The Trouble Lurking Offshore for Jon HuntsmanBy
Every Presidential candidate has political baggage. Much of Jon Huntsman's is made in China. It's not just the two years he spent as Barack Obama's ambassador in Beijing, which some fellow Republicans are using to question whether he's sufficiently conservative. As he launches his campaign, Huntsman will likely find himself having to answer a much tougher question from recession-weary voters: Why is the booming family business that made him rich creating thousands of jobs in Asia and the rest of the world instead of the U.S.?
The former Utah governor chose to declare his candidacy last Tuesday from a park in New Jersey, where the cameras could capture the Statue of Liberty behind him. Not in the picture was the red and blue logo of Huntsman Corp., started by his father, billionaire Jon Huntsman Sr., a stalwart Republican who once worked in the Nixon White House. Jon Jr.'s powerful name and his success as a young executive in the family business eased his path to public office.
Now 51, Huntsman has a Presidential pitch grounded in his years as a business-minded politician with global experience. "We must reignite the powerful job-creating engine of our economy—the industry, innovation, reliability, and trailblazing genius of Americans and their enterprises," he said in his speech.
Huntsman can make a convincing case that he knows something about putting people to work. One of the world's largest chemical makers, the company he once helped run employs 12,000 people and had revenues of $9.25 billion in 2010.
That would be a killer applause line, except by the company's own figures just 2,174 of those employees are in the U.S. The rest work around the world. The company declined to provide country-by-country details, though it did say that Huntsman Corp. has 1,151 workers in China.
"We now employ more people between China and India than we do in North America, which is really quite phenomenal when you consider that about 90 percent of our associates 10 years ago were in North America," Chief Executive Officer Peter Huntsman, 48, a younger brother of the candidate, told an industry conference this month.
Like other chemical companies, Huntsman Corp. sees an increasing share of its business coming from China. DuPont's (DD) China and Hong Kong revenue increased 51 percent from 2009 to 2010. The China growth for Huntsman Corp. is the result of partnerships with companies that are typically majority-owned by the Chinese government. During Huntsman's time as ambassador from 2009 to 2010, the company's revenue in China surged 57 percent, to $881 million, Bloomberg data show.
Huntsman Corp. says the number of U.S. workers has remained about the same over the past five years. It's just that it has hired many more abroad. The company has never stopped producing something in the U.S. to move the work abroad, Peter Huntsman says. "You've got to be competitive on a global stage. I honestly don't see how that can be a liability." (The candidate declined to be interviewed.)
It may not matter to skeptical voters that since leaving the company in 2001 Jon Huntsman has had no formal role in it. "China has become a bigger and bigger issue in recent elections, especially exporting jobs to China," says John Feehery, a Republican strategist in Washington who isn't working on any of the Presidential campaigns. "If I were an opposition researcher, I would have a field day with this."
A Huntsman Corp. annual report features an early 1970s photo of a young, smiling Jon Jr. holding a dozen eggs in a polystyrene package, an innovation that helped the company become the world's largest privately owned chemical producer before it went public in 2005. The eldest of nine children, Huntsman joined the family business in 1982, progressing to general manager of its international division before leaving in 1992 to become President George H.W. Bush's ambassador to Singapore. He returned as a vice-chairman in 1993 and left again in 2001 to work as a Deputy U.S. Trade Representative in President George W. Bush's Administration. He served as Utah governor from 2005 until 2009. He left office in his second term to become President Obama's ambassador to China, calling on the Mandarin Chinese he learned to speak as part of a Mormon mission in Taiwan during college.
Huntsman Corp. started as a family business in 1970 and remains one in many ways. Jon Huntsman Sr., 74, is still chairman, and family members and their foundation control 18.5 percent of the company's stock, data compiled by Bloomberg show. Huntsman Jr. divested his individual shares when the company went public. He is now worth at least $15 million, according to disclosure forms.
As a candidate, Huntsman may face some of the most difficult scrutiny from Republican voters in all-important New Hampshire, where he is spending a lot of time and money in hopes of winning the nation's first primary next year. New Hampshire lost about 16,000 jobs to China from 2001-2008—proportionally more than any other state in the country, according to a study by the Washington-based Economic Policy Institute. Huntsman can counter with some statistics of his own. During his time as Utah's governor, employment in the state grew 5.9 percent.
As for his family company's business abroad, Huntsman argues it's good for the nation. "I am proud of my private-sector experience, helping to grow our family business into a successful, global enterprise that has created thousands of high-paying American jobs," he said in a statement. "The company's global outreach brought capital back to America, allowing it to greatly expand the number of American employees."
The bottom line: In the rhetorical heat of a Presidential campaign, Huntsman Corp.'s global outsourcing experience could wind up hurting Jon Huntsman.