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October, 10 2012 |  Download PDF |  Share

Bain Capital: Pitting American Workers Against Workers in China Earning Just 99 Cents an Hour

 

What Does Bain Capital/Sensata Technologies Have to Hide? 

This is the question Charles Kernaghan, director of the Institute for Global Labour and Human Rights, is asking Bain Capital:

“Why is Bain Capital refusing to tell the truth to the American people, acknowledging that Sensata Technologies pays their young women workers in China just 99 cents to $1.35 an hour to work 12-hour shifts, seven days a week?  Does Bain Capital care that the young women working in Sensata factories in China have no freedom of religion, no freedom of speech, no political freedoms and no right to the International Labor Organization’s internationally recognized labor rights standards?  The American people deserve an answer.”

- Charles Kernaghan
  Director, Institute for Global Labor and Human Rights

 

We know of at least four U.S.-owned Sensata/Bain factories in China, including a large manufacturing facility in northern Jiangsu Province, which was built by the Government of China for Sensata.  Much of the machinery that is moved into the new plant in Jiangsu is from the Freeport, Illinois factory Sensata is shutting down on November 5, the day before the Presidential Election in the U.S.

 

 

Bain Unleashes the Race to the Bottom
Sensata Workers in China Earn 99¢ An Hour

 

Sensata Technologies Baoying Co. Ltd.
9 East Taishan Road
Baoying Economic Development Zone
Baoying, China #225800

Phone:  86-514-8887-3000
Fax:     86-514-822-8467

 

    • There are an estimated 500 to 1,000 workers at the Sensata Baoying plant, and hiring is limited to local people.
    • Female workers account for over 90 percent of the workforce and the hiring of men is very limited.  (Women believe that management prefers to hire females because they are thought to be easier to control.)
    • Approximately 70 percent of workers choose — out of need — to toil 12-hour shifts, seven days a week.  It is the norm — for the 70 percent — to work 150 overtime hours per month, which amounts to a 75-hour workweek, including 35 hours of overtime.  The monthly overtime hours exceed China’s legal limit on permissible overtime by 317 percent.
    • The base wage is 1,080 RMB per month.  (Exchange rate $1.00 = 6.28627 RMB)

- 99 cents an hour
- $7.93 a day (8 hours)
- $39.65 per week (40 hours)
- $171.80 per month
- $2,061.64 a year

  • It is typical for workers to take just one day off a month, and never more than two days.  During the busy period — usually five months from October through February — no days off are allowed!
  • It appears that the factory operates 24 hours a day, with three shifts.  Workers can choose the shift they want, but once they commit to a particular shift, it is difficult if not impossible to switch hours.

- Day Shift:  7:30 a.m. to 3:30 p.m.
- Mid Shift:  3:30 p.m. to 11:30 p.m.
- Night Shift:  11:30 p.m. to 7:30 p.m

  • It appears that all overtime is paid at a 175 percent premium, or $1.73 an hour.  (However, by law, all Saturday and Sunday work should be compensated with a 200 percent premium, and workers should be paid a 300 percent premium for working on holidays.)
  • There is a mid-shift stipend of 7 RMB ($1.11) and a night shift stipend of 15 RMB ($2.37) per shift.
  • Workers toiling 75 hours a week can earn 2,800 RMB per month ($445.42) after social insurance deductions:

2,800 RMB (Exchange rate $1.00 = 6.28627 RMB)
- $102.79 a week
- $445.42 a month
- $5,344.98 a year

  • Those who work an eight-hour shift, seven days a week can earn 1,700 RMB ($270) a month after deductions for social insurance:

1,700 RMB (Exchange rate $1.00 = 6.28627 RMB)
- $62.41 a week
- $270.43 a month
- $3,245.17 a year

  • The Sensata factory is near downtown Baoying.  Workers who live downtown typically choose to work fewer overtime hours.  They have extended families and more sources of income.  Local people say:  “City people value having a life more than workers from rural areas.”  Moreover, rural workers “want money more than their lives.”  It is the poorer workers from rural areas that choose to work 12-hour shifts seven days a week.
  • Especially rural workers who have relocated to Baoying feel they have no time to think.  All they do is work.  No one is satisfied and no one feels that their lives are improving.  Moreover, they feel that increasing prices have lowered their living standards.  Approximately one quarter of the workers told our researchers that they cannot save much money at all.  If they manage to save a couple of hundred RMB in a month, they will just have to spend it the next month.
  • The workers doubt there is a union at their factory.  There is a local Baoying County branch of the official, governmental union, but no one could think of anything that the union had done for anyone.
  • Two or three workers rent one room together.  Most of the rooms are 9 by 12 feet or 10 by 16 and cost about $44.54 to $50.90 per month.  For recreation, the workers say they watch television if they are not working.
  • Each day, the factory provides one subsidized meal, which costs the workers just 2 RMB (32 cents U.S.).  The other two meals are not subsidized and cost 10 RMB ($1.59).  It costs the workers $3.50 per day, $24.51 a week and $106.21 a month to eat.
  • Even working 75-hour workweeks, food and rent alone consume a full 30 percent of the workers’ regular and overtime wages.
  • There appear to be some illegal temporary workers employed at the factory.  These workers do not have a high school diploma.  Despite having worked for years in the factory, they have no written labor contract and are not inscribed in the social insurance programs.  These “temps” earn just 92 cents an hour and $36.71 for the week.  They do the same work as the regular employees, but they receive no overtime premium.  This is completely illegal.
 


Sensata Workers Toil 12-hour Shifts, Seven Days A Week

 

 

Sensata Technologies Changzhou Co. Ltd.

18 Chuangxin Avenue
Xinbei District
Changzhou 213031, China

Phone:  86-519-8516-1188
Fax:  86-519-516-1151

 

    • Base pay is 1,467 RMB per month (Exchange rate: $1.00 = 6.28672 RMB)

- $1.35 an hour
- $10.27 a day (8 hours)
- $53.85 a week (40 hours)
- $233.37 a month
- $2,800.39 a year

  • Approximately 800 workers.
  • Factory management hires only women.
  • As at the Sensata Baoying plant, 70 percent of the workers at Sensata Changzhou routinely toil 12-
  • hour shifts with just a single one-hour break for lunch.  Approximately 30 percent of the workers choose to work 8 hours a day, seven days a week.  (Even pregnant women must work 8 hours a day, seven days a week.)
  • There are no set days off, such as Saturday or Sunday.  Working seven days a week is common.
  • It is typical to work 12 hours a day, seven days a week for an 84-hour work week, with a single one-hour break each day for lunch.  Workers routinely put in 77 hours of work per week.
  • Many of these workers do not know that they have the legal right to paid vacation.  Management does not inform them, and they take no vacation days.
  • Overtime is correctly paid at a 150 percent premium for weekday overtime, 200 percent for weekend overtime and 300 percent for national holidays.
  • The 37 hours of overtime worked each week exceeds China’s legal limit on overtime by 345 percent.
  • It appears that the factory operates around the clock, on three shifts:  8:00 a.m. to 4:00 p.m.;  4:00 p.m. to 12:00 midnight, and 12:00 a.m. to 8:00 a.m.  (This is the standard, regular shift.  As mentioned, at least 70% of the workers opt to toil 12 hours a day, seven days a week, to earn more money.)
  • Workers on the mid-shift receive a stipend of 7 RMB ($1.11) per day.  On the night shift, workers receive a 15 RMB ($2.39) stipend per day.
  • Those working 12-hour shifts with at most two days off a month can earn around 3,800 RMB ($604.49) a month.  This comes to $139.50 a week and $7,253.90 a year.  The 30 percent of workers on 8-hour shifts with at most two days off a month, can earn 2,100 RMB per month, $334.06 — or $4,008.74 a year and $77.01 per week.
  • As there are no fixed days off, workers must ask permission for leave if they are sick, tired or need a day off.  No worker can ask for more than two days off in a month.  If a worker takes a Wednesday off, management still deducts their wages as if they were taking a Saturday or Sunday off.
  • At a minimum, workers toil at least 28 ½ days a month.  This would put them at the factory 79 hours a week while actually working 72 hours, including 32 hours of overtime.
  • The workers have never heard of a union and do not believe there is one at the factory.
  • As there are no dormitories, workers must rent rooms.  Two or even three women share a room.  A typical room is 8 by 13 ½ feet and has two beds, a table and a closet.  They share a small bathroom and kitchen with their landlord and his family.  The rent for such a room, depending upon its size, can range from 400 to 600 RMB ($63.63 to $95.45).  Two or three women share the cost.  Their living quarters are very humble.
  • The factory cafeteria serves two meals a day, which cost 6 or 7 RMB (95 cents to $1.11). At a minimum, the workers will spend $1.90 to $2.22 per day and $57 to $68.82 per month on food at the cafeteria, plus additional money for a third meal outside the factory.
  • The workers estimate that, for a worker sharing a room with one other person, on average, her share of the rent plus meals will cost about $97.15 per month.

 

The 70 percent of workers toiling 12-hour shifts, seven days a week are not from Changzhou.  Many workers come from poor, marginalized farming areas.  For them, the living costs in Changzhou are very high, so they are more willing to accept the long overtime hours.

It is difficult for these young workers to be away from their families.  They say they have no life.  They work 12 hours a day with no fixed holidays off.  Life is boring.  It is not long before the workers become depressed and many are waiting to quit at the end of the year.

The women have little chance to interact with men since there are none in the factory.

 

Wages at the Sensata Technologies plant in Changzhou, China are just $1.35 per hour, which is less than 1/10th of the $14 to $17 per hour wages earned in Freeport, Illinois.

The Changzhou Sensata factory in China has 800 workers with a total annual base wages of $2,800.39 per worker x 800 workers = a total base payroll (not including overtime) of $2,240,312 for the year.

Using just the average annual wage at the Sensata plant in Illinois, which is $32,240, multiplied by 170 workers at the Freeport plant equals a total payroll of $5,480,800.  Despite the fact that the U.S. Sensata Freeport plant is just 1/5th the size of the Changzhou Sensata plant, the annual total wage for the 170 U.S. workers is $5,480,800 as compared with the total annual base income of $2,240,312 for all 800 Chinese workers.

 

  

 Is Mitt Romney Pro-Life?
…Perhaps. But not when he is investing in China.

“Mitt Romney is pro-life...  Mitt believes that life begins at conception and wishes that the laws of our nation reflected that view...  The compassionate instincts of this country should not be silent in the face of injustices like China’s one-child policy.  No one will ever hear a President Romney or his vice president tell the Chinese government that ‘I fully understand’ and won’t ‘second guess’ compulsory sterilization and forced abortion.”                                      

— Romney Campaign, Values

 

The U.S.-owned Sensata Technologies factories in Changzhou and Baoying in the province of Jiangsu in China, are only two examples of Mr. Romney’s multiple investments in China.

The one-child policy is strictly enforced in this area.  Women need to receive a permit from the government to conceive and give birth.  Even for couples who just got married and have never had a child, it is still illegal for the wife to become pregnant without a permit, and they are required to abort the child.  If they do not abort the baby and give birth, they are in violation of the law and will be fined, and they will not enjoy maternity leave or insurance.  The fine would be 20 percent of the average take-home wage for the city.  Workers in China live hand to mouth, and no worker would have the means to pay such a fine.

Any woman who becomes pregnant with a second child will have to abort the child or pay a fine worth more than four times the average take-home wage, which no worker could possibly afford.

Given Mr. Romney’s strong position against abortion (which we presume would extend to the women workers at the Sensata factories in China), he should not be enriching himself and his family through his retirement fund, which includes stocks in Sensata.  In fact, once the Freeport, Illinois plant shuts down, which is expected a day or two before election day, and the work is relocated to China, the Romneys will see their Sensata stocks gain very handsomely.

Given Mr. Romney’s position on abortion, we believe he should immediately divest himself of all stock in Sensata and give the money to a charity of his choosing.

Furthermore, on moral grounds, Mr. Romney should also ask Bain Capital to drop their 51 percent stake in Sensata-China.

 

 

 

Sensata Illinois:
Bain Unleashes the Race to the Bottom

For over 60 years, the auto parts manufacturing plant in Freeport, Illinois was both busy and profitable.  The factory was operating around the clock, with three eight-hour shifts and plenty of overtime on Saturdays and sometimes on Sundays.  The 170 workers at the Freeport plant — many of whom had worked there for decades — earned $14 to $17 an hour with healthcare, vacation and other benefits.  These workers were proud members of the middle class, who could afford their homes, raise their children and yes, even send their sons and daughters to college.

(Photo courtesy of Bainport.com)

“[Mitt Romney] owns about $8 million worth of Bain funds that holds 51 percent of Sensata’s shares.  If Sensata saves money by closing the Freeport plant, that could add money to Mr. Romney’s trust accounts, now or after the election.”

The New York Times, July 18, 2012
Bain Never Left Romney” by David Firestone                 

Bain Capital, through its Sensata Technologies division, purchased the Freeport, Illinois plant in 2011, and is scheduled to shut the plant down on November 5, 2012, just one day before the Presidential Election.  What Bain and Sensata really wanted was to purchase the machinery at the Freeport plant and ship it to China, where Bain has at least four factories.  Bain brought two dozen or so Chinese engineers to the Freeport plant so the Freeport workers could teach them how to operate the machinery.  After a few weeks, on July 4, 2012, the Chinese workers returned home.  The last thing the Chinese engineers said to the Freeport workers was that when the machinery arrived in China, they would immediately strip off the safety guards so they could increase production.

Bain is simultaneously involved in a nasty campaign to shut down a Sensata-owned union auto parts factory in Jincheon, South Korea, in order to move the work to China.

Bain and Sensata knew that shutting down the Freeport plant and moving the machinery and work to China would not sit well with the American people.  So they prohibited the Freeport workers from taking pictures of the machinery being moved or of the Chinese engineers.  The workers were told that if they documented any of this, they would be immediately fired and stripped of their 26 weeks of severance pay.

Bain Capital was founded by Mitt Romney in 1984 as a global private investment firm.  Sensata Technologies, a Bain affiliate, was formed in April 2006 when the company purchased Texas Instruments’ sensors and controls division for $770 million.  Just four years later, by 2010, Bain’s original investment had quadrupled to $3.2 billion, we believe largely due to outsourcing.

“Not only is Bain taking away these workers’ incomes and livelihoods, the company is forcing them to train their replacements from China.”

- Congresswoman Jan Schakowsky (D-IL)
Daily News, September 20, 2012
Mitt Romney’s ‘Bain’ in the Neck” by Corky Siemaszko 

In 2011, when Bain and Sensata executives informed the Freeport workers, somewhat cavalierly, that they would be terminated in November 2012 and went on to explain that they were temporarily leasing the factory but were purchasing the machinery and the workers’ skills to train Chinese engineers before the work was shipped to China. 

In fact, Mr. Jacob Sayer — a Sensata spokesperson, said they were closing the Freeport plant in order to cut costs.  Mr. Sayer went on:  “If that had not been part of the strategy, then the deal would not have been so attractive.”  When questioned by Paul Harris of The Guardian (August 10, 2012), the same spokesperson refused to comment, saying “We don’t have a statement on the impact it has on Freeport.”

Bain and Sensata executives did not have a lot of time to talk about the 170 workers being terminated at the Freeport plant.  The executives have had more pressing issues, such as setting up 12 Sensata/Bain capital funds “organized under the laws of the Cayman Islands” so as to avoid paying taxes.

Twelve Sensata Funds Set Up in the Cayman Islands

Fund VIII
Co-Investment VIII
Bain Capital VIII
Fund VIII-E
Bain Capital VIII-E
Fund IX
Co-Investment IX
Bain Capital IX
BCIP III
BCIP Trust III
BCIP III-B
BCIP Trust III-B

Sensata Technologies Holding N.V., December 31, 2011 Schedule 13G

 

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Sensata Technologies
Magnetic Speed and Position
2520 S. Walnut Street, Plant 4
Freeport, IL 61032

Employment: 170 workers at the Freeport plant.

Wages and Benefits

Wages:         Average wages at Sensata Illinois plant: $14 to $17 per hour

$ 14.00 per hour
$112.00 a day (8 hours) 
$560.00 a week (40 hours)
$2,426.67 a month
$29,120 a year
to $ 17.00 per hour
$136.00 a day (8 hours)
$680 a week (40 hours)
$2,946.67 a month
$35,360 a year                      

Overtime rates:

                        * 150% premium for weekday or Saturday overtime
                        * 200% premium for overtime on Sundays or holidays

                        $ 21.00/hour weekdays/Saturdays       $25.50 weekdays/Saturdays
                        $28.00/hour Sundays/holidays            $34.00 on Sundays/holidays

Nine paid holidays
Sick days, Vacation days

Blue Cross/Blue Shield health insurance
(Workers pay $40 every two weeks toward health plan)

 

Update on Situation at Sensata-Freeport

  • As of Wednesday, October 10, a little more than half of the machinery has been removed from the factory and is being shipped to China.
  • Some 25 Chinese engineers visited the Freeport plant for about eight weeks, May through July 4.  The engineers were young — mid-20s to 35 years of age — and most spoke English, though English translators were also in the plant.  The U.S. workers trained the Chinese engineers regarding how to operate the machinery once it was set up in China.
  • Workers were strictly prohibited from photographing the Chinese engineers or taking pictures of the machinery being moved.  Management told the workers that anyone taking pictures inside the factory would be immediately fired and stripped of their 26 weeks of severance pay.
  • Before the machinery was dismantled and moved, the Freeport factory was busy and profitable, working around the clock on three eight-hour shifts.

 

Background

1934

Micro Switch Co. was founded in Freeport, IL to manufacture switches.

1950

The Micro Switch factory was purchased by Honeywell and began manufacturing Honeywell’s round thermostats.  For the last 60 years, the Honeywell factory has continued to manufacture goods in Freeport.

2006

Sensata Technologies was created when Bain Capital bought Texas Instruments Inc.’s sensor and control business for $770 million in April 2006.  (Bain took Sensata through an IPO in March 2010.  Bain’s $770 million investment is now valued at $3.2 billion.  Bain still owns 51 percent of Sensata.)  Sensata has some 11,400 employees world-wide.  Almost all of Sensata’s production is outside the U.S. — in China, Mexico, Malaysia and Bulgaria.

January 2011

Sensata purchased the Freeport, Illinois operations as part of its acquisition of Honeywell International’s auto sensors business in late 2010. 

Sensata did not purchase the Freeport plant itself.  Instead, they leased it.  All Sensata was interested in was the machinery, which was to be shipped to China (after the Freeport workers taught the engineers from China how to operate it).

Sensata immediately announced that the manufacturing work done in Freeport would be relocated to China.  Closure is to take place on November 5, 2012, the day before the Presidential Election.

“On January 28, 2011, we completed the acquisition of the automotive on board sensors of Honeywell International Inc. for an estimated total consideration of $152.5 million...

 

Sensata Technologies Holding, N.V., September 30, 2011 Form 10-Q

 

Honeywell does not break out its profits from the Freeport plant.  However, in Honeywell’s 2010 Annual report, it states:  “Automation and Control Solutions is on a roll.  They just get better and better.”  In 2010, the Automation and Control Solutions sector (including the Freeport plant) had a profit of $1.77 billion.

So, it certainly appears that the Freeport, Illinois factory was quite profitable — but not profitable enough for Sensata, which was dead set to ship this work to China.

Bain and Sensata claim that it was General Motors in China that was demanding that auto parts manufacturers be moved closer to GM plants.  But this does not make much sense.  China already ships more than eight times as many auto parts to the U.S. as the U.S. exports to China.  In the year ending 2011, U.S. exports of auto parts to China totaled $1.531 billion, while U.S. imports of auto parts from China totaled $10,534 billion

According to the New York Times, 7/18/2012, the U.S. Labor Department spent some $780,000 to retrain some of the hundreds of Sensata workers who were laid off as their jobs were taken offshore following the buyout.

 

 

For news articles and the report on Global-Tech, Bain and Romney's other investiment, please visit Romney/Bain invested in brutal Chinese sweatshops.

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