There is often confusion over what the term ‘troubled company’ means. Most people think it means a company teetering on bankruptcy, but in Wall Street terms it means that a company isn’t yielding enough profits. In other words, a ‘troubled company’ can be profitable. It would be one thing to ship jobs overseas to keep a company alive, but, often, this happens solely to increase profits.
The shock of losing a precious job in a town afflicted by high unemployment is always hard. A foundation for a stable family life and secure home instantly disappears, replaced with a future filled with fears over health insurance, missed mortgage payments and the potential for a slip below the breadline.
But for Bonnie Borman – and 170 other men and women in Freeport, Illinois – there is a brutal twist to the torture. Borman, 52, and the other workers of a soon-to-be-shuttered car parts plant are personally training the Chinese workers who will replace them.
It’s a surreal experience, they say. For months they have watched their plant being dismantled and shipped to China, piece by piece, as they show teams of Chinese workers how to do the jobs they have dedicated their lives to.
And yes, it is a profitable company:
Bain bought the firm that was to become Sensata in 2006, when it was the Texan arm of a Dutch company. It then floated it on the stock exchange in 2010, but kept a majority stake. Sensata came to own the Freeport plant at the beginning of 2011 as part of a wider purchase of a car parts business from Honeywell.
Sensata spokesman Jacob Sayer said closing the Freeport plant to cut costs was a key element of the Honeywell deal. “If that had not been part of the strategy, then the deal would not have been so attractive,” he said.
Bain has declined to comment. But it has made a lot of money from owning Sensata, quadrupling its initial 2006 investment. In business circles that focus on the bottom line is all that matters. But, not surprisingly, it cuts less ice in Illinois.
Workers insist their operation is profitable and makes top quality auto sensors.
“I understand business needs to make a profit. But this product has always made a ton of money. It’s just that they think it is not enough money. They are greedy,” said Tom Gaulraupp, who has put in 33 years at the plant and is facing the prospect of becoming jobless at the age of 54.
There are political implications (boldface mine):
But, in the midst of the 2012 presidential election, Freeport is different. For Sensata is majority-owned by Bain Capital, the private equity firm once led by Mitt Romney, that has become a hugely controversial symbol of how the modern globalised American economy works. Indeed, Romney still owns millions of dollars of shares in the Bain funds that own Sensata.
So as Sensata strips out costs by sacking American workers in favour of Chinese ones, the value of Romney’s own investments could rise, putting money into the pockets of a Republican challenger who has placed job creation in America at the heart of his bid for the White House.
I’ve long given up on the idea that Democrats would do the right thing, and in this case, attack Romney to help these workers–which is the most important thing–but if they don’t bludgeon him on this, then they are the most incompetent party in political history.