Election 2020

Vulnerable Dem. Senator Profits From the Very Outsourcing He Condemned

Sen. Joe Donnelly (D-IN), speaks with the staff at Hamilton Center in Terre Haute, Ind., June 30, 2017. (Austen Leake /The Tribune-Star via AP)

Sen. Joe Donnelly (D-Ind.), who faces a tough re-election campaign next year in a state that President Donald Trump won last November, has personally benefited from the very job outsourcing he has railed against for years. Specifically, he attacked Carrier Corp. for moving manufacturing jobs to Mexico last year, at the same time as he profited from a family business which relies on Mexican labor.

In 2016, the very year when Donnelly attacked Carrier, the senator made between $15,001 and $50,000 in dividends from stock he owns in an arts and crafts business owned by his family, the Associated Press (AP) reported Thursday.

For more than a year, Stewart Superior Corp. and its subsidiaries have been shipping thousands of pounds of raw materials to Mexico. The company owns a factory south of the border which produces ink pads and other supplies, the AP reported after examining customs reports from Panjiva Inc., which tracks American imports and exports. The finished products are sent to California.

Donnelly previously served as a corporate officer and general counsel for Stewart Superior before he was first elected to Congress in 2006. While his brother now owns the company, the senator, who filed a disclosure form in May, reported owning as much as $50,000 in company stock and earning between $15,001 and $50,000 in dividends last year.

On Stewart Superior’s website, the company claims that its Mexican factory “brings economical, cost competitive manufacturing and product development to our valued customers.”

But Alejandro Ruelas-Gossi, a professor at the University of Miami School of Business who focuses on Latin America, argued that these practices harm people in Mexico.

“What you are creating is poverty, because the jobs they are creating are very poor jobs,” Ruelas-Gossi told the AP. “You have very poor salaries. You have poor quality of life. It’s not good for America and it’s not good for Mexico.”

While free trade advocates would argue that even low-paying jobs still help the people in Mexico — they are better than no jobs, and so long as people aren’t forced into labor, they benefit the economy — Donnelly has already disagreed with this position. Ruelas-Gossi attacked his “hypocrisy” on the issue.

During the 2016 presidential campaign, Donald Trump and Mike Pence, Indiana’s governor at the time, focused on workers who would lose their jobs in the planned move by Carrier and its parent company, United Technologies. Donnelly also attacked the company, blaming corporate greed and the North American Free Trade Agreement (NAFTA).

“What you’re seeing with Carrier is what I call free riders,” Donnelly told The Statehouse File in August 2016. “What they do because of the trade agreement NAFTA, is they ship jobs to Mexico for $3 an hour, and so they get the benefit of the absolute lowest wages they can find, and then turn around to ship the products back to the United States.”

Sound familiar? Donnelly could as easily have been describing the business policies of Stewart Superior.

Less than a month after Trump won the election, Carrier announced an agreement to save about 800 jobs in Indianapolis. Donnelly thanked Trump for his involvement in the deal.

During his first run for the U.S. House of Representatives in 2004, Donnelly attacked NAFTA and lamented “outsourcing,” a word he has called “a fancy term for ‘Someone in Indiana has just lost their job.'” He is currently sponsoring a bill entitled the “End Outsourcing Act,” which would require companies to disclose jobs moved abroad, and deny them certain benefits.

When the AP reached out to Donnelly’s campaign about Stewart Superior, the campaign statement focused on the company’s operation in LaPorte, Indiana.

“Joe is proud to support good companies that create quality Hoosier jobs, including Stewart Superior,” Peter Hanscom, Donnelly’s campaign manager, told the AP. “Throughout his career, Joe Donnelly has always fought for a level playing field for the American worker, including a renegotiation of NAFTA, and he will continue to do so.”

Donnelly, the only Democrat elected statewide in deep red Indiana, is facing a tough re-election race in 2018. Two Republicans in the House of Representatives, Luke Messer and Todd Rokita, have signaled their interest in challenging him.

In April, the senator’s campaign reported raising $1.3 million in the first three months of the year, and a war chest of $2.55 million, USA TODAY reported. This dwarfed the haul reported by Messer, who has raised more than $700,000 and will have more than $1.6 million in the bank.

Trump and Donnelly might be wrong to lament outsourcing, but it is still rank hypocrisy for a man who attacks the practice of sending jobs to Mexico to profit from a company with a manufacturing plant in Mexico. This embattled Democrat’s Senate re-election race just got a little tougher.