For anyone with a strong stomach and nerves, and a robust appetite for irony and bumptious rhetoric, the Senate confirmation hearings on Donald Trump’s nominations for his cabinet are addictive. And from the private equity industry (PE), we have Wilbur Ross, Commerce Secretary-nominee and founder of turnaround investor WL Ross & Co. (Ross), who just had his confirmation hearing before the Senate Commerce, Science and Transportation Committee. To mark the occasion, Reuters released findings that Ross had “offshored 2,700 jobs since 2004” – not exactly the best message to put out alongside the Trump camp’s belligerently anti-globalisation rhetoric.
As Reuters revealed: “Supporters say Ross saved thousands of US jobs by rescuing firms from failure. Data attained by Reuters through a Freedom of Information Act request shows that rescue efforts came at a price: textile, finance and auto-parts companies controlled by the PE titan eliminated about 2,700 US positions since 2004 because they shipped production to other countries, according to a Labour Department programme.”
Reuters however admits that: “The figures, which have not previously been disclosed, amount to a small fraction of the US economy, which sees employment fluctuate by tens of thousands of jobs each month.” That said, as when Trump took credit for saving 800 jobs with Carrier Corp in Indiana, even a relatively small number of jobs gained or lost could make a big difference to public perceptions.
Cynics could ask, though: Does it matter? To the workers Ross may have made redundant, of course it does. But Ross may have saved many thousands more jobs through successful turnaround investments, as PE is often expected to do. Reuters quotes a spokesperson for Ross stating that: “Few people have done as much to defend American jobs and negotiate good deals for American workers as Wilbur Ross.” Mr. Ross himself claimed in his testimony that US growth could be boosted to 3% or more if all Trump’s policies were implemented, but at the same time stressed on deregulation in his answer. Mr. Ross also, apparently, is due to sell investments up to US$300 million, including his own stake in W.L. Ross, to avoid conflicts of interest – echoing Trump’s own move. One Democratic senator even praised him for this.
Whether that will cement Mr. Ross’, and PE’s reputation as a jobs preserver or jobs destroyer remains to be seen. The PE industry could probably do without fresh stigmatisation of its own practice in offshoring, given the current febrile climate of opinion – even when such offshoring is essential to save the companies it invests in. Ditto with the amount of coverage devoted to Mr. Ross’ personal wealth – The Guardian described him as potentially one of the richest Americans ever to hold high public office. Mr. Ross almost certainly can claim that the Reuters figures were given disproportionate attention, and that PE is mostly an agent for job preservation and creation. But the jury on all such cases is apparently still out drinking the Trump Kool-Aid.
