President Obama has made outsourcing a campaign issue and yet his jobs council -- which is supposed to come up with policies to create more American jobs -- is full of executives whose companies import a lot of material from overseas. And those companies say outsourcing is a fact of life in a global economy.
While President Barack Obama has attacked Mitt Romney for advising businesses that outsourced jobs, many of the executives on the president's own jobs creation council run or advise companies that import cheaper overseas goods instead of buying American alternatives, U.S. trade records show.
Commerce Department import records reviewed by the Washington Guardian show the companies affiliated with the 23 active and 3 ex-officio members of the President's Council on Jobs and Competitiveness imported 12,366 shipments from China alone -- totaling more than 20 billion pounds in weight -- during the 18 months since they began advising the White House in January 2011.
Just over half the council members were affiliated with firms that reported Chinese imports ranging from bulk steel and furniture to airline parts, appliance electronics and cosmetics.
The Made-in-China track record of the Jobs Council members has frustrated some labor unions key to the president's re-election, and could complicate Obama's strategy against his Republican opponent by illustrating that outsourcing is increasingly inevitable in a global economy.
“Why is stuff outsourced? The answer is, in those cases the work abroad is much cheaper than it is in the United States,” explained James T. Bennett, a George Mason University economics professor. “It’s market forces that create outsourcing of jobs, and it does not matter who is president. It is going to continue.”
Because the Commerce records do not indicate the value of the imports, it is impossible to quantify what percentage of supplies the companies get from overseas. But some of the firms tied to Jobs Council members acknowledge it is significant.
Chemical giant DuPont, which reported more than 1,400 shipments of Chinese imports over the 18 months since the jobs council was formed, told the Washington Guardian it has a third of its manufacturing base and several suppliers overseas.
Boeing, whose CEO, Jim McNerney, serves on both the Jobs Council and as chairman of the President’s Export Council, says it is Beijing's largest customer for aviation parts and boasts on its Web site that it has “manufacturing, service and technology partnerships" with companies around the world, including “contracts with 22,000 suppliers and partners globally.”
And the Hyatt Hotel chain -- tied to major Obama fundraiser and Jobs Council member Penny Pritzker -- imported from China and Singapore at least 83 shipments with 300 tons of chairs, sofas and safes enclosed in 4,500 crates. Even if each crate contained just one piece of furniture, Hyatt imported enough since 2011 to add a piece of new furniture to about five percent of its North American hotel rooms, the records show.
White House and Obama campaign officials declined to comment, despite repeated requests via email and phone. But representatives of the various firms make no apologies and say their imports are a matter of simple bargain shopping.
"There are instances when hotels shop and buy bulk items at the best price found in the global market," Hyatt spokeswoman Katie Rackoff explained. "In doing so, Hyatt hotels are often supporting businesses in countries where Hyatt hotels operate and Hyatt associates live."
Pritzker, who serves on Hyatt’s board, was Obama's finance chairwoman back in 2008 when his campaign raised more than $700 million, and she recently flew with the president aboard Air Force One. She has taken a lower-profile role this election, serving on the Jobs Council and functioning as a "bundler" who gathers individual donations into larger sums. The Obama campaign credits her for raising between $250,000 and $500,000 for 2012.
The hotel heiress did not return calls to her office seeking comment. Rackoff stressed Pritzker simply advises the company as a Board member and doesn't make management decisions.
Hyatt declines to say what percentage of its furniture comes from overseas. But the import records give a sense it is substantial, at least for some properties.
For instance, the Grand Hyatt in Tampa, Fla., the host city for this year's Republican National Convention, was outfitted in 2012 with 1,260 "cartons of wooden bedroom furniture" from Singapore, the records show -- plenty to fill the 442-room hotel. Ironically, the Democratic convention this week is in North Carolina, regarded by many to be the capital of America's wooden furniture industry.
And near Dallas, the 298-room Grand Hyatt at Fort Worth International Airport reported importing 112 containers of sofas from China weighing 50,600 lbs.
Democrats, while silent about the import records of the Jobs Council members, have said Romney would be an “outsourcer in chief,” citing his time as a corporate turnaround expert at Bain Capital, when he advised companies that in some cases shipped jobs overseas.
The first prime-time speaker on the opening night of the Democratic convention, Maryland Gov. Martin O’Malley, attacked Romney and running mate Paul Ryan on the issue. “Instead of investing in America, they hide their money in Swiss bank accounts and ship our jobs to China,” O’Malley charged.
Obama started the effort earlier this summer, when he unleashed a series of ads that declared "America doesn't need an outsourcing pioneer in the Oval Office." The news media immediately cried foul, citing the ads for inaccuracies or misleading claims. One ad earned four Pinocchio noses from the Washington Post truth watcher.
Economists say political attacks on outsourcing exploit Americans’ limited knowledge of economics, stressing highly visible job losses at home while ignoring the benefits of getting less expensive goods made with cheaper overseas labor or parts.
"It’s been good for consumers, whether high or low income, who’ve gotten access to cheaper or better products,” explained Gary Burtless, an economist at the Brookings Institution, a liberal think tank. In addition, sometimes American workers are hired by foreign companies, such as Japanese automakers, who built U.S. plants starting in the 1980s. “‘Foreign outsourcing’ is not all in one direction.” Burtless said.
Inside the president’s own camp, the ads opened old wounds among pro-labor forces, who seethed that so many CEOs who do so much importing got to bend the president’s ear while only a few union-friendly representatives, including AFL-CIO president Richard Trumka, served on the council.
"I believe strongly that the Jobs Council’s membership is simply too narrowly representative of our country to provide a balanced set of recommendations to the President in these critical areas," Trumka wrote in a dissent from the council’s “Roadmap to Renewal” report, issued in January.
The Obama administration has created some gains in domestic manufacturing jobs while aggressively pursuing trade complaints against China over steel and renewable energy technologies. The complaints accuse Beijing of unfair practices such as dumping and excessive government subsidies. The United States has prevailed in many of the cases.
But the trade gap has only widened. Americans imported nearly $36 billion in goods from China in June alone, four times as much the $8.5 billion they exported to Beijing, according to Commerce Department records. The annualized trade deficit with Beijing in 2011 stood just over $295 billion, a record high.
The U.S-China Business Council reports that some of China's top exports to the United States in 2011 included electrical machinery and equipment ($98.7 billion), furniture ($20.5 billion), plastics ($10.9 billion) and steel ($8.6 billion) -- all items that showed up on the import lists of companies tied to Jobs Council members.
While it is impossible from the trade records to calculate how many jobs Americans lost from the shipments tied to Jobs Council members, government data analyzed by the nonpartisan Economic Policy Institute details the decade-long toll Chinese imports have taken on the U.S. economy.
The imbalance with China has eliminated or displaced about 2.7 million jobs in America -- or about 2 percent of the workforce in the sectors affected -- since China joined the World Trade Organization in 2001, according to the think tank's analysis of Commerce Department trade records. The losses affected every congressional district in the country.
But blame for lost jobs shouldn’t automatically fall on trade with China, said Marc Ross, spokesman for the US-China Business Council. There are far too many factors to point to a single source, including the recession, tax codes, and America moving to a service-based economy, he said.
The US-China Business Council has criticized the EPI studies and pointed out that U.S. exports to China are the fastest growing, totaling $103.9 billion in 2011.
Obama appointed the 26 business executives to the council in January 2011 to provide nonpartisan advice on strategies for growing jobs during the slow, uneven economic recovery. The council was part of an effort to remake the White House as more business-friendly after the 2010 elections, which swept Republicans to power in the House of Representatives.
But the council hasn’t met in recent months, raising questions about its influence.
Its chairman, Jeffrey Immelt, is CEO of technology giant General Electric. GE has received at least 1,500 shipments of Chinese goods since the Jobs Council began meeting, including a number of electrical and mechanical components such as refrigerator spare parts, water valves, and wind turbine parts.
GE has been one of the largest importers of Chinese steel, including about 185 tons of stainless steel bars in the past year alone.
But the single biggest importer in terms of shipments on the council has been Estee Lauder. Council member Richard Parsons sits on the board of the cosmetics company. The business received 2,800 shipments from China, including plastic bottles, paper boxes, and lipstick cases.
GE and Estee Lauder did not return calls or emails seeking comment.
Delaware-based chemical giant DuPont, whose CEO Ellen Kullman serves on the council, reported importing hundreds of thousands of pounds of chemicals in the past year. Spokeswoman Tara Stewart said the imports are the raw materials DuPont uses to produce goods. Some of the materials aren’t available in the U.S., she said, but added that there are so many shipments it would be unwise to draw a blanket statement for all of them.
Two-thirds of the company’s manufacturing base is within the U.S., she said, as well as 51 percent of its workforce. “I think it’s clear that we’re growing everywhere,” Stewart added. “We’re not taking jobs from one place and pushing them somewhere else.” (An earlier version of this story quoted Stewart as saying two-thirds of the supply chain was in the United States. Stewart later told the Washington Guardian she meant two-thirds of the manufacturing base.)
In the past year alone, Seattle-based Boeing received more than 250 shipments from China weighing more than 1,000 tons, mostly of parts for its 737 and 747 planes, such as fins, rudders and stabilizers.
“Since the 1980s, Boeing has purchased Chinese aviation hardware and services worth $1.5 billion, and that procurement total is expected to double in the coming years,” said a 2009 company report. “Boeing remains the largest single customer of China’s aviation industry.”
The relationship cuts both ways, however.
“It’s a good way for us to engage with that market because we sell into that market, and we sell substantially into that market,” Boeing spokesman John Dern added. “China is a huge market for our products and has been for quite some time.”
Boeing's Web site says 70 percent of the company's commercial airplane revenue historically comes from customers outside the United States. Dern also notes Boeing does all the final assembly of aircraft in the U.S., and recently built a $1 billion assembly plant in Charleston, S.C. The company estimates it has created 6,000 jobs this year.
The President’s Council on Jobs and Competitiveness or Jobs Council was started in 2009 to provide the president with advice for improving the U.S. economy.
Outsourcing is the word describing the business practice of buying goods or hiring workers overseas.
AFL-CIO stands for American Federation of Labor and Congress of Industrial Organizations and is the nation's leading labor and union advocacy group.