This Obama campaign ad received four pinocchios from the Washington Post's Glenn Kessler, the fact-checking guru of WaPoLand.
Regarding the outsourcing claims, we have frowned on these before. The Obama campaign rests its case on three examples of Bain-controlled companies sending jobs overseas. But only one of the examples — involving Holson Burns Group — took place when Romney was actively managing Bain Capital.
Regarding the other claims, concerning Canadian electronics maker SMTC Manufacturing and customer service firm Modus Media, the Obama campaign tries to take advantage of a gray area in which Romney had stepped down from Bain — to manage the Salt Lake City Olympics — but had not sold his shares in the firm. We had previously given the Obama campaign Three Pinocchios for such tactics.
The Modus Media case is also not an example of shipping jobs overseas. The company closed one plant in California and transferred the jobs to North Carolina, Washington and Utah. At the same time, it opened an unrelated plant in Mexico. The Obama campaign once trumpeted the fact that we had dinged a conservative Super PAC for making the same leap in logic.
Bad, naughty Obama campaign, misleading viewers that way. Oh, wait. Because the Washington Post also has this story running on page 1 this morning about how Romney did, in fact, outsource jobs to China and Mexico during his time at Bain Capital. And it directly contradicts Mr. Pinnochio-Giver Kessler:
Until Romney left Bain Capital in 1999, he ran it with a proprietor’s zeal and attention to detail, earning a reputation for smart, hands-on management.
Bain’s foray into outsourcing began in 1993 when the private equity firm took a stake in Corporate Software Inc., or CSI, after helping to finance a $93 million buyout of the firm. CSI, which catered to technology companies like Microsoft, provided a range of services including outsourcing of customer support. Initially, CSI employed U.S. workers to provide these services but by the mid-1990s was setting up call centers outside the country.
Two years after Bain invested in the firm, CSI merged with another enterprise to form a new company called Stream International Inc. Stream immediately became active in the growing field of overseas calls centers. Bain was initially a minority shareholder in Stream and was active in running the company, providing “general executive and management services,” according to SEC filings.
By 1997, Stream was running three tech-support call centers in Europe and was part of a call center joint venture in Japan, an SEC filing shows. “The Company believes that the trend toward outsourcing technical support occurring in the U.S. is also occurring in international markets,” the SEC filing said.
Stream continued to expand its overseas call centers. And Bain’s role also grew with time. It ultimately became the majority shareholder in Stream in 1999 several months after Romney left Bain to run the Salt Lake City Olympics.
Bain sold its stake in Stream in 2001, after the company further expanded its call center operations across Europe and Asia.
Oh, and there is more. Much, much more. Mr. Glenn Kessler should have to retract his judgment, though I'm certain he will follow in Politifact's footsteps and find a way to dig in harder. He will do this despite hard, factual evidence that Bain Capital not only invested in companies specializing in outsourcing services, but also invested in companies that moved operations overseas, just like the OFA ad claims.