PI Original Matthew Blake Wednesday October 24th, 2012, 11:23am

Freeport Sensata Layoffs Spark National Debate On Outsourcing

Employees at the Sensata Technologies manufacturing plant in Freeport have failed to prevent the outsourcing of their jobs to China. Bu they have succeeded at helping to spark a national election season conversation about outsourcing, one that has dominated Illinois’ 17th congressional district race and emerged in the presidential campaign.

Employees at the Sensata Technologies manufacturing plant in Freeport have failed to prevent the outsourcing of their jobs to China.

But they have succeeded at helping to spark a national election season conversation about outsourcing, one that has dominated Illinois’ 17th congressional district race and emerged in the presidential campaign. But it is questionable as to whether this dialogue will result in government policies that could prevent another wave of U.S. jobs from being shipped overseas.

At the Sensata plant in Freeport, sensors and controls that are used in aircraft, automobiles and electronic motors are produced, with 170 employees working at the facility. Tom Gaulrapp, who says he has worked at the plant for 33 years, describes his job as “running very high-tech automated equipment.”

“We set up and troubleshoot equipment,” explains Gaulrapp, who says he is scheduled to lose his job on November 5.

Sensata told the Freeport plant employees in early 2011 that their jobs would be relocated to China by December of this year, and that workers must train their replacements. This is despite the fact that Sensata has turned a consistent profit, even while paying these employees an average of $17 an hour for eight-hour shifts.

Sensata employees in China can expect to be paid $1 an hour to work twelve-hour shifts, according to a report by the Institute for Global Labour and Human Rights.

Workers in Freeport have shrewdly centered attention on the fact that Bain Capital, a Boston-based private equity firm, owns Sensata. Bain is, of course, co-founded and formerly run by Mitt Romney, the Republican presidential nominee.

On June 21, the Washington Post reported that Bain was a pioneer in taking over U.S. companies and encouraging them to move jobs offshore in order to significantly save labor costs. This included outsourcing done as early as 1993, six years before Romney left the company.

A week after the Post article, Sensata employees held a press conference linking Romney to their impending layoffs. Employees set up an encampment called Bainport, and demanded Romney and President Barack Obama visit Freeport and debate the issue of outsourcing.

The topic has gained steam as Election Day approaches. On Monday, Rev. Jesse Jackson and the Freeport employees tried to meet with Sensata regarding their severance packages. According to Gaulrapp, company representatives ignored their overtures.

On Friday, MSNBC visited Bainport and Ed Schultz, host of The Ed Show, declared that, “We are in the belly of the beast of Mitt Romney’s economy.”

Schultz interviewed Cheri Bustos of Moline, the Democratic challenger in the 17th congressional district, which includes Freeport. Bustos makes Sensata a central part of her campaign, contending that both Romney and her opponent, U.S. Rep. Bobby Schilling (R-Colona), encourage outsourcing.

Bustos repeatedly vowed in a debate with Schilling last Wednesday that if elected she would “end these flawed and ridiculous tax policies that encourage outsourcing.”

Obama and Romney never did visit Freeport, and neither mentions the Sensata situation by name in the presidential debate or on the campaign trial.

But both candidates have increasingly focused their rhetoric on outsourcing.

In his closing statement in the presidential debate Monday night, Obama said he had a “plan to make sure that we bring manufacturing jobs back to our shores by rewarding companies and small businesses that are investing here, not overseas.”

While Obama suggested that he would change U.S. policies to stop outsourcing, Romney said that China must change. “I’ve watched year in and year out as companies have shut down and people have lost their jobs because China has not played by the same rules, in part by holding down artificially the value of their currency."

The former Massachusetts governor said that he would label China as a “currency manipulator” on the first day of a Romney presidency.

Debate moderator Bob Scheiffer questioned the wisdom of this idea, asking if it would spark a “trade war.” Romney responded that China is already “winning” a “silent” trade war between the two countries.

The facts are that China does not manipulate its currency as much as it once did, and according to the Washington Post, American allies such as Switzerland and Japan artificially push down the value of their currency as much as China.

While Romney might be incorrect or simply posturing to look tough on China, the Obama plan to stop outsourcing is also perhaps flawed. When pressed on policy specifics, Obama has cited the Bring Jobs Home Act, which Republican Senators filibustered in July. Bustos also has focused on this legislation.

The bill would put one wrinkle in the tax policy that allows companies to write off the costs of transferring their business location. Companies would continue to enjoy the deduction if they transferred jobs within the U.S., but lose the write off if they moved overseas. Revenue collected from this change in the tax code would be used as tax credits for companies that moved jobs back to the U.S.

“This particular proposal is not expected to change behavior at all,” says Steve Wamhoff, the legislative director at Citizens for Tax Justice, a research and advocacy organization in Washington D.C. Wamhoff says that ending this write off is “small potatoes” to the cost of doing business for companies such as Bain.

But Wamhoff acknowledges that, “There are other proposals that the president has that would do a whole lot more.” These include changes to the tax code that Obama proposed at the start of his presidency that would partly end companies deferring the payment of U.S. taxes on profits from overseas facilities.

Both political parties, at least on the national level, have fairly recently taken up the issue of how corporate-friendly tax policies and free trade can hurt American job retention and creation.

This has traditionally been the politics of a few progressive rustbelt lawmakers such as U.S. Sen. Carl Levin (D-Michigan), sponsor of the Bring Jobs Home Act, or politicians to the left of the Democratic Party line. For example, the presidential bids of Ralph Nader have focused on Third World sweatshop labor, which he connects to outsourcing.

Sensata employee Gaulrapp says that his co-workers are “not happy with either party”, but are optimistic that Obama and a Congress that may include lawmakers such as Bustos will change matters.

“The Bring Jobs Home Act is not an end all, but it’s a start,” Gaulrapp adds. “It will hopefully start an entire body of legislation that addresses outsourcing.”


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