In a 2005 deposition, Perdue said companies hired him to outsource manufacturing jobs. Perdue: 'I spent most of my career' outsourcing

David Perdue has run aggressively as a “job creator,” touting his record as a top executive with Fortune 500 companies as the chief selling point in his Georgia Senate campaign.

Yet during a controversial chapter in his record — a nine-month stint in 2002-03 as CEO of failed North Carolina textile manufacturer Pillowtex Corp. — Perdue said he was hired, at least in part, to cut costs by outsourcing manufacturing operations overseas. Perdue specialized throughout his career in finding low-cost manufacturing facilities and labor, usually in Asia.


During a July 2005 deposition, a transcript of which was provided to POLITICO, Perdue spoke at length about his role in Pillowtex’s collapse, which led to the loss of more than 7,600 jobs. Perdue was asked about his “experience with outsourcing,” and his response was blunt.

“Yeah, I spent most of my career doing that,” Perdue said, according to the 186-page transcript of his sworn testimony.

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The Georgia Republican then listed his career experience, much of which involved outsourcing.

“[At] Kurt Salmon Associates, some of my experience there was helping footwear companies develop the ability to import shoes from Asia, specifically Taiwan, Korea, China, Indonesia, Malaysia,” Perdue noted, referring to his 12 years working for that management consulting company that specialized in outsourcing manufacturing for apparel companies. Perdue eventually became a partner with the firm.

“Later with Haggar Corp. — sorry, with Gitano and Sara Lee, having lived there, I lived in Singapore with Gitano and in Hong Kong with Sara Lee — sourcing was my primary responsibility in both of those locations.”

Perdue added: “I dealt with companies from Japan westward all the way to Kenya and Lesotho in Africa, Dubai, Pakistan, Bangladesh, India, Thailand, Malaysia, Myanmar, Indonesia, Vietnam, all points west of Japan.” With the American consumer goods company Sara Lee, Perdue noted he built an Asia operation from the “ground up.”

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The previously unreported comments offer the candidate’s unvarnished take on a hot-button issue in Perdue’s campaign against Democrat Michelle Nunn, who has sought to undermine the Republican’s long business record.

The deposition was triggered by a lawsuit brought by Pillowtex creditors who were unhappy with Perdue’s leadership, including claims that he received financial compensation he didn’t deserve. Perdue testified that the allegations were baseless, and none of them were ultimately substantiated by the lawsuit.

Perdue campaign manager Derrick Dickey said it was wrong to suggest from Perdue’s statements that the Republican candidate wanted to ship jobs overseas. Perdue’s comments about “outsourcing,” Dickey said, referred to a “company contracting with an outside source, not the direct shift of jobs overseas.”

Dickey added: “At various positions throughout [Perdue’s] career, he helped his company identify international manufacturing sources, but that had nothing to do with determining how much product the company produced domestically versus internationally.”

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The Georgia race is one of a handful of competitive contests expected to decide control of the Senate, and recent polls show Perdue narrowly ahead. If neither candidate eclipses 50 percent on Election Day, the race would go to a January runoff.

The issue of outsourcing — whether Perdue has engaged in it, and if so, how much — has emerged as a major flash point for the Republican against Nunn as well as in his primary race over the summer. Perdue boasts of being a lifelong job creator, pointing to his stint as Dollar General CEO, where he claims he created 20,000 jobs by adding stores throughout the country.

“I’m not a politician,” Perdue told Republicans at a February debate. “I spent the last 41 years of my life in the free-enterprise system growing companies and learning how to compete in our global economy.”

Perdue has faced frequent attacks over the collapse of Pillowtex.

“Thousands lost jobs but Perdue made millions,” a Nunn TV ad alleged of Perdue’s role at the company. “David Perdue: His world doesn’t include you.”

According to the 2005 deposition, Perdue’s mission at Pillowtex was, in some measure, to shift portions of the company’s manufacturing operations to lower-cost foreign factories, especially in Asia. Perdue was also charged with overhauling its marketing programs.

“This company was — one of the problems this company had was [it was] overburdened with domestic manufacturing capacity. And those cost of goods out of those factories were significantly higher than the costs or the prices coming in from importers at that time,” Perdue said.

Dickey said those comments didn’t necessarily mean that Pillowtex would be laying off U.S workers under the plan being implemented by Perdue. Dickey said Perdue was not responsible for crafting the Pillowtex reorganization plan, just implementing it.

The campaign manager said “bad government policies” are responsible for the loss of American manufacturing jobs, not the companies or executives who run them — a line oft-repeated by Perdue during the race.

“Cherry-picking sentences from a 186-page legal deposition leaves them grossly out of context,” Dickey asserted. “David has spent 40 years dealing with bad government policies that put our manufacturers at a disadvantage internationally. He wants to use that experience in the Senate to revitalize domestic manufacturing by removing the barriers to competitiveness.”

After a highly successful run at Reebok, Perdue was hired in June 2002 to turn around Pillowtex, which was foundering under pressure from lower-cost competitors with overseas manufacturing plants.

The venerable firm, which traced its origins to the late 1880s, was one of the last American textile companies with factories in the United States. But with the U.S. textile industry facing a flood of cheap imports, the company was in serious trouble. Pillowtex was already in bankruptcy when Perdue was given his four-year contract as CEO, and the company was in danger of going under if it didn’t change its business model quickly.

Perdue was recruited in part by officials from Oaktree Capital Management, a Los Angeles-based investment firm that owned a big chunk of Pillowtex’s debt and was a major stockholder.

Describing his mandate during the deposition, Perdue said, “I wanted to know … in the plan of reorganization, what would be required to support the marketing efforts and what capital would be required to convert certain production from domestic factories to Third World — or predominantly Asia sourcing.”

The campaign manager added that the plan would have the potential for retaining some American jobs, although there was no mention of that in Perdue’s testimony.

“The post-bankruptcy plan David inherited was intended to develop international sources for their less expensive product lines, making them more competitive and stopping the company from hemorrhaging losses,” Dickey said. “However, the company also wanted to aggressively market its more profitable higher-priced products, which would have offset domestic job loss. This was a plan designed to save the company and American jobs.”

But Perdue’s tenure at Pillowtex went badly from the start, the deposition shows.

Perdue said he was not aware of an estimated $40 million in unfunded pension liabilities when he was hired.

Pillowtex’s board of directors also failed to follow through on some of its financial commitments to Perdue personally, he said during his deposition. Perdue received a $1 million-plus signing bonus when he joined Pillowtex, and he was promised options on 800,000 shares of company stock. He was also promised a “back-end” payment of $2 million. Perdue never got the options or the $2 million payment, although he received $700,000 to cover any potential tax liability from the options.

In addition, Perdue was paid $100,000 to relocate to North Carolina, despite the fact that he never did so.

Perdue said he went to Oaktree for more money to cover the cost of Pillowtex’s reorganization after he uncovered the pension problems. He estimated that he needed at least $22 million to initiate the outsourcing plan. Oaktree refused to kick in any additional funds.

Perdue said he then worked to come up with revised reorganization plans, including exploring potential mergers or a sale to another company. When “liquidation” was mentioned as a potential option, Perdue told other company officials that he was not interested in being involved in that process.

Perdue, though, also testified that he heard whispers from inside Pillowtex that he was just involved in a “money grab,” an accusation that he resented bitterly. Perdue gave up a potential bonus worth as much $5 million when he left Reebok for Pillowtex, according to the deposition.

By January 2003, Perdue had been approached about the Dollar General position, just six months into his tenure at the North Carolina company.

Despite his talks with Dollar General and unhappiness with his contract, Perdue made one last effort to rework his compensation package at Pillowtex. Although its finances were precarious, Perdue and Pillowtex officials had discussions on a deal for him worth as much as $9 million, the deposition shows.

However, those contact talks went nowhere, and Perdue jumped to Dollar General in March 2003, less than nine months after being hired for the Pillowtex job.

By July 2003, Pillowtex shut down. More than 7,600 workers lost their jobs.

Perdue has compared his tenure at Pillowtex to “running into a burning building,” blaming the company’s collapse on the pension problems and other factors beyond his control.