements.
Trump’s administration is expected to crack down on Chinese trade practices with enforcement cases, which has raised fears Beijing would retaliate.
He has also pledged to hit companies that shift production from the United States to other countries with a 35 percent tax on their exports into the United States — legislation he said his team would soon “write up.”
INTERVIEWS FOR USTR
Trump has picked more than 20 nominees for his cabinet so far, packing his team with billionaires from the business world, retired generals, and loyalists.
He is continuing to interview candidates for his cabinet this week at Mar-a-Lago, his Palm Beach resort, where he will spend the Christmas holiday — including potential picks for the USTR job.
Elevating Ross’ role as Commerce Secretary could make the USTR job less attractive to potential candidates with top-tier trade expertise, said Scissors at the American Enterprise Institute.
Traditionally, the USTR takes the lead on negotiations for trade deals, while Commerce, a massive sprawling agency, handles enforcement actions including anti-dumping and anti-subsidy investigations of low-cost imports.
On Tuesday, Trump was slated to meet about the USTR position with Jovita Carranza, a consultant who worked to attract support from Hispanic voters during the campaign.
Carranza was a deputy administrator with the Small Business Administration in the George W. Bush White House.
Trump has also discussed the USTR job with Robert Lighthizer, a former deputy USTR during the Reagan administration, and Dan DiMicco, former CEO of steel producer Nucor Corp.
In 2012, Obama proposed to combine Commerce and the USTR with the Small Business Administration, Export-Import Bank, Overseas Private Investment Corporation and U.S. Trade and Development Agency in one streamlined department – a plan that was rejected by Congress.
Trump has no plans to merge Commerce with the USTR, Miller said.
(Writing by Roberta Rampton; Editing by Andrea Ricci)
IMAGE: Billionaire investor Wilbur Ross, chairman of Invesco Ltd subsidiary WL Ross & Co, arrives at Trump Tower to meet with U.S. President-elect Donald Trump in New York, U.S., November 29, 2016. REUTERS/Mike Segar
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