Commentary on Political Economy

Wednesday 30 December 2020



Sen. David Perdue became wealthy outsourcing work to Asia. Now the former CEO stands with Trump, who wants to ‘end our reliance on China.’

A crowd gathers during President Trump’s Macon rally in October.
A crowd gathers during President Trump’s Macon rally in October. (Nicole Craine for The Washington Post)

Perdue’s de-emphasis of his China experience comes while he has alleged that Ossoff’s film company has profited from working with a firm tied to the Chinese communist government. Perdue tweeted that “Jon @Ossoff did business with a company owned by the communist Chinese Government and then tried to hide it from Georgia voters. Georgians can’t trust him to hold China accountable.”

Ossoff’s campaign said his film company received only about $1,000 from a Hong Kong-based television network for the right to broadcast a documentary about Islamic State terrorists commissioned by the BBC.

“It’s totally in bad faith, and they’re just lying, and they have nothing else to work with,” Ossoff said in an interview about the charge by Perdue. Ossoff’s campaign said the charge is an effort by Perdue to divert attention from his far more extensive work with companies that have ties to the Chinese government.

Perdue, whose net worth is more than $15 million, according to his financial disclosure, declined an interview request. His spokesman, John Burke, did not respond to a list of specific questions and instead sent a statement that attacked Ossoff, praised Trump and said, “Throughout his four decades working in the real world before being elected to the Senate, Senator Perdue worked for American companies that saved and created tens of thousands of good-paying American jobs - and he has always been proud to talk about those achievements.”

Working in Hong Kong

Perdue, 71, born in Macon and raised in nearby Warner Robins, graduated from Georgia Tech and soon focused on global business. In 1972, he began a 12-year career at Kurt Salmon Associates, an international consulting firm, where he said in a deposition that he helped companies “import shoes from Asia, especially, Taiwan, Korea, China, Indonesia, Malaysia.”

After leaving that company, he held a number of positions, including in Singapore from 1991 to 1992 as a managing director for Gitano, an international clothing company. Two top executives of the company pleaded guilty in 1993 to conspiracy involving Chinese imports, and the company went into bankruptcy, according to news reports from the time. Perdue does not mention Gitano on his campaign website biography.

Perdue then came to the attention of Sara Lee, which had expanded far from its bakery origins into international clothing lines. The company hired Perdue to its office in Hong Kong to build its sourcing operation “from the ground up,” as he put it in the deposition, reported by Politico during the 2014 campaign.

Keith Alm, who worked with Perdue in the Hong Kong office, said in an interview that Perdue was “a very shrewd business guy” who worked with companies across China that had ties to the communist government.

“David was a very key figure in terms of establishing relationships with the Chinese government as well as the manufacturers of different products,” said Alm, who was an executive senior vice president at Sara Lee at the time. “They’re all inextricably linked. Obviously, when you work in China, you work with the Chinese government. So he had exposure and management responsibilities for developing that relationship.”

After a stint as senior vice president of operations for Haggar Clothing, Perdue in 1994 became global vice president of Reebok, the athletic shoe company. Perdue said in the deposition that the company relied almost entirely on foreign production. “Except for very few pair, 100 percent was sourced in Asia,” he said. He was so successful in his role that the company’s founder and former CEO, Paul Fireman, elevated him to president, and the brand thrived.

Fireman said in an interview with The Washington Post that he recalled about 90 percent of the company’s overall shoe and clothing products being made overseas during Perdue’s time, including about 30 percent from China. He said Perdue never raised the idea of making shoes in the United States, adding that it would never have been possible given the higher costs.

Fireman said he is incredulous at the way Perdue has stood by as Trump denigrates the way American companies have relied on outsourcing.

“I like David a lot; he did a good job for me,” Fireman said. “I was surprised that Perdue would be so involved with Trump. Trump has no knowledge of what it means to run a factory or run a business, so he can make up all the stories that sound good politically. And, you know, that’s what happens. He speaks to his base, which is, they all think manufacturing — you just dial the number on a machine, and it comes out the other end.”

As a result, Fireman said, he hasn’t made a campaign contribution to Perdue or spoken on his behalf. “I don’t happen to agree with what he’s doing today,” Fireman said. “So I don’t promote him or support him, but I don’t want to discredit him.”

Turnaround effort fails

One day, Perdue received a phone call from an executive search firm asking whether he was interested in leaving Reebok to run a North Carolina textile manufacturing company called Pillowtex. Even though Perdue was in line to receive Reebok stock benefits that could have been worth millions of dollars, he accepted the incentive-laden offer.

Perdue became CEO and chairman of Pillowtex just after it emerged from bankruptcy in June 2002, telling the Charlotte Observer at the time that he had “developed a knack for being involved in building things and turning things around.”

As Perdue put it in the deposition, part of a case brought by Pillowtex’s unsecured creditors, one of the company’s main problems was that the cost of goods from its U.S. factories was “significantly higher than the costs or the prices coming in from importers at that time.” To turn around the company, it was expected Perdue would rely on outsourcing, which could have meant the loss of thousands of American jobs.

“One of the problems this company had was [it was] overburdened with domestic manufacturing capacity,” Perdue said in the deposition. “And those cost of goods out of those factories were significantly higher than the costs or the prices coming in from importers at that time.”

Perdue was given $100,000 for expenses to move from Massachusetts to North Carolina, even though he never moved there. He also received $700,000 to offset tax on anticipated stock profits, although he said the stock proved worthless, and he didn’t get an expected additional $1.2 million, according to his 2005 deposition.

Three months after taking the job, Perdue said in the deposition, “My deal had exploded in my face…the equity that I walked away from, the stock at Reebok continued to go up. This thing was not what it had been represented to me to be.”

Perdue resigned his Pillowtex job in March 2003. His reign was so brief that Fireman said he didn’t realize Perdue, still living in Massachusetts, had worked there. Four months later, efforts to save Pillowtex collapsed, and the 4,800 workers in North Carolina and about 1,800 elsewhere lost their jobs.

Harris Raynor, the Unite union official who represented most of the workers, said in an interview that he met in New York City with Perdue, offering to work with him on a restructuring plan. “He said, ‘Thank you, I’m very grateful we’ve had this conversation. I’ll get back to you.’ I never heard from him again.”

Raynor, who works for a successor union in Atlanta and has endorsed Ossoff, said he and others were shocked that Perdue left the firm so quickly.

“He made no attempt to save that company,” Raynor said. “All he cared about was saving himself.”

Perdue did not mention his experience at Pillowtex in either his 2014 or 2020 campaign ads.

Many executives have successes and failures in their careers, but they often cite the failures as learning experiences. Perdue leaves out Pillowtex from his campaign website biography and omits it from a list of “Brands I’ve Helped.”

Leaving Pillowtex’s problems behind, Perdue became CEO of Dollar General, where he had a much more successful experience. Perdue has said that during his four years there, the company added 2,500 stores and 20,000 jobs. An analysis by PolitFact in 2014 rated the claim “Mostly True,” saying company reports from around that time showed an increase of 2,100 stores and 16,000 employees. Dollar General did not respond to a request for comment.

In his 2014 campaign, Perdue was pressed by a reporter how he would defend “outsourcing.”

“Well, defend it? I’m proud of it,” Perdue responded. “I mean this is a part of American business, part of any business. I mean outsourcing is the procurement of products or services to help your business run.”

Perdue acknowledged that “entire industries have been decimated,” but he said “people are confused” about “the loss of jobs.” He said that is not because of executives such as himself who relied on outsourcing, but because of “bad government policies” that he said put the United States at a competitive disadvantage.

After winning election, Perdue sought to address the problem by voting to give then-President Barack Obama the authority to fast-track negotiations on the Trans-Pacific Partnership, telling the Atlanta Journal-Constitution that it “goes a long way to allowing us to compete.” But when Trump was elected on a platform of withdrawing from that trade deal and imposing an array of tariffs, Perdue said, “What the president is doing is exactly what he should be doing.”

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