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Wisconsin Trek-ery


Wisconsin Gov. Scott Walker claims his wealthy Democratic opponent is “sending jobs overseas.” But Mary Burke says the family company, Trek Bicycle Corporation, is “making more bikes in the U.S. than anyone.” Both are at least partly correct, but neither is telling the whole story.

Walker’s Attack

Walker started the latest round with a TV spot July 16 claiming Burke “[made] millions” sending jobs “that could have been done in Wisconsin” to “countries where women and children might work up to 12 hours a day, earning only $2 an hour.” 

Burke’s brother John, Trek’s CEO,  said the ad is wrong to blame his sister: “Mary had nothing to do with sourcing decisions at Trek. Those decisions were made by my father [the company’s founder] and myself,” he told the Milwaukee Journal Sentinel. However, a 2005 state Department of Commerce press release announcing Burke’s appointment as Wisconsin’s commerce secretary said she was responsible at Trek for “helping to start and oversee companies in the UK, Germany, France, Switzerland, Spain, Austria, and the Netherlands.”

During her time at the family business, Mary Burke was director of European operations and later director of forecasting and planning. She left in 2004.

It’s questionable, though, whether the jobs in question, as a practical matter, “could have been done in Wisconsin” as the ad claims. All but a very few of the bikes sold in the U.S. by Trek’s competitors are made overseas. The National Bicycle Dealers’ Association estimates that 99 percent of all bikes sold in the U.S. last year were imported.

Generally, industry experts say only very high-end bikes with carbon-fiber frames, costing thousands of dollars each, can be made profitably in the U.S. “Trek would not be at all competitive in the U.S. market if they weren’t in China,” said Ray Keener, executive director of the Bicycle Product Suppliers Association, in an interview with the Journal Sentinel.

Still, it’s a fact that Trek produces the vast majority of the bicycles in China and other foreign countries. And there’s no question that Mary Burke, who has been an executive of the company, is wealthy enough to have donated more than $400,000 to her own campaign as of July 1. So the Walker ad is accurate at least to that degree.

Burke’s Response . . .

If you can’t dispute the facts, political strategists advise, “Change the subject.” And that’s what Burke’s response tried.

It calls Walker’s ad “an outrageous attack on a great Wisconsin company,” even though Burke herself was the specific target. It says “almost 1,000 Wisconsin people” work at Trek — avoiding any mention of how many Chinese, Taiwanese or German people also work at Trek’s overseas facilities. Founded in 1976, Trek remains a privately owned company that does not have to make public reports of its financial results or business operations.

Burke’s ad also says that Trek “makes more bikes in the U.S. than anyone.” That long-standing company claim may be accurate; the  Journal Sentinel wrote that one researcher described it as “plausible, but difficult to verify.” Even if true, however, it doesn’t contradict the Walker ad.

. . . And Counter-Attack

The Burke ad also counter-attacked Walker on the outsourcing issue. “It’s Walker’s agency that gave millions in tax breaks to companies that relocated jobs overseas, the narrator says. The ad cites an Associated Press item that in turn refers to a July 9 investigative story by Madison, Wisconsin TV station WKOW.

The station reported that the Wisconsin Economic Development Corporation — an agency created and chaired by Walker himself — gave financial awards to two companies, Ireland-based Eaton Corporation and Wisconsin-based Plexus Corp., that later laid off a total of 279 workers in Wisconsin and relocated the work overseas.

Walker’s Renewed Attack

Walker then renewed his attack July 22 with another TV spot saying Burke “forgot to mention that they [Trek] make 99 percent of their bikes overseas, in places like China.”  On screen, the percentage is given as “over 99.5%.”

That statement is based on an interview with Trek company public relations manager Eric Bjorling, published Jan. 9, 2011 by the digital magazine OnMilwaukee.com. Although Bjorling was reluctant to give specific figures — the subject was a sore point with the company even then — the persistent interviewer wormed out of him that Trek’s U.S. production — exclusively carbon-fiber bikes — is “somewhere in the 10,000 range,” depending on the year. The rest of the bikes are made in Germany, China and Taiwan. How many? “Again, it’s tough to say,” Bjorling responded. “We do sell roughly 1.5 million bikes every year, so that gives you an idea.”

So if Trek made exactly 10,000 bikes in the U.S. and 1.5 million worldwide, that would figure out to 99.3 percent of its bikes made overseas.

And the percentage could be higher today, because last year a state agency, petitioning on behalf of Trek workers, stated that the company had shut down most of the second and third shifts at its Waterloo, Wisconsin bike-frame production facility. “Production has been shifted to China,” the petition stated, adding that a total of 15 to 20 workers were laid off. The U.S. Department of Labor reviewed the matter and determined on Nov. 7 last year that all Trek workers laid off after August 12, 2012 are eligible for federal trade adjustment assistance.

In fact, it’s the second time that Trek workers have qualified for such assistance. In 2004, Trek petitioned the Department of Labor on behalf of its workers, and DOL determined that an increase in imports “contributed importantly” to a decline in employment at the company.  As the second Walker attack as says, Trek “has outsourced jobs for years.”

Hypocrisy

But what should voters make of all this? We find each side is telling only part of the story while accusing each other of hypocrisy — and each with some merit.

In fact, only two years ago, the agency Walker created and chairs chose Trek as one of the companies featured in a marketing campaign to encourage others to do business in Wisconsin. WEDC featured Burke’s brother John, the company CEO, in a two-minute promotional video and said Trek “has developed into a global leader in the design and manufacturing of bikes and biking equipment.”  The WEDC described Trek as a company that embodies the state’s “pioneering spirit and heritage of innovation, key attributes of our state’s business climate.” 

So Walker’s now faults Burke for her role at a company his state agency once held up as a shining example. Meanwhile Burke’s campaign attacks Walker’s agency for providing state aid to companies that outsource hundreds of jobs — just as her family company has done.

As the Walker campaign likes to point out, way back in 1995 Trek got an $875,000 state loan to help finance expansion of its new $6.3 million factory in Whitewater, Wisconsin. According to a Wisconsin State Journal article dated June 29, 1995, the company then envisioned adding 400 new workers to the 875 workers it employed at the time. And now some of that work has gone to China.

The economic reality that neither side is addressing squarely is that in today’s global economy, like it or not, U.S. workers compete for jobs with workers in rising economies around the world. Both Walker’s development agency and Burke’s family business have struggled with that, and their TV attacks and counter-attacks tell voters little about what Wisconsin’s next governor can do about it.

— Brooks Jackson