‘Outsourcing’ draws rebuttal from Perdue

Perdue spoke to the press at the White House restaurant in Buckhead following a Politico.com article on comments he made in a 2005 deposition where he said he "spent most of my career" outsourcing. When asked how he defends those statements, Perdue shot back.

“Defend it? I’m proud of it,” he said. “This is a part of American business, part of any business. Outsourcing is the procurement of products and services to help your business run. People do that all day.”

The former CEO for Dollar General and Republican nominee to replace retiring Sen. Saxby Chambliss has based much of his campaign on his record as a businessman. But the deposition was taken as part of bankruptcy litigation against Pillowtex, a failed textile company he was hired to turn around in 2002.

In the deposition, Perdue outlined the strategy to outsource much of Pillowtex’s domestic production overseas. He also detailed his role in foreign sourcing in prior jobs with Haggar, Reebok and Sara Lee.

Did that mean moving all manufacturing jobs out of the U.S., the lawyers asked in the deposition?

“Not all,” Perdue said. “They (Pillowtex) felt like certainly a majority would have to be sourced out. They did not know how much. But the sourcing and marketing strategies were cornerstones of their plan of reorganization.”

He never had a chance to complete the plan at Pillowtex. The company collapsed in 2003 shortly after he left, causing 7,650 layoffs in the United States and Canada — about 4,800 in North Carolina alone. At the time, it was the largest single layoff in state history.

On Monday he said there is a difference between corporate outsourcing and domestic policies that kill jobs in the U.S. The fault for the latter rests with out-of-touch Washington politicians.

“I think the issue that people get confused about is the loss of jobs,” he said. “This is because of bad government policies: tax policy, regulation, even compliance requirements.”

In attempting to deflect the ills of outsourcing to Washington, Perdue took a somewhat strange position on free trade for a Republican with corporate credentials.

“What caused the loss of jobs were the rules that were established by people in Washington who really don’t understand how business works,” he explained. “NAFTA, that’s a government regulation, a government law.”

The trade agreement gave companies “the opportunity to do things in a different way,” he said.

“Levi’s, Haggar, JC Penny, Wal-Mart, all those companies did that. Those are policies that destroy jobs,” he said. “That’s what I’m saying. If you look at the government policies that were done by politicians who really didn’t understand the unintended consequences of it, that’s really the source of why a lot of jobs were lost in this country.”

Perdue was senior vice president of international operations for Haggar in the mid-1990s when the company moved production from factories in Texas in favor of cheaper labor in Mexico.

“We very definitely looked at trying to maintain as much volume as we could (in America),” Perdue told MSNBC earlier this year. “The problem was if you looked at the cost sheet of a product made in Mexico versus a product made in South Texas … the Mexican product had an advantage.”

The deposition is a windfall for Michelle Nunn, Perdue's Democratic opponent, who has tried to paint him as a job killer.

“In the deposition, David Perdue explains, in his own words, that he would summarize his business experience as mostly spent outsourcing jobs overseas to places like China and Mexico,” said Nunn spokesman Nathan Click. “That’s a far different explanation than what he’s been trying to convince Georgia of during this election and it’s not the kind of experience we need in Washington.”

This month Perdue received the endorsement of a key business group, the National Federation of Independent Business. In remarks made at the endorsement, Perdue put his record at Dollar General squarely up against his opponent’s, who he said had offered no “ideas on how to get people working again in America.”

“We added about 2,200 stores, created almost 20,000 jobs and doubled the value of that company in a very short period of time. Not because of me, but because we listened to our customers and employees,” he said. “We helped families get from pay day to pay day and that was our mission. We got back to that mission and it worked, pure and simple.”

It’s at Dollar General where Perdue typically hangs his CEO hat, not Pillowtex. His nine-month stint at the helm of the North Carolina textile firm is the only significant business credit not mentioned in his campaign biography.

In an interview with The Atlanta Journal-Constitution last year, Perdue referred to his time as head of Pillowtex as "a trying experience."

“I thought I could help,” he said. “They were some of the best workers I’ve ever worked with. I would have done anything to salvage the situation.”

Indeed, Perdue outlines in the deposition how investors reneged on promises to provide the capital for the company’s restructuring, and left him few options to save the company.

But in the 2005 deposition, Perdue was also blunt about the company’s need for more outsourcing.

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