Saturday, 6 Mar 2021

Before Embracing America-First Agenda, David Perdue Was an Outsourcing Expert

The biographical video from Senator David Perdue’s first campaign, in 2014, celebrated a narrative arc that many fellow Georgians either related to or have aspired to: the story of a humble boy from rural America whose hard work catapulted him into a global business career, navigating free markets and faraway lands, all the while gathering stores of wisdom and wealth.

The embrace of global commerce has been a hallmark of modern Georgia, showcased in the 1996 Atlanta Olympics, dissected by the novelist Tom Wolfe and promoted by, among others, Mr. Perdue’s Nafta-loving cousin, Sonny Perdue, governor from 2003 to 2011. Three years later, in his maiden run for office, David Perdue would boast of his international experience as a consultant and chief executive while speaking to a gathering of Republicans in Bibb County, close to his middle Georgia hometown.

“There’s only one candidate in this race that’s ever lived outside the United States,” Mr. Perdue said. “How can you bring value to a debate about the economy unless you have any understanding about the free-enterprise system and what it takes to compete in the global economy?”

Now, facing one of a pair of Jan. 5 runoff elections in Georgia that will determine control of the Senate, Mr. Perdue has continued to make his global business experience the essence of his brand. But that has highlighted the contradictions that emerge — in his career and in his character, but also in his party and his region — as he embraces the populist, America-first strains of Trumpism.

The man who has lately voiced support for some of President Trump’s signature tariffs built his career as an unapologetic, free-trading practitioner of the outsourcing arts. As a top executive at companies including Reebok, Sara Lee and Dollar General, he was often deeply involved in the shift of manufacturing, and jobs, to low-wage factories in China and other Asian countries.

A review of that business record shows a man who achieved significant successes, making millions, managing complex periods of corporate growth and change and creating domestic jobs, particularly at Dollar General. But there were also disappointments, like the failed trucking business he ran with Sonny Perdue and his fruitless effort to rescue a company called Pillowtex that brought heartbreak to a North Carolina mill town. And while the senator often speaks of having led “the Reebok turnaround” as president of the company’s flagship brand in the early 2000s, he moved on from the company after a rival, who today questions Mr. Perdue’s contribution to the turnaround, was installed above him.

The man who spent much of his life broadening his horizons took to the stage at a Trump rally in Macon before Election Day and mocked Senator Kamala Harris’s first name, mispronouncing it with an exaggerated stumble that to critics amounted to crude racism. His campaign has called it an innocent mispronunciation.

The man who dons a faded denim jacket to reinforce his connection to everyday Georgians has a record of aloofness, with an aversion to holding town hall meetings and a thin skin for tough questions. Now he has chosen a further withdrawal, declining to participate in additional debates after one in which his Democratic opponent, Jon Ossoff, called him a “crook” for his prolific stock-trading while in the Senate.

Mr. Perdue did not respond to requests to be interviewed for this article. In response to written questions, his campaign issued a statement that said, in part, “Throughout his four decades working in the real world before being elected to the Senate, David Perdue led American companies that saved and created tens of thousands of American jobs.”

As when he first ran for office six years ago, Mr. Perdue, who is 71, regularly invokes those decades in business to style himself the ultimate Washington “outsider,” though it was his cousin the former governor who gave him his entree to politics and helped nurture his ascent.

Taking aim at his 33-year-old opponent, who runs a London-based documentary film company and has never held public office, Mr. Perdue’s campaign has fixed on a $1,000 payment from a Hong Kong media company to charge that Mr. Ossoff had a two-year working relationship with the Chinese Communist Party.

In its statement to The New York Times, most of which dwelled on Mr. Ossoff, the Perdue campaign called it “ridiculous” to compare the senator’s “leadership in American companies with Jon Ossoff’s foreign-owned company with shady ties to the Chinese government.” (Mr. Ossoff’s spokeswoman dismissed that claim as “one of the most laughable smear campaigns in Georgia history.”)

Mr. Perdue’s campaign’s biographical video, meanwhile, has been refreshed for 2020. Edited out is a section that showed the senator posing with his wife on China’s Great Wall.

From a Watermelon Patch to the World

Mr. Perdue grew up in Warner Robins, a small city about 100 miles south of Atlanta, home to Robins Air Force Base. Airmen coming and going from foreign deployments connected the city to the wider world.

But life could still move to rural rhythms. Mr. Perdue traces his roots back to nearby Bonaire, a farming community where Perdues settled in the early 1800s. Mr. Perdue recalls picking watermelons on a family-owned farm alongside Sonny, who would become Mr. Trump’s agriculture secretary in 2017.

While farming was a family pursuit, Mr. Perdue’s parents followed a different path — education. David Perdue Sr. eventually became county schools superintendent.

Mr. Perdue would later go on to extol his father’s leadership in desegregating the county’s schools, but the historical record provides a different picture, revealing the school system employed delay tactics until the N.A.A.C.P. sued and a court ordered it to comply.

The future senator graduated from high school in 1968, two years before the schools were fully integrated. Standout student, varsity athlete and class president, he was awarded a coveted appointment to the Air Force Academy.

“David has those personal traits that cause him to be recognized as a person of worth,” his high school principal, Milton Sutherlin, wrote in a recommendation letter. “His character is that always of a gentleman, and he holds high those Christian ideals that speak well of his home training, his school and his community.”

But while the Air Force would prove a good fit for his cousin Sonny, who served three years and was promoted to the rank of captain, it was not so for David. He received Bs and Cs in a brief stint at the academy, and by early 1969 let it be known that he wanted out.

“I have realized that I have made a mistake and I do not want this type of career,” he wrote in January 1969 to Jack Brinkley, the congressman who had sponsored him. His plan was to attend the Georgia Institute of Technology “and try to play basketball.”

His basketball career never materialized, but Mr. Perdue would earn undergraduate and masters degrees at Georgia Tech. And over the next three decades, he would position himself on the winning side of a seismic economic shift sweeping the South.

A Global Man of the New South

Increasingly and inexorably, the region’s apparel and textile industry was turning to foreign contractors to manufacture its products. The disruption, which meant thousands of layoffs for low-skilled workers in Southern mill towns, was Mr. Perdue’s ticket to the world. He became an expert in outsourcing.

“I spent most of my career doing that,” he would later say in a deposition.

His apprenticeship in outsourcing began while he was still in school. In 1972, he joined Kurt Salmon Associates, a consulting company that had earned its reputation sending bright young engineers into Southern clothing factories to solve technical problems and boost efficiency. The company had a large Atlanta office, and by the 1970s was aspiring to a more-global footprint.

The city was, too. Born as a regional railroad hub, Atlanta had begun adding international flights to its growing airport, creating yet more opportunities for a metropolis that had already rocketed past its Southern rivals, fueled by relentless civic boosterism and a reputation for racial moderation.

William Sand, an engineer who worked in the Atlanta office with Mr. Perdue, recalled that in the 1970s, as Southern factories were beginning to close, new ones were opening in Mexico and Asia. Kurt Salmon, he said, “became experts at helping companies source product from overseas.”

Mr. Perdue left in 1984 and worked at a few other places before ending up at Sara Lee, which was best known for its baked goods but was also an apparel manufacturer. He was hired in 1992 to open a headquarters in Hong Kong, where he lived for two years, establishing operations throughout Asia “from the ground up,” he would later say.

The ripple effects reached home. In 1994, the company eliminated thousands of jobs, including 230 at its Spring City Knitting plant in Cartersville, Ga. Most of the workers were women who earned $4.25 an hour sewing garments.

By that time, Mr. Perdue was globe-trotting with yet another company, Haggar Clothing, which had chosen him to lead its international operation with one aim — increasing foreign sourcing. Within three years, he had done just that, boosting international production from 60 percent to 75 percent. As company plants were closed in the United States, workers in Mexico performed the job for $1.50 an hour.

By 1998, Mr. Perdue was headed to Reebok, which ultimately promoted him to lead its main division as it forged licensing deals with the National Football League and the National Basketball Association. Major league teams, with their star power and marquee players, burnished Reebok’s cachet, leading to its acquisition by Adidas in 2005. The manufacturing of most of the company’s products was outsourced, primarily to China and elsewhere in Asia.

The 2014 video produced by Mr. Perdue’s Senate campaign — in which he discusses licensing agreements — portrays him as the architect of Reebok’s turnaround. Even in the wake of improvements in the company’s business, though, Reebok’s chairman, Paul Fireman, passed over Mr. Perdue for promotion to the company’s No. 2 job.

In December 2001, the company announced that Mr. Perdue, who as head of the Reebok brand had reported directly to Mr. Fireman, would instead report to Jay Margolis, who had formerly headed other brands for the company but was suddenly named chief operating officer.

“Paul Fireman decided he wanted one guy to run it all from a C.O.O. point of view,” said Kenneth Watchmaker, Reebok’s chief financial officer until 2006. “That’s where the two of them competed, and Jay got the nod and David left after a period of time.”

Mr. Margolis says that he and Mr. Fireman actually pushed out Mr. Perdue, who has characterized his departure from Reebok as voluntary. “I look back on David. He couldn’t make decisions. He was so indecisive, he couldn’t move the product forward,” Mr. Margolis said.

As for the licensing deals, Mr. Margolis said those were the brainchild of Mr. Fireman.

Mr. Fireman, reached by phone, said, “I don’t remember firing him.” He added: “I’m not challenging Jay’s recollection; I just don’t remember myself.”

Mr. Fireman did not address a question about the extent to which Mr. Perdue was involved in turning around the brands. A long time has passed since then, he said. “David was a good, solid employee for the four or five years he was with me at a high level,” Mr. Fireman said. “And I knew him as a good person.”

Within months of Mr. Margolis’s promotion, Mr. Perdue was in discussions with a headhunter seeking an executive with the know-how and experience to turn around Pillowtex, a troubled sheet and towel manufacturer with well-known brands in its portfolio, including Cannon, Fieldcrest and Royal Velvet.

Leaving behind what he would later describe as $5 million worth of “in-the-money unvested” Reebok stock options, Mr. Perdue agreed in spring 2002 to take the job as chief executive of Pillowtex.

The company was just emerging from bankruptcy, and thousands of workers at its home base in Kannapolis, N.C., viewed Mr. Perdue as a potential savior, according to Scott Shimizu, a former executive vice president. Looking back, though, Mr. Shimizu said he believed Mr. Perdue’s inaction led to the company’s demise.

The company needed to sell off assets quickly and outsource production to survive — with the possibility of retaining part of its United States work force — but Mr. Shimizu says Mr. Perdue took few steps to do either.

“He didn’t really help us,” said Mr. Shimizu. “We were waiting for him to bring the Ten Commandments to us. They never came.”

Mr. Perdue would later say he had been misled about the depth of the company’s financial problems, including a badly underfunded pension plan. He became embroiled in a dispute with Pillowtex over its failure to live up to the compensation agreement he had negotiated.

The company imploded, and about 7,650 people lost their jobs, most of them in North Carolina. The Charlotte Observer called it the largest mass layoff in state history. The hard feelings toward Mr. Perdue were rife in Kannapolis, and in 2014, his Democratic Senate opponent, Michelle Nunn, would release an ad set there highlighting the bitterness.

Mr. Perdue, who had been at Pillowtex less than a year, soon found a new opportunity that would also touch large numbers of working-class people: at Dollar General. The company boasts that 25 percent of its products retail for less than $1.

As chief executive, Mr. Perdue oversaw the opening of a Hong Kong office in 2004, increasing the “global sourcing” that “helps to provide the low everyday price our customers count on,” according to a company announcement. Among the global sources were manufacturers in China, records show.

Low wages were another way the company controlled costs. Store managers sued the company, complaining that they were not paid overtime, even though they took on nonmanagerial duties, unloading trucks and stocking shelves after hours. Some of their claims, as well as legal complaints from female workers who said they were inequitably compensated, resulted in payouts.

Dollar General flourished under Mr. Perdue’s leadership, adding more than 2,000 stores and expanding the use of coolers to stock more grocery items. Former colleagues who visited Mr. Perdue at the company’s Tennessee headquarters said it was apparent he was preparing Dollar General for acquisition. In 2007, Kohlberg Kravis Roberts & Company announced it would purchase Dollar General for about $7 billion. It was later reported that Mr. Perdue walked away with a $42 million payout.

The Perdue family had lived in Nashville’s tony Belle Meade section, but it was time to head back to Georgia, where Mr. Perdue would ultimately settle on Sea Island, a wealthy sanctuary on the southern coast.

‘The Outsider’

In 2010, as Sonny Perdue was finishing his second term as governor, he named his cousin David to the board of the Georgia Ports Authority.

About a year later, records show, the cousins formed a company called Perdue Partners, which in December 2012 acquired Benton Express, an Atlanta-based trucking company that had operated as a regional family business for nearly 80 years. They renamed it Benton Global and pledged to reinvigorate the business by drawing on overseas connections, and especially David Perdue’s ties to Asia, according to press reports and interviews with former employees.

The Perdues installed two loyalists of the former governor in top management positions and oversaw the purchase of new tractor-trailers. But the promised new international business never materialized, and the company, already suffering from flagging revenues, struggled to pay its bills. It closed abruptly in 2015, leaving more than 500 truck drivers, clerks and terminal workers unemployed.

As a member of the ports authority board, Mr. Perdue voted repeatedly on infrastructure improvements that might have benefited his trucking business, The Atlanta Journal-Constitution reported. A spokesman for Mr. Perdue said at the time that none of the votes posed a conflict of interest or aided Mr. Perdue financially.

In 2013, Georgia’s senior senator, Saxby Chambliss, announced that he would not stand for re-election the next year. In David Perdue’s telling, he drove to see his cousin and tried to convince him to run. “Well, he told me he didn’t feel led to do so, but then he said I should consider running,” Mr. Perdue later recalled in an interview.

When Mr. Perdue decided to run, he recruited top aides from his cousin’s campaign staff. “David’s team was Sonny’s team,” said Jack Kingston, a longtime Republican congressman who also sought the vacant seat. Sonny Perdue, he said, was “very instrumental” in his cousin’s campaign.

For all that, David Perdue branded himself “the outsider”— the man with the real-world business savvy needed to effect change. The Republican primary was crowded with well-known and seasoned politicians, and Mr. Perdue attacked them for their seasoning, portraying them in ads as ineffectual, mewling babies.

"We were hoping that we could find an Achilles heel — he’s lazy, he’s going to say something stupid,” Mr. Kingston said of the campaign. “We found him to be pretty disciplined and hard-working. I have to give him good marks.”

After defeating Mr. Kingston in a primary runoff, Mr. Perdue went on to face Ms. Nunn, an executive at a nonprofit whose father, Sam Nunn, was a former Democratic senator from Georgia. Though both candidates benefited from famous family names, Ms. Nunn thought she might gain the upper hand by focusing on the negative effects of Mr. Perdue’s embrace of globalism.

A month before the election, a transcript surfaced of a nine-year-old deposition in which Mr. Perdue said he had spent “most of my career” outsourcing. Questioned by reporters, Mr. Perdue replied that he was “proud” of that record. “This is a part of American business, part of any business,” he said, adding, “People do that all day.”

Ms. Nunn pressed the point in her ads and on the debate stage. But she was the underdog, and 2014 proved to be a bad year for Democrats, burdened by a lack of enthusiasm for President Barack Obama and his signature legislation, the Affordable Care Act. Mr. Perdue blasted Mr. Obama’s handling of the Ebola virus crisis, and vowed to repeal Obamacare. He practically waltzed to victory.

The outsider arrived on Capitol Hill pushing a term-limit plan and railing against “career politicians,” to the annoyance of his fellow Georgia Republican, Senator Johnny Isakson, according to two people familiar with the views of Mr. Isakson, who had spent many years in politics and was gearing up for a third Senate run.

The record Mr. Perdue built was reliably conservative. He submitted a far-fetched — and, critics said, regressive — proposal to replace income taxes with sales taxes on goods and services. He proposed limits on the ability of immigrants to sponsor family members, instead giving priority to college-educated young people with high-paying jobs.

In the beginning, he also spoke and voted as one would expect a free trader to do. In 2015, he voted to give Mr. Obama enhanced powers to negotiate big trade agreements, including the Trans-Pacific Partnership, the most substantial trade accord since the North American Free Trade Agreement of the 1990s.

But Mr. Perdue was also early to see the potential in Mr. Trump, who offered a kind of mirror reflection of Mr. Perdue’s own political persona as chief executive change agent. The two men reportedly met at Trump Tower during Mr. Perdue’s 2014 run. And after Mr. Trump’s inauguration, the senator could be unrestrained in his praise, at one point comparing the new president to Winston Churchill. “This guy, I think, is a historic person of destiny at a time and place in America when we’ve got to make a right-hand turn here,” Mr. Perdue said.

Mr. Perdue and his fellow Republicans quickly had to grapple with the president’s determination to break the party’s mold on global trade. Three days into his tenure, Mr. Trump tore up the Trans-Pacific Partnership, calling it “a rape of our country.”

Although Mr. Perdue’s campaign has said that he consistently supported the president’s America-first trade policies, the senator spoke out in 2017 against a Trump-backed plan to impose a “border adjustment tax” that would have raised taxes on companies that import goods into the United States. A year later, he criticized the president’s plan to impose steep tariffs on foreign steel and aluminum, calling for a “more targeted” strategy.

But by late 2019, as Mr. Perdue’s re-election bid on a ticket with Mr. Trump loomed, he seemed more amenable to the president’s approach.

“The tariffs are creating the opportunity for people to come to the table,” he said, according to The Atlanta Journal-Constitution. “For the first time in five decades, we are standing up to the Chinese and other trading partners around the world, and all we want is equal access and a level playing field.”

The crosscurrents on trade could be tricky, and suddenly Mr. Perdue’s globalist background made him susceptible to attacks from fellow conservatives. In September 2019, Lou Dobbs, the powerful pro-Trump TV personality, reported that Mr. Perdue and another senator were visiting Beijing, where, Mr. Dobbs warned, they “may well be undercutting U.S. and China trade negotiations” and progress made by the president. Mr. Dobbs noted Mr. Perdue’s outsourcing record.

A day later, Mr. Dobbs issued a correction, noting that Mr. Trump had approved the trip.

The China Problem

In 2016, Mr. Perdue had preached Republican unity as the divisive Mr. Trump began gaining ground in the G.O.P. primary. But the senator helped spark a civil war among Georgia Republicans in 2020 when he and his Georgia runoff-mate, Senator Kelly Loeffler, demanded the resignation of the state’s top elections official, a Republican, calling the election he oversaw an “embarrassment.”

More recently, the senators supported a failed Texas lawsuit that would have blocked the election result in Georgia, where President-elect Joseph R. Biden Jr. beat Mr. Trump by about 12,000 votes, and in three other states Mr. Trump lost.

The battle over Mr. Perdue’s Senate seat has been no less fierce. Mr. Ossoff’s “crook” attack, in a televised debate in October, was based on disclosures that Mr. Perdue, the Senate’s most prolific stock trader, made a number of well-timed trades, including in companies that could be affected by his committee’s votes. An investigation of some of Mr. Perdue’s stock dealings by the Justice Department and the Securities and Exchange Commission ended without prosecution, and Mr. Perdue has used those facts to argue that he has done nothing wrong.

Mr. Ossoff has revived criticism of Mr. Perdue’s outsourcing record. And the senator has also had to fend off charges of bigotry, for both his mockery of Ms. Harris’s name and an online campaign ad that showed a photo of Mr. Ossoff, who is Jewish, with a lengthened nose. Mr. Perdue’s campaign has called the image in the ad an accident caused by a “filter” applied by an outside vendor handling the graphic design.

For his part, Mr. Perdue’s closing attack is in keeping with Republicans’ emerging argument that Democrats like Mr. Ossoff are too weak, and in some cases too compromised, to stand up to the threat of Chinese global dominance.

Mr. Ossoff, Mr. Perdue contends, is a radical left-winger with a grave “China problem.” He cites as proof a $1,000 agreement that allowed a large media company in Hong Kong, PCCW, to rebroadcast a documentary Mr. Ossoff’s company produced about the Islamic State.

Previous reports have characterized one of PCCW’s investors, China Unicom, as a state-owned Chinese company, a point Mr. Perdue has used in an effort to tie Mr. Ossoff to the Chinese Communist Party.

“For two years, he worked with the C.C.P.,” the senator said in a Fox News interview.

Mr. Perdue has said little about his own China ties.

In 1991, the year before he headed to Hong Kong to build Sara Lee’s Asian outsourcing operation “from the ground up,” the company proudly announced a new foothold in Asia — a deal in Fuzhou, China.

The joint venture, Fujian Sara Lee Consumer Products, manufactured toothpaste, shampoo and other personal care products. It was partially owned by the Chinese government, according to a report in The Chicago Tribune announcing the venture.

As the Fujian arrangement continued, Mr. Perdue busied himself with building Sara Lee’s first centralized sourcing operation in Asia, including in mainland China, he said in a deposition in 2005. That involved lining up suppliers and overseeing quality control and human rights practices for the company, which manufactured Hanes clothing, among other things.

No American firm could have established such an operation in China at that time without dealing extensively with the government or the Communist Party, industry experts said.

“You don’t just wander into China without central government and local party officials wanting to know what you’re doing,” said Michael Posner, a professor at New York University’s Stern School of Business and a top human rights official during the Obama administration. “It’s a very controlled environment. And anybody there who is dealing with factories would have had to deal with that.” (While some of its products remain on the market, Sara Lee has since disbanded.)

This week, The Times asked Mr. Perdue’s campaign if he had any other business involving the Chinese government.

The campaign declined to answer.

Kate Kelly and Jannat Batra contributed reporting. Susan Beachy, Kitty Bennett and Sheelagh McNeill contributed research.

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