Joe Donnelly Increased Investment in Family Business After Shift to Mexican Labor

Indiana Democrat, an outsourcing critic, has seen greater earnings in recent years

Sen. Joe Donnelly / Getty Images
July 14, 2017

Indiana senator Joe Donnelly (D.) didn't make substantial investments in his family's ink business until after it moved part of its manufacturing into Mexico, and his profits have steadily increased in the years since, according to financial disclosure forms.

Donnelly's investment in the family company, Stewart Superior Corp., was highlighted on Thursday by the Associated Press, which pointed out the senator's past criticism of companies that outsource manufacturing to Mexico. Donnelly has said that outsourcing is "a fancy term for 'someone in Indiana has just lost their job,'" and is currently sponsoring the "End Outsourcing Act."

A representative for Stewart Superior, an ink stamp company, was surprised to hear Donnelly had been critical of the practice, framing it during a conversation with the Washington Free Beacon as the only way the company stays competitive.

Julie Paramo, the company's operations manager, said the company moved some of its manufacturing of ink stamp pads to a factory in Guadalajara five years ago—right around the time that Donnelly began directly investing in the longtime family business run by his brother.

Donnelly first disclosed his investment of between $15,001 and $50,000 in Stewart Superior, which is not publicly traded, in his 2013 financial disclosure report. No income was reported. The filing notes that he previously held assets in the company, but that it was below $1,000 and therefore didn't need to be disclosed.

The size of Donnelly's investment appears to stay the same in the years that immediately followed, but his income off it steadily increased.

In both 2014 and 2015, Donnelly reported that he earned up to $15,000 in dividends. By 2016, Donnelly was reporting that he earned up to $50,000 off his investment.

None of the disclosure forms filed by Donnelly during his six years in the House of Representatives list an investment in the company.

Paramo said the company had no choice but to move manufacturing to Mexico for some products. Raw materials are transported to Guadalajara, and then the finished products are picked up by Paramo in San Diego and brought back to the company's headquarters near San Francisco.

"We don't do it a lot, but our bigger clients need us to bring costs down," Paramo said, citing large companies such as Close to my Heart that rely on Stewart Superior.

Paramo, who has been working at Stewart Superior for nearly 30 years, said the company chose Mexico over China, which is where some clients go as an alternative to them.

"When people want cheap, they go to China," Paramo said. "We don't go to China because you never know what you're going to get."

Stewart Superior advertises on its "about us" page that its new plant in Mexico allows it to provide "economical, cost competitive manufacturing."

"A recently opened manufacturing plant in Guadalajara, Mexico now brings economical, cost competitive manufacturing and product development to our valued customers," the company writes.

Donnelly's campaign did not respond to questions regarding whether he was aware of the company's operations and whether the decreased manufacturing costs played a role in the timing of his investment.

In a statement to the Associated Press, Donnelly's campaign manager failed to address his knowledge of the company's Mexican operations.

"Joe is proud to support good companies that create quality Hoosier jobs, including Stewart Superior," said campaign manager Peter Hanscom. "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, who is facing reelection in 2018, engaged the outsourcing issue last year by directly criticizing Indiana-based air conditioning company Carrier for plans to move part of its operations to Mexico like Stewart Superior did.

"What you’re seeing with Carrier is what I call free riders," Donnelly said. "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 into the United States."

In a letter sent to President Donald Trump following last year's election, Donnelly urged the president to "encourage investment in the foundation of our economy— American workers, their families and our communities."

Though Stewart Superior is headquartered in California, it has a clear stamp manufacturing plant in LaPorte, Ind.

Published under: Joe Donnelly