Federal data reveals the economic wreckage caused by the large-scale outsourcing of Wisconsin jobs since Gov. Scott Walker and U.S. Sen. Ron Johnson took office. They’ve aided and abetted multinational corporations in selling out Wisconsin workers for short term profits.
Data kept by the U.S. Department of Labor shows that at least 11,331 Wisconsin jobs have been outsourced to other countries since Walker’s scandal-ridden “jobs” agency, the Wisconsin Economic Development Corporation, was launched July 1, 2011. This is a very low-end estimate of the impact of outsourcing in Wisconsin, because it only accounts for groups of workers who successfully applied for Trade Adjustment Assistance from the federal government by proving their jobs were eliminated because of global trade agreements. It does not account for outsourcing to other states or downsizing. In those cases, it’s not possible to prove jobs went to a foreign country or were impacted by global trade deals.
Walker and Johnson have consistently supported a rigged economic system that allows multinational corporations to pit Wisconsin workers against low-wage foreign workers.
Walker’s WEDC has consistently refused to hold accountable the corporations that take public job creation dollars and then outsource Wisconsin jobs. The WEDC board has refused to require corporations receiving public dollars to create a net positive number of jobs (i.e. not to outsource and downsize more jobs than they are paid to create).
Recently a Citizen Action of Wisconsin open records request found that WEDC is not enforcing its own 30 day notice policy for outsourcing and downsizing. Senator Dave Hansen and Reps. Andy Jorgensen and Debra Kolste introduced a bill that would have banned corporations who outsource from receiving state economic aid for five years. But it was voted down by the conservative majorities in both chambers.
While Walker has aided and abetted outsourcing through state government, Johnson has done nothing to challenge unfair trade deals that rig the economy against Wisconsin workers. This is not surprising, given that during his election campaign in 2010 Johnson touted global trade deals like NAFTA as “creative destruction.” Johnson touts his manufacturing credentials, but seems oblivious to the impact of outsourcing on manufacturing workers across the state.
“The continuing toll of outsourcing in Wisconsin is not a natural disaster; it is human made. Accountability is coming to all the politicians who are aiding and abetting the outsourcing of their constituents’ jobs,” said Robert Kraig, executive director of Citizen Action of Wisconsin. “The public is on to the fact that the political and corporate establishment are committing economic treason against Wisconsin workers. The public is also increasingly realizing that if the economy can be rigged against workers, it can also be re-rigged in our favor through policies that expand economic opportunity.”
Web Link to News Release http://www.citizenactionwi.
A Wisconsin businessman has struck a deal with federal prosecutors to plead guilty to fraudulently obtaining bank loans for a man who was also involved in defrauding the Wisconsin Economic Development Corporation.
The Wisconsin State Journal reported that Paul Piikkila’s deal calls for him to acknowledge committing conspiracy to defraud his employer, Horicon Bank, of more than $700,000. The deal also requires Piikkila, of Appleton, to testify in the case, which involves De Pere businessman Ron Van Den Heuvel.
Van Den Heuvel has pleaded not guilty to a 13-count indictment. But according to the plea agreement, Piikkila will acknowledge his role in fraudulently securing more than $1 million in loans from Horicon Bank for Van Den Heuvel and his wife in 2008 and 2009.
Green Bay Press-Gazette reported that Van Den Heuvel borrowed money from the bank and investors ostensibly to pay for equipment and operations of seven businesses that he claimed to operate. But the money he raised actually supported a lavish lifestyle that included a luxurious house, a Florida residence, expensive cars, a luxury box at Lambeau Field, a private plane, and a live-in nanny, who told authorities that she was never paid. She also said Kelly Van Den Heuvel ran up large debts on her credit cards.
Van Den Heuvel faces up to 30 years in prison and up to $1 million in fines on each count. Piikkila faces up to five years in prison and a fine of $250,000. But, in exchange for his guilty plea, prosecutors have agreed not to charge him with additional offenses.
Piikkila will be sentenced July 29.
The fraud case is unrelated to another, higher-profile scandal in which Van Den Heuvel received $1.2 million from Gov. Scott Walker’s “job-creation” agency, the Wisconsin Economic Development Corporation. Critics have branded WEDC as a corporate welfare agency for giving away millions to political donors without holding them accountable for creating jobs in return for the money.
In some cases, WEDC recipients took money and shipped jobs to other states or overseas. In other cases, the loans weren’t properly recorded, tracked or repaid — with impunity.
Van Den Heuvel, a longtime Republican donor, seems in some ways typical of WEDC awardees. He received the loans just months after the agency’s creation in 2011 based on his connections. He never underwent a background check. If he had, WEDC, which was headed by Walker at the time, would have learned that Van Den Heuvel owed millions in legal judgments to banks, business partners, state tax officials and even a jeweler.
Despite Van Den Heuvel’s failure to produce jobs or repay his initial loan, WEDC officials considered giving him more money as recently as February 2015.
Van Den Heuvel’s proposed business to create jobs was called Green Box NA. He claimed the company would convert dirty napkins and plastic eating utensils into synthetic fuel and paper products, but it apparently never had either a facility or the technology to perform such functions.
Van Den Heuvel faces numerous lawsuits from investors who loaned the business money, thinking that it was legitimate.
Green Box has declared bankruptcy. The state apparently is not pursuing charges or repayment from Van Den Heuvel.
Millions of dollars disappeared from Gov. Scott Walker’s embattled job creation agency and millions more were awarded to companies, many of them Walker supporters, that never followed through on creating new jobs. In fact, many of them shipped jobs out of Wisconsin.
Now a new review shows the Wisconsin Economic Development Corporation, which Walker no longer helms, erroneously awarded more than $412,000 in tax credits to companies over how many jobs they created. But that’s just how much that’s been identified thus far. The final total could be in the millions, the review showed.
The WEDC revealed the tax credit issue at a board meeting earlier this spring, when it reported it was checking on discrepancies in credits awarded and actual jobs created.
But the new report was the first time the size of the problem was detailed.
The investigation was prompted by an investigative report last fall that revealed the WEDC exceeded its authority and improperly awarded more than $21 million in taxpayer funding, much of it to Walker’s campaign contributors
The Wisconsin State Journal reported in late May that the agency is reviewing 222 tax credits awarded since 2006 over the way jobs were counted. Based on 18 awards checked thus far, there was more than $448,000 in over-awarded credits. About $36,000 was under-awarded.
With so many more credits to check, the overage may go significantly higher. WEDC chief executive Mark Hogan declined to give an estimate to a board committee. Hogan said the agency might try to recoup any excess credits by reducing the amount of tax credits that have yet to be verified.
The committee discussed the issue in open session before moving into closed session for further talks about the tax credit problem.
WEDC has been plagued by years of scandal. Last year, it handed out $90 million in awards — much more than the previous year — but created even fewer jobs, according to its own annual report.
At the time, Democratic lawmakers on the WEDC board repeated a call for replacing the agency with a new public entity.
“I am deeply concerned that taxpayers are not getting the needed bang for their buck at WEDC,” Assembly Minority Leader Peter Barca said in a statement at the time.
During his first campaign, Walker promised to create 250,000 jobs during his first term in office — a number he still hasn’t come close to attaining after nearly six years. WEDC was purportedly created to fulfill that promise.
AP contributed to this report.
The Department of Revenue has revoked $50,000 worth of tax credits from W.W. Grainger, a distributor of industrial and maintenance supplies, after the company failed to create promised jobs, sold subsidiaries employing hundreds of its workers and sent some jobs overseas.
The money was part of $500,000 in tax credits approved for W.W. Grainger in 2011 by the Wisconsin Economic Development Corp., Gov. Scott Walker’s signature job creation agency.
Walker chaired WEDC until 2015. A former top official at Grainger, David W. Grainger, has been a major donor to Walker’s gubernatorial campaigns.
Illinois-based W.W. Grainger had promised to make at least $1.8 million in capital improvements to its Janesville location and create 130 new jobs at that facility by March 2013. The contract also required the company to retain both the new jobs in Janesville and the 1,169 existing full-time jobs across Wisconsin until March 2015.
Because W.W. Grainger spent well over the planned amount on capital improvements, it received $50,000 in tax credits. But WEDC later changed its mind.
“While Grainger has far exceeded their capital investment expectations, they did not create any of the expected 130 jobs, and have had a significant reduction in their workforce,” WEDC program manager Shelly Braun stated on an award closeout assessment signed Oct. 14. “I recommend the revocation of the $50,000 in tax credits verified for capital investment.”
WEDC notified W.W. Grainger’s tax manager of its intent to revoke the credits and, a month later, turned the matter over to the Department of Revenue.
W.W. Grainger spokesman Joe Micucci said the company is paying the $50,000 back. WKOW-TV in Madison disclosed in a report Thursday that the company’s tax credits had been revoked.
Micucci said employment temporarily declined due to the sale of subsidiaries in 2013 but has since rebounded. According to Micucci, the company now has about 1,250 Wisconsin employees, but he declined to say whether that includes part-time employees. When the company applied for the credits in 2011, it reported having 1,169 full-time and 93 part-time employees.
Thomas Cafcas, a research analyst for Good Jobs First, said taxes represent just 2 percent of a company’s costs. More important factors include a ready workforce, good education and transportation systems, and the availability of suppliers and customers, said Cafcas, whose organization promotes accountability in economic development.
“If you look at WEDC, there is so much emphasis over the past few years on how tax breaks create all sorts of jobs,” Cafcas said. “Frankly, (Grainger) is the case in point — along with a whole host of other deals that have gone awry — that this is simply not the case.”
He added that when it comes to business decisions, “subsidies have little to do with it. A company will take taxpayer money if available, but it’s not really driving them to be where they are.”
David W. Grainger, the company’s former senior chairman, is a top Walker donor. He stepped down as chairman in 2007, and he was the largest individual shareholder as recently as 2013. Micucci said Grainger no longer holds that distinction and is not involved in day-to-day operations of the company.
Grainger has given $21,000 to Walker since 2011, according to the Wisconsin Democracy Campaign database. In the 2014 election cycle, Grainger was one of 11 contributors who exceeded the limit of $10,000 in donations for the governor’s re-election. Walker’s campaign was ordered to pay a penalty for accepting excessive contributions.
The foundation managed and funded by Grainger also has been a generous donor to the University of Wisconsin-Madison. The business school building was named Grainger after he and the Grainger Foundation together gave $10 million for its construction. And last year, the foundation made a $47 million gift to the UW-Madison engineering program from which David W. Grainger graduated.
Job tax credits given by Walker under scrutiny
WEDC has faced criticism for years and, in some cases, acknowledged its lack of proper oversight in awarding and monitoring financial awards. Critics also have called on the agency to stop subsidizing companies that send jobs outside of Wisconsin. Recently, WEDC chief executive Mark Hogan announced the agency is reviewing its job-related tax credit program after officials identified inaccuracies in how the agency counted qualifying jobs.
W.W. Grainger first applied for the tax credits in 2010, before WEDC was formed, with the Department of Commerce under Democratic Gov. Jim Doyle.
Walker, a Republican, formed WEDC after becoming governor in January 2011. The public-private agency then chaired by Walker authorized up to $500,000 in credits in July 2011, including $450,000 for job creation and $50,000 for capital investments.
Grainger’s application detailed plans to convert unused warehouse space in its Janesville property into office space and add 130 full-time jobs, the majority of which would pay around $14 an hour plus benefits. The remaining positions would be managerial positions with hourly wages ranging from $26 to $51.
The application noted two alternative locations to move the jobs, both outside of Wisconsin: Grainger’s corporate offices in Niles, Illinois, or the company’s headquarters in Lake Forest, Illinois.
The final progress report, obtained by the Wisconsin Center for Investigative Journalism under the state public records law, shows the company completed the capital investments, spending $6.6 million on its Janesville facility — well over the $1.8 million promised. Improvements included new office space, additional parking, a second cafeteria and other updates.
But W.W. Grainger failed to create 130 new jobs and in fact eliminated two to three times that many positions between receiving the credits and filing the final progress report in 2015.
Citizen Action of Wisconsin, a nonprofit that focuses on social and economic justice, criticized the deal Friday.
“Wisconsin voters are on to the fact that political and corporate establishment are committing economic treason against Wisconsin workers,” said Robert Kraig, executive director of Citizen Action. “The public is also increasingly realizing that if the economy can be rigged against workers, it can also be re-rigged in our favor through policies that expand economic opportunity.”
Job numbers decline, rebound
Micucci said the company’s 2013 sale of Gempler’s, Ben Meadows and AW Direct to Ariens Co. — an equipment manufacturing company based in Brillion — caused its headcount to decline.
Last year, W.W. Grainger cut 30 jobs from the Janesville warehouse as part of a strategy to outsource 130 jobs companywide to Panama. According to Micucci, all but six of the 30 employees were placed in other positions with Grainger.
In January, the company announced it would close its Green Bay warehouse and lay off around 43 employees. Employees were told they could apply to jobs at the Janesville warehouse; seven have transferred to date, Micucci said.
He added that the company has no plans for additional job reductions in Wisconsin. In fact, more than 220 people have been hired in the Janesville facility since January. However, since 2011, the number of employees in Janesville has increased by 50 people, to around 900 — still 80 jobs shy of its target.
W.W. Grainger is publicly traded and has paid shareholders increasing dividends for the past several years.
In a recent earnings statement, Chairman and CEO Jim Ryan told shareholders that the company responded to challenging market conditions in 2015 by “restructuring several of our businesses, resulting in a leaner cost structure.” Grainger closed 49 U.S. branches last year and, according to Ryan, “will continue to execute changes” in 2016.
The nonprofit Wisconsin Center for Investigative Journalism (www.WisconsinWatch.org) collaborates with Wisconsin Public Radio, Wisconsin Public Television, other news media and the UW-Madison School of Journalism and Mass Communication. All works created, published, posted or disseminated by the Center do not necessarily reflect the views or opinions of UW-Madison or any of its affiliates.
Gov. Scott Walker says he supports a bipartisan bill that would make providing fraudulent information to the Wisconsin Economic Development Corporation a crime.
WEDC has been plagued with scandals and failures since Walker created it after his first election to replace the Department of Commerce. Intended as a job-creation agency, WEDC gave more about 60 percent of its loans to Walker contributors without requiring them to create jobs in the state and losing track of at least $24 million that it awarded.
The fraud bill would make providing a false statement on an application for grants, loans or other WEDC benefits punishable by up to 15 years in prison. The bill also would make anyone who commits such fraud ineligible for WEDC benefits for seven years.
Walker told reporters after speaking at a dairy conference at a Madison convention center that whoever gives fraudulent information to the state should face consequences.
Walker donor William Minahan got a $500,000 WEDC loan in 2011 after checking “no” when asked if his company or any of its officers had been sued in the last five years. Online court records show three lawsuits.
An audit showed that Walker appointees pushed the agency to give Minahan even more money — after the agency learned that he’d pledged agency funds to pay for a lease on a Maserati sports car. The company defaulted on the loan from the state, and WEDC failed to attempt collecting it.
The agency also handed out $1.2 million in grants and loans to Green Box NA Green Bay LLC after the company said it could turn dirty plastic forks and ketchup-stained napkins into jobs.
But it appears that the agency didn’t look deeply enough into the company; founder Ron Van Den Heuvel owed millions in legal judgments to banks, business partners, state tax officials and even a jeweler. In February 2015, the agency considered giving Green Box additional incentives.
Ever since the audits that found mismanagement at WEDC were released to the public, the Walker administration and the Legislature’s Republican majority have been trying getting rid of government oversight committees and create new policies that allow lawmakers to withhold their emails and other information from the public.
Employees from Johnson Controls, which is laying off 277 employees after getting $1 million in state aid in 2014 to create nearly all of those jobs, contributed about $5,700 last year to Republican Gov. Scott Walker’s reelection campaign.
The state aid was awarded to the Milwaukee-based company by the Wisconsin Economic Development Corporation. Walker created WEDC in 2011 to be the state’s lead job creation and economic development agency. Walker also led the agency as chairman of its board of directors from its creation through June 2015.
WEDC has been criticized by numerous state audits and media reports — here, here, here – for failing to properly award, document and track millions of dollars in state aid to businesses. Republicans have responded by trying to eliminate state audit agencies.
WEDC awarded Johnson Controls nearly $2.47 million in tax credits in March 2014 for two projects, including $1 million for its Milwaukee Business Center in suburban Glendale, where it will lay off all of its employees beginning in January. The company said the jobs lost in Wisconsin will be sent to Johnson Controls’ accounting and finance operations in China, Mexico and Slovakia.
Meanwhile, company employees contributed about $5,700 to Walker in 2014 when the tax credits were awarded and the governor was at the agency’s helm. Top Johnson Controls employee contributions to Walker in 2014 were $1,000 from Andrea Ferestad, of Mukwonago, senior program manager; $600 from Donald Pfeiffer, of New Berlin, an engineer; and $550 from Paul Thompto, of Brookfield, a control engineer.
Since Walker was first elected governor in 2010, through June 2015, Johnson Controls employees have contributed about $28,200 to the governor.
In a letter to U.S. Attorney General Loretta Lynch, Baldwin asks for a review of how three loans by the Wisconsin Economic Development Corporation were handled. The loans have not been repaid.
One of cases involves a $500,000 loan to a Milwaukee company, Building Committee Inc., which is owned by a top donor to Gov. Scott Walker. The Wisconsin State Journal reported earlier this year that a top Walker cabinet member pushed WEDC officials to provide a $4 million loan to the company.
Baldwin also wants DOJ to look into a $1 million loan to Green Box of Green Bay and $2 million loaned to Oneida Seven Generations Corp. Both loans are in default.
Walker created the agency shortly after beginning his first term as governor in 2011, touting it as the state’s flagship job-creating force that would help revitalize Wisconsin’s economy. But the agency has been troubled with mismanagement and cronyism from the beginning.
A state audit in the fall of 2014 found that the agency lacked documentation justifying money paid to cover expenses and grants during its first two years. An audit released in May found that contracts with grant and loan recipients hadn’t complied with state law and the agency hadn’t demanded proof that recipients were creating or retaining jobs.
The agency released documents in June showing that from July 2011 to June 2013, 27 awards worth about $24 million went out without a staff review. One of those awards was the $500,000 unsecured loan made to Building Committee, owned by Walker donor William Minahan. Walker appointees pushed the agency to give Minahan even more money — even after the agency learned that Minahan had pledged agency funds to pay for a lease on a Maserati sports car. The company defaulted on the loan from the state.
The agency also handed out $1.2 million in grants and loans to Green Box NA Green Bay LLC after the company said it could turn dirty plastic forks and ketchup-stained napkins into jobs.
But it appears that the agency didn’t look deeply enough into the company; founder Ron Van Den Heuvel owed millions in legal judgments to banks, business partners, state tax officials and even a jeweler. As recently as February, the agency considered giving Green Box additional incentives.
Last year, Gov. Scott Walker’s job-creation agency struck a deal with Ashley Furniture Industries Inc. that would have led to a loss of 2,000 jobs.
The Wisconsin Economic Development Corporation, which Walker chaired at the time, offered Ashley a $6-million tax credit in 2014 for agreeing to invest $35 million to expand its headquarters in Arcadia. But, as part of the deal, WEDC accepted the company’s plan to eliminate nearly half its labor force of about 4,000 workers in the state.
Company president Todd Wanek explained that he couldn’t find the kind of skilled workers he needed in the area near the company’s Whitehall plant.
So how could a jobs agency negotiate a deal to kill jobs? It turns out that Wanek and members of his family made donations totaling $20,000 to Walker about two weeks after the deal was struck.
“Pay-to-play certainly comes to my mind and I know I’m not alone,” said Scot Ross, executive director of the progressive group One Wisconsin Now.
According to an investigation conducted by One Wisconsin Now, 60 percent of the companies that received grants from WEDC were Walker contributors.
Better luck down south
Engulfed by bad publicity, Ashley decided to decline the $6-million tax credit and instead looked south.
According to a recent story in Business North Carolina, Ashley plans to create 454 new jobs in that state during the next five years and invest upward of $8.7 million there through the end of 2019, the magazine reported.
Not only did North Carolina get far more jobs than Walker’s team negotiated, but North Carolina appears to have gotten a better overall deal for less money than WEDC was willing to pay. North Carolina offered tax credits of $4.6 million from 2016 through 2027.
According to Business North Carolina, Ashley’s latest deal with the state comes on top of “the initial phase of development where it committed to create 550 jobs and invest $80 million between 2012 and 2015. Ashley exceeded these commitments by creating more than 1,100 jobs.”
Part of the initial phase in North Carolina included job training provided by Ashley to prospective workers.
By comparison, Ashley added 300 employees at its Wisconsin locations in Arcadia and Whitehall through 2014.
“It seems that even after his privatized commerce department agreed to give millions to a company run by his campaign donors, that Scott Walker has failed Wisconsin again,” Ross said. “Rather than create jobs in its home state, the company has decided to cut and run on expanding in Scott Walker’s Wisconsin.”
Since the Ashley Furniture scandal, Walker has stepped down as chair of WEDC, which even Republicans have declared a disaster.
The case raises a broader question about WEDC’s approach: Is Ashley Furniture the kind of employer that Wisconsin should support?
Earlier this year, Ashley was hit with a $1.8-million fine from the U.S. Labor Department’s Occupational Safety and Health Administration for safety violations in Wisconsin. More than 1,000 worker injuries were officially recorded at the Arcadia plant in three and a half years. All of the incidents were serious enough to have been reported by someone other than the injured employee.
“Ashley Furniture has created a culture that values production and profit over worker safety, and employees are paying the price,” U.S. Labor Secretary Thomas Perez said in a strong statement.
In early 2013, the company came to national attention for a discrimination suit. A lesbian worker sued the Ashley Furniture HomeStore of Secaucus, New Jersey, claiming she was grilled about her religious beliefs and then fired. According to court filings, former employee Isabel Perez said she was told that she didn’t fit in with the company’s “culture.”
Perez said the furniture store’s manager “spoke in tongues,” a state of babbling hysteria induced by religious fervor, which Pentecostal Christians believe is the result of possession by the Holy Spirit. Two managers at the store told Perez that God ordered them to let her go.
The same store was sued in 2013 for alleged harassment of two Muslim employees, who said they were repeatedly accused of being terrorists and were tormented with racial slurs.
The two employees were fired after they complained about the verbal abuse.
According to the website Back2Stonewall, the Waneks support the Christian-right organization FamilyLife, an anti-gay group that lobbies against same-sex marriage and LGBT civil rights.
Newly released records show two of Republican Gov. Scott Walker’sinternational trips this year cost state taxpayers nearly $147,000.
Records the Wisconsin Economic Development Corporation released late Friday afternoon show Walker’s trade mission to Europe in April cost $117,300. His trade mission to Canada in June cost $29,470.
Expenses on both trips included hotels, transportation, parking, telecommunications, hospitality gifts, networking events and meals.
Meanwhile, Walker has said he’d repay more than $125,000 in travel costs in the first half of the year as he traveled extensively during his failed bid for the Republican presidential nomination.
Groups connected to Walker have repaid about $58,000 and have said they will reimburse taxpayers for the remaining roughly $67,000, the newspaper said. Our American Revival, the political committee Walker formed last year, is repaying the costs.
Walker promised early last year to cover travel costs for his security detail, but did not take action until the public became aware of the costs.
The Milwaukee Journal Sentinel reported Walker’s campaign security costs from records acquired under the state’s open records request law, a law that Walker and the state’s Republican leadership conspired to eliminate in June. The GOP is still trying to scale back the law to limit information that the public can obtain about the activities of elected officials.
Republicans are also working to eliminate government watchdog and information-collecting bureaus, as well as the state’s civil service law. Without the civil service law, politicians can reward their backers with lucrative government jobs, regardless of whether they’re qualified for the positions.