Come Saturday Morning: GOP and Pals REALLY Bad For and At Business
Last fall, I discussed how Republicans, particularly those in my neck of the woods, seemed to be bad both for and at business. As it turns out, they’re apparently really bad for and at business — and a few of them are crooked as hell.
First off, let’s look at the checkered career of Frank Vennes, recently charged in connection with the massive Tom Petters $3.65 billion Ponzi scheme. This is a classic case of “if this guy were a Democrat it’d be all over the news now”; as it is, the silence of the local corporate media is telling. There was nothing by any of the local TV or radio stations, and only one article apiece in the Minneapolis StarTribune and the St. Paul Pioneer Press — and both of those articles were not only buried in the business section, they both buried the lede of Vennes’ heavy-duty political (and Republican) ties: the Pioneer Press didn’t mention them at all, while the Strib waited until the third paragraph from the end to bring them up.
This is a doozy, folks. Just take a gander at how local blogger and independent reporter Karl Bremer opens his latest piece on Vennes:
Convicted money launderer and cocaine/gun runner Frank Vennes Jr., a close personal friend and major campaign contributor of Minnesota presidential candidates Michele Bachmann and Tim Pawlenty, has been indicted on federal fraud and money-laundering charges for his alleged role in the $3.5 billion Tom Petters Ponzi scheme.
Vennes became implicated in the Petters Ponzi in 2008. Millions of dollars worth of his assets have been seized and are being liquidated to pay back some of the victims of the multibillion-dollar scam—the largest in Minnesota history. But until now, Vennes had not been charged with a crime for his involvement in the Ponzi scheme, which sent Petters to the U.S. Penitentiary at Leavenworth Federal Prison for 50 years.
If convicted, Vennes could go to federal prison for the second time in his life on such charges—and also be in need of a second presidential pardon.
Besides each taking tens of thousands of dollars in campaign cash from Vennes and his family, Bachmann and Pawlenty—along with former Minnesota Sen. Norm Coleman and former Minnesota GOP Chair Ron Ebensteiner—unsuccessfully sought a presidential pardon from President George W. Bush for Vennes’ federal crimes from the 1980s. Vennes donated heavily to Bachmann’s congressional campaign, Pawlenty’s gubernatorial campaign, Coleman’s senatorial campaign, the state House Republican Campaign Committee, the Minnesota GOP and other GOP candidates, all during the time the four Republicans heartily endorsed his candidacy for a pardon.
The timing of Vennes’ largesse has led many to speculate that it was part of a “pay-for-pardon” plot.
Here’s the take of blogger and former Strib reporter and columnist Eric Black of MinnPost. He’s careful to mention that there’s no concrete evidence that there was a quid pro quo involved in the pardon efforts made on Vennes’ behalf, but he also says the Vennes indictment “is at least somewhat embarrassing to both of Minnesota’s Repub presidential candidates.” Considering Vennes’ heavy involvement in Minnesota Teen Challenge, a charity favored by Bachmann and Pawlenty, it may well end up being more than an embarrassment.
But of course, this is outright scammery. What about those folks who do things that are scummy but legal, such as sending jobs overseas to avoid paying living wages to American workers?
Minnesota’s Republicans are trying to justify yet another round of the same sorts of business-and-rich-people-favoring tax cuts that have been part of the state landscape ever since Tim Pawlenty still had his mullet and still ran the Minnesota House. A key talking point revolves around Hutchinson Technology, which makes suspension assemblies for hard disk drives (and whose top brass are GOP-friendly). Seems that Hutchinson Tech is shutting down all its Minnesota manufacturing. As Hutchinson, Minnesota resident (and BSP blogger) Sally Jo Sorensen shows, local Republicans like Glenn Gruenhagen claim this is due to the Evil Socialist Evildoers of Evil wrecking the business climate of our fair state:
We recently learned a prominent Hutchinson company will shift its manufacturing operations to Wisconsin at a savings of $45 to $60 million annually. Our tax climate remains among the most unfriendly in the country and Gov. Dayton’s plans to raise taxes would put us at a further disadvantage.
You reach a point of diminishing returns when tax increases push our job creators out of the state, cutting off revenue streams we need for sustainability and a strong economy. Our neighbors – including Wisconsin – recognize this and declare themselves “open for business” instead of strangling the goose that lays our golden eggs.
What Gruenhagen and the Republicans won’t tell you, but Sorensen will, is the following:
a) Hutchinson Technology had a South Dakota plant which was opened to huge fanfare and similar attacks on Minnesota’s business climate back in 1998 — but that plant, which “business-friendly” South Dakota had given boatloads of free-money incentives, closed in January of 2009.
b) In April of 2009, when operations from the closed South Dakota plant were consolidated with HTI’s Minnesota and Wisconsin operations, Wisconsin’s governor was a Democrat, Jim Doyle, and Democrats had just won control of the State Assembly while holding onto the state senate. As Sorensen says, “Under Republican logic, one would think that Hutch Tech jobs would have flowed to South Dakota.”
c) HTI is also laying off over 200 people in Wisconsin over the next few months.
d) Guess where most of the manufacturing jobs are probably eventually going? Wisconsin? South Dakota? Mississippi?
Offering the perfect investment location, Minnesota-based Hutchinson Technology Inc. is breaking ground in Ayutthaya province, central Thailand, on its first-ever production facility outside the United States.
Start up at the 13,000 sqm factory in the Rojana Industrial Park is anticipated by year’s end. The company supplies suspension assemblies, which hold the read-write heads at microscopic distances above the hard disk drives, to all of the major HDD makers. Locating in Thailand puts it in close connection to customers that have HDD production bases here or in nearby countries across Asia.
“When we were doing our country selection process, what especially differentiated Thailand from other places was customer proximity,” said Abraham Sleiman, managing director of the Ayutthaya plant, which is known as Hutchinson Technology Operations (Thailand) Co., Ltd. By having a production facility in Thailand, the company can accelerate speed of delivery to customers operating locally and in Malaysia, China, the Philippines and Japan ? the plant’s main markets. “Operating in Thailand improves our responsiveness. This means lower logistics cost, a benefit to us and our customers,” Sleiman said.
The need to be near Asian customers — as opposed to, say, the desire to exploit the low-cost Thai workforce — was also cited in recent Wisconsin coverage of the Eau Claire job cuts: “. . .Minnesota’s governor recently met with the CEO to talk about the company’s decision to consolidate operations in Eau Claire and Thailand. Governor Dayton says he was told there was nothing Minnesota could’ve done to prevent it. HTI calls it a shift of the customer base from 100 percent American to 98 percent Asian.”
HTI makes it sound as if the shift is of recent vintage, perhaps as a way to explain why the move wasn’t done earlier. If the customer-base shift is the true reason, as opposed to wanting to exploit cheap overseas labor, then we’re talking about a truly delayed reaction on HTI’s part. From Page 30 of a 1998 Humphrey Institute study on southwest Minnesota’s industry cluster:
Home demand is not a large part of the demand for computer and electrical components in Southwest Minnesota. Although there were connections between the supercomputer industry and some firms in the region, the current home demand is minimal. … Hutchinson Technology estimates that 5% of its demand is national while 95% is international.
But this may all be moot, as Thailand may not be the best or safest place in the world for a multinational company:
The political situation in Thailand is unpredictable and sometimes volatile. Over recent years there have been instances of civil and political unrest resulting in large-scale demonstrations and, in some cases, violence. British nationals should exercise caution throughout Thailand and avoid demonstrations or large gatherings, which may turn violent. … There is a high threat of terrorism in Thailand. Bomb and grenade attacks have been indiscriminate, including in places visited by expatriates and foreign travellers. Sporadic attacks continue in Bangkok and around Chiang Mai. In 2010, there were around 114 reported explosions in Bangkok and the surrounding provinces.
More on this can be found at www.crisisgroup.org. It’s not exactly something I’d find reassuring if I were an HTI investor.