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Tuesday, July 17, 2012

The Biggest Outsourcer

The 'private sector' of the economy is, in fact, the voluntary sector; and the 'public sector' is, in fact, the coercive sector. — Henry Hazlitt

Last fall while driving along the historic Lincoln Highway I passed through Mansfield Ohio. Mansfield was first settled in 1808 and was named for Jared Mansfield, the U.S. Surveyor General who directed its planning. The village of Mansfield was incorporated in 1828, and in 1857 Mansfield was chartered as a city. During the War of 1812, the first courthouse, jail, and church of Richland County was served in one of two blockhouses that were located on the public square until 1816. In 1908, the blockhouse became a symbol of Mansfield's heritage during its 100th birthday celebration, and in 1929, the blockhouse was relocated to its present location at South Park. The railroads came to the city in 1846, followed by the first road across America, the Lincoln Highway in 1913, smoothing the path for economic growth.

However, like many cities in the rust belt region of the Midwest, Mansfield saw a large decline in its manufacturing and retail sectors. Beginning with the steel Recession of the 1970s, the loss of jobs to overseas manufacturing, prolonged labor disputes, and deteriorating factory facilities all contributed to heavy industry leaving the area. Mansfield Tire & Rubber Company, Ohio Brass Company, Westinghouse, Tappan and many other manufacturing plants were either bought-out, relocated or closed, leaving only the AK Steel Plant in Mansfield and the General Motors Fisher Body Stamping Plant (Mansfield-Ontario Metal Center) in neighboring Ontario as the last two remaining heavy industry employers.

The AK Steel Mansfield Works production facility, formerly Armco Steel, was the location of a violent 3-year United Steelworkers Union lock-out and strike from 1999 to 2002. On June 1, 2009, General Motors filed for Chapter 11 bankruptcy protection and announced that its Ontario stamping plant (Mansfield-Ontario Metal Center) would close in June 2010.With the loss of the jobs, locally owned businesses in downtown Mansfield closed, as did much of the retail built in the 1960s along Park Avenue West (formerly known as "The Miracle Mile") and Lexington Avenue. New big-box retail, shopping strips and franchise restaurants have been built in the adjacent suburban city of Ontario, which has replaced Mansfield as the retail hub for Richland County and north-central Ohio.

As we drove through Mansfield, not a pretty town, we passed the abandonedAbandoned Westinghouse plant in Mansfield, Ohio.<br /><br />,-82.50588000&spn=0.001,0.001&t=k&hl=en Westinghouse appliance factory, a plant that once employed 8,000 people in the manufacture of clothes dryers, electric ranges, and other home appliances. It was here that the first the first “Electro Robot” was made in 1937. Now the plant is being torn down and all of the jobs are gone, probably to China or Korea. Westinghouse fell into decline due to bad business decisions; sell off of division, entry into to broadcast industry, and constant labor strife and strikes. Eventually their main manufacturing plant in Pittsburg closed and the once thriving Mansfield plant was not far behind.

The Westinghouse plant closure is just one example of many manufacturing plants that have closed in the United States due to the high cost of labor, bad management, and oversees competition. Today the Obama reelection campaign is accusing Bain Capital and Mitt Romney of outsourcing American jobs by closing plants and laying off the workers. This is blatantly false. Yes, Bain closed some plants due to the factors listed above, but they saved many more jobs by restructuring plants and allowing them to become more competitive.

From 1984-98, Mitt Romney worked for Bain Capital. There were 77 companies involved with Bain during that time, and some failed, some sputtered, but multiple others were raging successes. Here is a sample of where the Romney wealth came from. A few of Bain’s successes are:

Staples: Staples only had one store when Bain invested. Romney sat on Staples' board for 15 years after Bain invested in it, according to former Staples CEO Thomas Stemburg. Now the company employs 90,000 people. Stemberg also said on Fox News that Romney is "the single best corporate director I ever worked with."

Steel Dynamics: Bain's investment: $18.3 million. Estimated Gain: $85.5 million. A steel making company that first dealt with Bain Capital in 1994. Steel Dynamics went public in 1996, and still is in business today.

Domino's Pizza: Bain Capital invested $1 billion into Domino's in 1998, according to the New York Times. Now Domino's has 9000 stores.

DDi: Bain did very well with the circuit board makers DDi, nearly quadrupling its initial investment in a few years, according to the Wall Street Journal. The Journal reported that after Romney left, Bain merged DDi with another company and then gradually sold its DDi stock. Romney personally sold $4.3 million of DDi stock in May 2001. In the early 2000s, DDi experienced a drop in sales and cut its work force, according to the Wall St. Journal. DDi defaulted on some loans when Bain still had some control over the company. But DDi emerged from bankruptcy and is still doing business today. In fact, DDi's website says that the company acquired another company called Coretec Inc. in 2010.

Bright Horizons Family Solutions: James H. Furneaux, venture colleague of Romney from another company wrote to the Boston Globe that Mitt Romney recruited the founding team of Bright Horizons, a childcare company, and was heavily involved in the early strategy of the company. Bright Horizons flourished and still flourishes today, with 800 child care centers and 19,000 employees. In fact, the Boston Globe called Family Horizons the number one place to work in their "Globe’s Top Places to Work" survey.

Sports Authority: Sports Authority was also quite small when Bain became involved. By 2006, Sports Authority had over 14,000 employees, according to

Wesley Jessen VisionCare Inc.: In 1995 Bain Capital invested $6.4 million in specialty contact lens maker Wesley Jessen VisionCare. The Wall St. Journal reported that the investment yielded a gain of more than $300 million. The New York Times reported that in 2000, Ciba Vision Corporation bought Wesley Jessen for $758 million.

Stage Stores: Bain Capital invested in Stage Stores in 1988, and Stage went public in 1996, with 9,606 employees. BY 1999, the company employed 15,700 people. Bain received excellent returns. Employment dropped back down when the company went into chapter 11 bankruptcy in 2000. But Stage eventually recovered and now employs 13,500 people, according to (Click Here to see Romney’s defense against Obama’s outrageous charges of destroying jobs)

Obama wants to tag Romney with outsourcing. It’s the only campaign issue he has for he certainly can’t run on his dismal record. All he has is Bain’s outsourcings and calls warfare. What a miserable president he has been

With all the talk of Bain Capital, let us consider the bane of capital. Speaking at a campaign stop in Roanoke, Virginia, President Barack Obama set business owners straight: "If you've got a business, you didn't build that." Powerful stuff. "If you've been successful, you didn't get there on your own. You didn't get there on your own. If you've got a business, you didn't build that. Somebody else made that happen."

This from a person who told his supporters that his nomination marked the moment when the waters of the great oceans would recede and when the earth's temperature would cool. So now one wonders whether Obama really did win that election. He didn't build the voting machines. He didn't create the cars that brought voters to polling places. He didn't create the pens that wrote the checks for his campaign. Someone else did that. So he didn't win that election. Someone else did.

This from a person who told his supporters that his nomination marked the moment when the waters of the great oceans would recede and when the earth's temperature would cool. So now one wonders whether Obama really did win that election. He didn't build the voting machines. He didn't create the cars that brought voters to polling places. He didn't create the pens that wrote the checks for his campaign. Someone else did that. So he didn't win that election. Someone else did.

The thing is, he does not know how to create a productive job that adds value because he never built a business. He never filed the corporate-compliance documents, was never posed with obligations to leap through endless hoops of government red tape to sell a product. He never built a factory, never went to a fabricator to have manufacturing machines built to specifications. The only fabrication he knows is falsifying his life story — one cannot call such novels a "biography" or an "autobiography," but only a "life story." So he can fabricate facts in his life story. He can fabricate claims against Romney that fly against the truth. But he does not know how to fabricate a machine. Someone else made that happen.

He does not understand what it means to research a product for years, risking all of one's life savings and borrowing and seeking investment capital, hoping for that breakthrough that might fill a need. He does not know what it is to sell a consumer product and, one day, have an extraordinary insight that, by tweaking the product just a bit, it can open doors to satisfy millions of needs. He does not understand because he didn't build that. Someone else made that happen.

For decades people sat in coffee shops and ordered coffee from a waitress who served it fifteen minutes later in a porcelain cup, refilling it endlessly at no extra charge. It cost peanuts. A guy in Seattle became convinced that he could serve an untapped societal desire for a more glitzy coffee — what he called an affordable luxury. He risked his shirt, and he was right. People were ready to stand in line for ten minutes, pay five dollars a cup, pay for refills, and drink it out of paper cup for the affordable luxury that a Starbucks offered. Other people before him had picked the coffee beans, conceived of brewing them for a drink. But a guy turned an idea into something that has touched millions of lives.

Another fellow experienced an accidental mess-up at work when some glue was not made properly and barely held its stick. He noticed that an adhered item could be separated from the item to which it been glued, and then could re-stick again. Most everyone else would have shrugged and grumbled about the day's mistake at the glue factory. But this guy figured out that people could really do something with little paper notes that could be used as Post-Its. It took a small form of crazy, a wonderful crazy that could think outside a box, to see a vision of millions of insane people like me who survive on Post-Its. 3M made millions.

Obama is the bane of capital. He does not understand it. He does not understand the risk of capital, the possibility of capital, the magic of how America opened possibilities never before imaginable because it liberated capital for private enterprise.

Now let’s see what Obama is doing about outsourcing. Firstly with increasing tax rates and onerous regulations many companies like his buddy Jeff Immelt’s General Electric is doing when they outsource hundreds of thousands of jobs to China and India. Apple, Microsoft, and even General Motors are doing the same. Of course this doesn’t count in the media coverage. It’s only Bain that matters and most of the jobs lost in firms Bain invested in were in companies that just could not make it. See

As President Obama was attacking Mitt Romney for supposedly “outsourcing” jobs when he ran Bain Capital (a charge disputed by The Washington Post’s fact checker), tens of thousands of Americans were fleeing the Obama economy to find work in Canada.

“Skilled U.S. workers are coming to Canada in ever greater numbers, driven out by high unemployment at home, and tempted in by job shortages in key sectors like Alberta’s growing energy sector,” Reuters reported last week.

“Government figures show that Canada issued 34,185 temporary work permits to Americans last year, just shy of the record 35,060 handed out in 2010, and officials expect that number to keep growing.”

Why will it keep growing? Because the U.S. job market is not growing, while Canada’s is.

In the Obama economy, according to news reports this year, blue-collar Americans are fleeing north by the thousands to find work, Mexican immigrants are returning to their home country to find work because the prospects are so bad here, and more of America’s wealthiest are fleeing to Asia to protect their assets from the reach of the U.S. government.

Meanwhile, consumer confidence is down for the second straight month.

“The greatest concern to consumers is that wage and job growth will remain depressed over the foreseeable future, and that these meager gains are likely to be further diminished in the years ahead by rising taxes and benefit cutbacks,” Richard Curtin, who directed the Reuters/University of Michigan survey of consumers, said last week.

President Obama offers nothing that will reverse these trends and bring employment and investment back to the United States. So he tries to distract the people by calling Romney an outsourcer. The irony is that America will continue losing jobs and workers to other countries, with no end in sight, if Obama’s trick works.

The latest and most egregious example of Obama’s push to outsourcing is our space program. When Neil Armstrong and Buzz Aldrin landed their Apollo 11 lander on the moon on July 20, 1969 the United States was the big kahuna when it came to space. No country could touch us, not even the Soviet Union. We were the leaders in space exploration and technology. This was good for the nation, our national defense, and business. Thousands were employed by the contractors making the parts for the space program. This meant jobs – good paying jobs.

Over time NASA, like all government agencies, grew to bureaucratic giant. Once the Apollo missions ended NASA began the space shuttles program that lasted until last year. The shuttle was used as a recoverable space vehicle for putting satellites into orbit, servicing the Hubble Telescope and supplying the International Space Station.

Congress became more and more disenchanted with NASA’s lack of a focus as they spent more and more money. NASA began to dabble in climate change, environmental issues, and even wanting to give Islamic countries more involvement with the space program. They had become a political correct bureaucracy with no clear mission.

Now the Obama administration is outsourcing much of NASA’s space program, particularly supplying the ISS, to Russia. The Mail Online reported this week that American astronaut blasted off in Russian rocket after the end of shuttle program forces U.S. to outsource space travel:

“They may have been bitter enemies during the Cold War space race, but these days the U.S. and Russia work together to transport astronauts through the cosmos.

And it's just as well - for since the demise of the space shuttle programme last year, NASA has been forced to piggy-back off other countries rockets for its space expeditions.

This enforced co-operation was on show on Sunday, when American Sunita Williams joined colleagues from Russia and Japan on a Soyuz capsule headed to the International Space Station for a four-month mission.

Ms Williams, Yuri Malenchenko and Akihiko Hoshide launched successfully from the Baikonur cosmodrome in Kazakhstan at 0240 GMT.

They are scheduled to berth early on Tuesday, joining Nasa Flight Engineerarticle-2174106-1413902A000005DC-931_634x431 Joseph Acaba and Russian cosmonauts Gennady Padalka and Sergei Revin aboard the ISS.

'The Soyuz had a very smooth ride into space,' a spokesman for Nasa said during a live broadcast on the agency's television channel.

The Soyuz TMA-05M rocket blazed a bright orange trail through cloudy skies above the Kazakh steppe on the first stage of its journey to the ISS, a $100billion research complex orbiting 240 miles above Earth.

Moscow hopes a successful mission will help to restore confidence in its once-pioneering space programme after a string of launch mishaps last year, including the failure of a mission to return samples from the Martian moon Phobos.

The previous Soyuz launch on May 15 was delayed by more than a month after an accident during pressure tests damaged the Soyuz crew capsule. There were no such delays with Sunday's launch.

'The most tense, the most difficult part (of the launch) has been successfully implemented,' said Vladimir Popovkin, head of Russian space agency Roscosmos.

'I have just spoken to the crew. They are feeling great,' Russian news agencies quoted Popovkin as saying in Baikonur. 'I have no doubts that all will go according to plan.'

Colonel Malenchenko, a 50-year-old cosmonaut on his fifth space voyage, loosened his straps about 20 minutes after blast-off after conducting air pressure checks.

Asked by Mission Control how the crew was feeling, he replied: 'Good.' A doll given to him by his daughter dangled from the roof of the capsule.

Captain Williams, 46, and Mr Hoshide, 43, a civilian engineer, are both on their second space flight and their first aboard a Soyuz spacecraft.

They, along with Colonel Malenchenko, are scheduled to return to Earth in mid-November.

The previous crew of three at the ISS returned on July 1. Cosmonaut Oleg Kononenko, NASA astronaut Don Pettit and European Space Agency astronaut Andre Kuipers helped to dock the first privately owned spacecraft during a six-month stint in orbit.

Sunday's launch took place less than three weeks after China's Shenzhou 9 spacecraft returned to Earth, ending a mission that put the country's first woman in space.

Although China is far from catching up with the United States and Russia, the Shenzhou 9 marked China's fourth manned space mission since 2003.

It comes as budget restraints and shifting priorities have held back U.S. manned space launches.”

So while Obama and his media minions harp about Bain Capital our campaigner-in chief is outsourcing elements of our national defense to nations that have their own interests in mind — not ours. Once a leader in space technology we have abdicated that role to our once Cold War enemy and China. This is due of an absence of a clear mission for NASA by Obama and the Bush Administrations. Obama wants to put all of his emphasis on social issues and class warfare, items not enumerated to Congress for funding, while we lose our edge in technology.

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