David Perdue speaks during a forum in Atlanta, Jan. 27, 2014.
John Bazemore/AP

Georgia GOP hopeful David Perdue’s outsourcing past

Updated

David Perdue, a Republican candidate for Senate in Georgia’s competitive primary, has boasted in ads, interviews and debates that he ran corporations that created thousands of jobs in America. He’s also claimed that he learned the intricacies of international affairs from managing business operations abroad. Both of these claims are true, just not always at the same time.

When Perdue arrived at Haggar Clothing Co. in 1994, the historic menswear company was struggling. Revenues were down, old reliable products like suits were in decline, and competitors like Levi’s were muscling in on their department store sales.

As senior vice president, Perdue was in charge of international operations at Haggar and later domestic operations as well. Under his watch, the company did what so many clothing manufacturers did at the time: closed down factory lines in America and outsourced production overseas where labor was cheap and regulations were less restrictive.

“Under his watch, the company did what so many clothing manufacturers did at the time: closed down factory lines in America and outsourced production overseas where labor was cheap and regulations were less restrictive.”
Benjy Sarlin, msnbc reporter

That meant cutting hundreds of jobs at South Texas facilities in Weslaco, Edinburg, and Brownsville and producing clothes in countries like Mexico, where the average manufacturing employee earned about $1.50 an hour in wages and benefits.

In SEC filings, Haggar reported employing 4,300 workers in America in 1996. That number dropped to just 2,600 in 1997 while the company maintained 1,700 workers overseas in both years. By 1998, 1,667 laid off Haggar employees had been certified for NAFTA retraining programs for workers who lost their jobs to outsourcing or foreign imports – the most of any company in Texas, according to The Dallas Morning News. 

In some Texas facilities, work hours were reduced or their operations were consolidated into other plants. In Robstown, a small, mostly Hispanic town outside of Corpus Christi, the entire 575-worker factory shut down in 1995.

Zulema Zapata, 52, worked her way up from the assembly line to a supervisor job at the Robstown facility before it closed.

“Everyone was making good money,” she said. “There had always been rumors since I started that it might move. We never thought it would happen, but they wanted to go where they paid cheaper wages.”

Zapata was briefly relocated to another job with the company in Dallas but couldn’t handle leaving her children back in Robstown for weeks at a time. With help from Haggar, she took paralegal training at a vocational school and found work in city and state government. Others were less lucky. Zapata said she still runs into old colleagues in the area working low paying jobs as janitors or cafeteria workers.

“I would not vote for him,” she said of Perdue.

In an interview, Perdue said he and his colleagues approached the factory closings with a “social conscience,” but determined the move abroad was in the best interest of the company.

“We very definitely looked at trying to maintain as much volume as we could [in America],” Perdue told msnbc. “The problem was if you looked at the cost sheet of a product made in Mexico versus a product made in South Texas … the Mexican product had an advantage.”

Perdue is leading polls of Republican voters ahead of Georgia’s May 20th primary in one of the most crowded races of 2014, with seven GOP candidates running. The winner is expected to face the well-financed Democratic candidate Michelle Nunn in a bid for the senate seat currently held by Republican Sen. Saxby Chambliss. Jobs, like health care, are central on the minds of voters.

Outsourcing has been a contentious issue in politics in recent years. Democrats pilloried Mitt Romney in 2012 for his role investing in companies that engaged in the practice. In 2010, Carly Fiorina was assailed for outsourcing jobs while CEO of Hewlett-Packard during her unsuccessful campaign for Senate.

According to Perdue, anti-outsourcing attacks against politicians often ignore the challenge that companies face balancing the interests of customers, employees, shareholders, and investors.

“To politicians who have never been in a free enterprise system this sounds really easy,” Perdue said. “It is anything but easy. It’s very messy.”

Perdue said Haggar’s shift to factories abroad was the unavoidable result of several factors, including declining sales for some of the company’s American-made products, increasingly cheap clothing from rivals who had outsourced production earlier, and the 1994 ratification of NAFTA, which reduced duties on Mexican-imported goods.

“We fundamentally restructured a company for survival,” Perdue said. “Another way to look at this is we saved a couple thousand jobs.”

“We fundamentally restructured a company for survival,” Perdue said. “Another way to look at this is we saved a couple thousand jobs.”
Although Perdue presided over a significant transition to overseas labor, Haggar had taken some steps toward outsourcing production before he arrived. After an earlier round of factory closings in Texas, then-CEO Joe Haggar III told The Daily News Record in 1992 that the company’s plan was to maintain a “50-50 mix” of American and overseas production. By the time the Robstown plant closed in 1995, the company’s new target was to make 15% of its products in the United States. By 1999, the company produced 9.3% of its apparel in America and was en route to eventually moving all production overseas.

As Perdue noted, the forces that pushed Haggar plants abroad were hardly unique to his company – 97% of apparel sold in America is manufactured overseas today.

“I don’t envy anybody running for high office who sent jobs overseas,” David Trumbull, a textile and trade consultant, told msnbc. “But it was what was going on at the time. He was certainly not alone.”

Perdue, whose most recent work at Perdue Partners involves exporting US-made agricultural products abroad, has made American manufacturing and trade a central plank of his Senate campaign. He’s called for reducing corporate tax rates, ending the taxation of repatriated profits, and slashing business regulations in order to give companies a leg up against international competition.

“My argument is let’s get the playing field level,” he said. “I believe the opportunity is there.”

Carly Fiorina, Georgia, Mitt Romney, Republican Party, Senate and Texas

Georgia GOP hopeful David Perdue’s outsourcing past

Updated