Thursday, September 27, 2012

The Bain-Fisher Effect: When Romney Visited Marshalltown, Iowa

by Nomad


n the clip below from a recent interview for a local Iowa radio station, we hear Romney doing what Romney likes best- talking about Romney and his love for the common people. He talks about his familiarity with the area, throwing in a lot of famous local landmarks to improve an illusion of sincerity and personal connection. 
More interestingly, he explains to the DJ how he himself once worked in Marshalltown, Iowa as a consultant. He mentions that he worked with a company called Fisher Controls.

So I decided to take a moment to look into the history of Fisher Controls. 

First a little about Fisher. 
Founded as the Fisher Governor Company in 1880, Fisher is a designer, manufacturer, and supplier of control valves and regulators on the global market. Its products are used in a number of industries, including chemical, refining, power, and pulp and paper, liquefied natural gas (LNG), refining, and water and wastewater industries. It was family-controlled until sold to Monsanto in 1969.

In 1981 Fisher's sales reached $650 million. North and South American customers made up 60 percent of those sales. However, over time, the pairing of Monsanto and Fisher proved to be unworkable and Monsanto decided to sell off this subsidary to the highest bidder. Preparing Fisher for sale involved an outside appraisal of the companies strengths and weaknesses.

As usual Romney is a little vague about exact dates of his Marshalltown business, however, we can get a rough idea of the time from various sources. During the Iowa primary, a local Romney supporter and reporter for the Times-Republican, Don W. Crowley, spoke of Romney’s connections to Marshalltown.

Romney was in Marshalltown a number of years ago as a principal of Bain Capital, according to Crowley. Monsanto was in the process of selling Fisher Controls and brought Bain Capital in for an analysis. "Romney's fair and honest analysis helped keep Fisher Controls growing and prosperous in Marshalltown for many years," Crowley said.
This narrows the dates somewhat. Monsanto sold Fisher Controls to Emerson Electric in 1992. At that time, according to information provided by the company, Fisher Controls had 7000 employees; annual sales of $928 million; representatives and direct sales offices in 75 countries; 23 manufacturing plants in 13 countries; and 60 training, manufacturing and service centers in 22 countries.

Here’s what the corporate history of Fisher Controls has to say about that sale.
The sale of Fisher to Emerson increased Fisher's potential for growth, but it also meant Fisher had to adhere to the business strategies of new management. Emerson planned to increase profits and become more competitive in a global marketplace, and this meant a bit of housecleaning for Fisher, namely cutting costs by moving production to cheaper markets, modernizing and refurbishing some existing plants, and streamlining operations to improve efficiency.

Unfortunately for some of Fisher's workers, Fisher's new plans did not include them. At the end of 1993 Fisher announced it would close down Marshalltown's Center Street plant and move those operations to plants in Texas, Mexico, and Asia, where labor costs were cheaper. Fisher reported that its employees in Marshalltown earned above-average wages for the industry--an average of $26.50 hourly in wages and benefits. Employees in Mexico, in contrast, would earn about $3 per hour. The Center Street plant was one of two Marshalltown plants run by Fisher, and the closure meant more than 300 employees would be laid off.
At the turn of the century, Fisher Controls expanded its manufacturing internationally. Overall the trend seemed to follow a predictable pattern. Research and development and lab work were based in the US while labor-intensive operations were based in countries where labor costs were less. From a business perspective, it made good sense. 
Despite expansion, the sagging economy affected Fisher's operations, and in the spring of 2003 the company announced plans to lay off 75 employees at the Marshalltown plant. Several months later, in July, Fisher said it would close the Posi-Seal plant in North Stonington, Connecticut, by early 2004. The shutdown would result in the layoff of 130 workers.
Further Marshalltown shutdowns followed in October 2009 when Fisher announced the layoff of 79 hourly employees in Marshalltown. According to the official statement by management:

"This is a very difficult decision that is not a reflection on the hard work of our employees," the Fisher Division of Emerson Process Management said in a statement. "Rather, this business decision is based on the competitive global landscape resulting in a drop in demand for our products manufactured at the Marshalltown facility and changing market dynamics in the global economy."
The statement closed with:
"Everyone at the plant should be proud of the excellent work done at the facility over the years,"
Today, with $I billion in sales, Fisher Control boasts 100,000 to 150,000 around the world, yet according to Marshalltown's 2011 Comprehensive Annual Financial Report, the number of Marshalltown employees is only 1,200. 

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It is important to remember that what might be good for corporations may not necessarily be good for the American worker. When the Supreme Court decided that corporations had the rights of US citizens, it ignored one important point. The justices did not mention any requirements of allegiance or about the duties and responsibilities which come with citizenship. Citizen rights, according to the courts, are bestowed on corporations without accompanying an expression of loyalty to the nation or its workers.

Although candidate Romney might have fond memories of his visit to Marshalltown, Iowa back in the early 1990s, his time in the area ushered in the period of “housecleaning”- of layoffs and outsourcing to countries where labor was so much more affordable.

Yesterday, as his poll numbers continue to slide, Romney told the voters of Westerville Iowa:

"There are so many people in our country who are hurting right now. I want to help them. I know what it takes. I care about the people of America, and the difference between me and Barack Obama is I know what to do."
It will soon be up to the voters of Iowa to decide whether Romney actually cares about the American worker- or whether he is, like Jacob Marley, a good man of business . 

As Charles Dickens wrote, the repentant ghost of Marley told Scrooge:
Mankind was my business. The common welfare was my business; charity, mercy, forbearance, and benevolence, were all my business. The dealings of my trade were but a drop of water in the comprehensive ocean of my business!
The voters of Iowa, the voters of the nation will have to examine this good man of business and decide whether what Romney did to Marshalltown is something that would be good for all American workers.