Sen. Joe Donnelly (D-IN) sells stock in family company after outsourcing criticism

Posted at 1:55 PM, Jul 14, 2017
and last updated 2017-07-14 19:26:50-04

INDIANAPOLIS -- Sen. Joe Donnelly (D-IN) is selling his stock in a family business amid criticism that he profits from Mexican labor, something he frequently rails against.

An Associated Press story published Thursday revealed that an arts and crafts business Donnelly's family has owned for generations capitalizes on low-paid foreign labor. 

For more than a year, Stewart Superior Corp. and its subsidiaries have been shipping thousands of pounds of raw materials to Mexico, where the company has a factory that produces ink pads and other supplies, according to customs records from Panjiva Inc., which tracks American imports and exports. The finished products are then transported back to a company facility in California, the records show.

Donnelly, who is up for re-election next year, accused Carrier of exploiting workers when it announced it was moving production of its Indianapolis plant to Monterrey, Mexico. 

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In a statement released Friday, Donnelly said he's selling the stock to keep "some folks in Washington" from causing a distraction.

"Some folks in Washington want to make the stock I've owned in my brother's company into a distraction from our work to end outsourcing and keep American jobs here instead of shipping them to other countries. I won't let them distract us, so I'm selling the stock in my brother's company - a company I haven't had an active role in for 20 years.

The real issue we need to focus on, days before 300 Carrier workers in Indianapolis face layoffs, is how we can keep manufacturing here in Indiana. My bill, the End Outsourcing Act, will make it more difficult to ship jobs to other countries. This is legislation that I’ve talked to President Trump about, and he agrees would be a step forward. Mitch McConnell ought to bring this bill up on the floor next week. My colleagues and I should work together, stop the political games and get back to work for the people of Indiana."

Although Donnelly’s brother runs the company, the senator previously served as a corporate officer and its general counsel before he was first elected to Congress in 2006. In a financial disclosure form he filed in May, Donnelly reported owning as much as $50,000 in company stock and earning between $15,001 and $50,000 in dividends on it in 2016 alone.

During the 2016 presidential campaign, the Republican ticket of Donald Trump and Mike Pence, then Indiana’s governor, made the plight of workers who would lose their jobs in the planned move by Carrier and its parent company, Connecticut-based United Technologies, a key part of their presidential campaign.

Donnelly directly criticized the company, blaming corporate greed — a position that largely echoed some of Trump’s campaign-trail sentiments.

“What you’re seeing with Carrier is what I call free riders,” Donnelly told the Indiana political news website The Statehouse File in August 2016. “What they do because of the trade agreement NAFTA, is they ship jobs to Mexico for $3 an hour, and so they get the benefit of the absolute lowest wages they can find, and then turn around to ship the products back into the United States.”

Less than a month after Trump won the election, the company announced an agreement to spare about 800 jobs in Indianapolis. Donnelly thanked Trump for his involvement in the deal and pledged to stand with him in efforts to stop companies from outsourcing jobs to other countries.

Proponents of programs like the one Stewart Superior is using for its Mexican operations argue they provide employment to local workers while allowing U.S. companies to avoid some import duties and taxes. NAFTA has made the programs more enticing to American manufacturers.

But critics contend the efforts amount to a race to the bottom, siphoning jobs away from the U.S. while trapping Mexican workers in a low-wage cycle of poverty.

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During his first run for the House in 2004, the former three-term congressman took on both NAFTA and the practice of “outsourcing”— a word he has called “a fancy term for ‘Someone in Indiana has just lost their job.’”

He’s currently sponsoring a bill entitled the “End Outsourcing Act,” which would require companies to disclose jobs moved abroad, deny some tax benefits and economic incentives to those companies and also require the federal government to take into account a company’s outsourcing practices when awarding contracts.

Donnelly, the lone Democrat elected statewide in Republican-dominated Indiana, is facing a tough re-election bid in 2018. Two Republicans in the U.S. House, Luke Messer and Todd Rokita, have signaled an interest in running.

“I have been fighting alongside these workers for years, arguing that we have an obligation to ensure that federal policies are designed to benefit the U.S. economy, and that we encourage investment in the foundation of our economy — American workers, their families and our communities,” Donnelly wrote in a November letter to Trump that urged the president to advocate similar ideas.

FULL CARRIER COVERAGEDOCUMENTARY SERIES: Moving to Mexico with 1,400 of Indy's lost jobs Jilted workers get first look at Carrier's offer | TIMELINE: Carrier to ship 1,400 jobs from Indiana to Mexico | Trump made money off of Carrier in 2015 | Carrier president: More growth expected in '16 | Ex-Carrier employee sentenced for embezzlement | Carrier pay in Mexico questioned | Carrier refutes offer of $5.85/hour for workers to stay in Indy | Coats, Donnelly have 'disappointing' meeting with Carrier execs |  Sen. Donnelly: Carrier never cited federal regulations as reason for move | Union president: 'We're not going away quietly' | Carrier employees protest move at statehouse | Pence on Carrier meeting: 'I don't want to create any false hope for people' Moving to Mexico: What you need to know about Monterrey, Mexico  | Moving to Mexico: On the ground in Monterrey, Mexico, where Carrier is moving  Trump weights in on Carrier relocation to Mexico  | Carrier: Company did not receive $5M in federal stimulus funds  | President of United Steelworkers Union: No hope of saving 1,400 jobs  | Carrier employees, local businesses reel after announcement of move to Mexico  | WATCH: Employees react to news that Carrier is moving from Indy to Mexico