Monday, August 01, 2005


More on LaTourette, CAFTA and arm twisting

A couple of days ago we had a post on Steve LaTourette, his sudden conversion to a CAFTA supporter and the decisive vote he cast for the trade agreement.

The Dispatch reported this version of his conversion:
LaTourette said he decided to vote for the trade accord, despite doubts about its effects on union workers and small manufacturers, after receiving a phone call from the head of a cabinet-making company in his northeastern Ohio district.
But, prompted by comments from a reader, we have been wondering what really went on here.

Doing some more checking, we came across a story in the Washington Times that is a little more believable, and sheds some light on the "cabinet-making company" (not that the company, itself, was big mystery):
The late holdouts acknowledged intense pressure from the White House and Republican leaders, but did not point to any particular payoffs.

"You feel a certain amount of pressure when the president calls you and asks you to give him a hand. But nobody threatened my highway projects, nobody gave me a bridge," said Rep. Steven C. LaTourette, Ohio Republican and one of the last members to vote for CAFTA.

Mr. LaTourette, who talked to the president Wednesday night, said he was ultimately swayed by a call from Ohio manufacturer KraftMaid Cabinetry in favor of CAFTA, and the sense that Democrats were more interested in beating Mr. Bush than debating free trade.
Now, one might think that LaTourette was in some way doing his job and just looking out for a small Ohio-based business. Indeed, KraftMaid is located in Middlefield, "in the heart of Amish country" as the company likes to remind everyone and maybe they do have some Amish employees.

But KraftMaid is not just some cutesy small manufacturer. The company brags that "is one of the world’s largest cabinetry manufacturers and the leading producer of built-to-order cabinetry for the home. Indeed, it recently opened a $106 million facility in Utah and completed a $25 million expansion to its Ohio facilities.

More importantly, KraftMaid is part of the Masco conglomerate. Masco says it is
one of the world’s largest manufacturers of brand-name consumer products for the home and family. Masco is also a leading provider of services that include the sale and installation of insulation and other building products such as cabinetry, fireplaces, gutters, bath accessories, garage doors, shelving and windows.
According to it's website, it employs about 62,000. Its has annual sales of over $12 billion and a market cap of $15 billion.

So why is Masco so gungho about CAFTA? We're not entirely sure, but comments the company makes in its SEC 10-K annual report suggest that Masco and KraftMaid are in a very competitive industry. At the same time, it's European sales are off.

It doesn't take too much imagination to realize that Masco/KraftMaid probably needs to eliminate tariffs to make raw materials (like the plywood for the cabinets) and manufactured goods (like hardware) cheaper, and they need to be able to export their cabinets to Central America to expand their markets.

Further, Masco has a number of international manufacturing facilities. As our commentator noted, CAFTA may allow KraftMaid to expand, but it probably won't be in the U.S.

And it seems that Masco has the clout to get the White House to do some arm twisting. Although the company makes some small donations to local Michigan (where the company's HQ is located) Dems like Carl Levin, Masco employees have given about $170,000 to various Republican committees and candidates. Most startling was a $100,000 given to the RNC/Repub National State Elections Committee by Masco chairman and CEO Richard Manoogian. Manoogian is also a member of the JP Morgan Chase and Ford Motor Co. boards of directors.

Forget that Amish country stuff - when guys like Manoogian start whining, the White House will gladly act the thug.


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