Obama’s Outsourcing Allies

The president has a history of associating with outsourcers

June 27, 2012

President Barack Obama recently called Mitt Romney an "outsourcing pioneer"—a title once bestowed on General Electric and its CEO Jeffrey Immelt, key Obama allies.

Business insiders reacted with surprise in 2011 when Immelt discussed a new push to hire Americans to run call centers locally. "Offshore Outsourcing Pioneer GE to Hire 1,100 American IT Workers," read the headline from CIO magazine.

"To those who know their IT outsourcing history, GE and offshoring are practically synonymous," the article read.

The month before GE’s hiring spree, the company transferred its Wisconsin-based x-ray division to China, displacing 150 American workers, while bringing on 65 engineers overseas. That outsourcing occurred while Immelt was heading Obama’s Jobs Council.

GE became the third-largest company in the world under Immelt’s leadership; cost cutting through outsourcing and expanding to overseas markets has helped fuel its growth over the past decade. When Obama chose Immelt to chair his Jobs Council in 2011, the Huffington Post reported:

As the administration struggles to prod businesses to create jobs at home, GE has been busy sending them abroad. Since Immelt took over in 2001, GE has shed 34,000 jobs in the U.S., according to its most recent annual filing with the Securities and Exchange Commission. But it's added 25,000 jobs overseas.

At the end of 2009, GE employed 36,000 more people abroad than it did in the U.S. In 2000, it was nearly the opposite.

GE is not the only Obama ally to ship jobs overseas during the recession. General Motors announced its intention to begin importing cars bound for the U.S. from factories in China and Mexico just months after Obama spearheaded a $50 billion bailout of the company despite public opposition to the plan.

In a confidential 12-page presentation to members of Congress, obtained by The Detroit News on Friday, GM said it will boost U.S. sales of vehicles built in those four countries by 98 percent -- or about 365,000 vehicles -- while shrinking production in Canada, Australia and European countries by about 130,000 vehicles.

GM also disclosed it will start importing vehicles made in China in 2011, reaching 51,546 vehicles in 2014. Imports from South Korea to the United States will jump from 36,967 vehicles in 2010 to 157,126 in 2014…

GM plans to trim 21,000 hourly workers and close 13 of its 47 U.S. plants by the end of 2010 as part of a tougher recovery plan sought by President Obama's auto task force. It will close three more U.S. plants by 2014.

Obama has trumpeted the GM bailout on the campaign trail and blasted Romney for once saying that he would have let the car company go bankrupt. Obama’s assistance to the company did not end with the bailout; the administration later granted the automaker a $45 billion tax write-off that allowed it to pay no income tax, despite taking in a record-$7.6 billion profit in 2011. That came one year after GE paid no income tax on $5.1 billion in domestic profits—35 percent of its worldwide profit of $14.2 billion.

Romney has attempted to counter Obama’s "outsourcer-in-chief" attack by accusing the president of perpetuating outsourcing through poor economic policies. His campaign "pointed [reporters] to an April 26 Wall Street Journal story headlined ‘U.S. Firms Add Jobs, but Mostly Overseas’ in an attempt to put the Obama campaign on the defensive," according to NPR.

That has proved true on the energy front.

Foreign-controlled companies collected $1.7 billion of the green energy grants issued by the stimulus, compared to $500 million for domestic operations.

The administration has pumped billions in federal grants and subsidies to energy companies to manufacture LED and compact fluorescent bulbs (CFBs). The result has been a dramatic shift of jobs to China, where the pricey bulbs are made at a low cost thanks to cheap labor and the regime’s control of 95 percent of the rare raw materials needed to build the bulbs.

The energy-efficient focus has translated to large job losses in swing states, such as Virginia. The administration’s push for more energy efficient lightbulbs led GE to close its largest manufacturing plant in Winchester, Va., leaving 200 laborers in one of the poorest parts of the state out of work.

Romney will continue to parry Obama’s attacks on outsourcing when he campaigns in northern Virginia on Wednesday. The president returned to the White House late Tuesday after campaign stops in Atlanta and Miami.