Clinton blasts Bush for project Bill OK'd

McClatchy NewspapersApril 30, 2008 

INDIANAPOLIS — Hillary Clinton loves to tell the story about how the Chinese government bought a good American company in Indiana, laid off all its workers and moved its critical defense technology work to China.

It’s a story with a dramatic, political ending. Republican President George W. Bush could have stopped it, but he didn’t.

If she were president, Clinton says, she’d fight to protect those jobs. It’s just the kind of talk that’s helping her win support from working-class Democrats worried about their jobs and paychecks, not to mention their country’s security.

What Clinton never includes in the oft-repeated tale is the role that prominent Democrats played in selling the company and its technology to the Chinese. She never mentions that big-time Democratic contributor George Soros helped put together the deal to sell the company or that the sale was approved by her husband's administration.

In response, the Clinton campaign said that Bill Clinton's administration had gotten assurances at the time it approved the deal that production would remain inside the United States, and that the shift of jobs to China didn't occur until under the Bush administration.

“Hillary Clinton must have been hoping we Hoosiers have short memories,” Ed Dixon of Valparaiso said in a letter to a local newspaper after a recent Clinton visit. “Her husband was president at the time and allowed this to happen.”

“They would have us believe Bush was behind this sale,” added Fred Sliger of Valparaiso in another letter, “when in fact the Clinton administration rubber-stamped this along with the sale of numerous other high-tech secrets to the Chinese. …Let's get the facts straight.”

In an interview, Sliger amplified his view. "She blamed President Bush. I blame him, too, but she neglects to mention that it all started when her husband was in office," said Sliger, a mechanic at Valparaiso University. "They say those jobs went out the back door on Bush's watch. They wouldn't have gone out the back door if President Clinton hadn’t left the front door propped open. I blame everybody. I want the blame to go around." Dixon also elaborated in an interview. "She brought it up at a town hall meeting here," said Dixon, a computer network administrator from Valparaiso and a Barack Obama supporter.

"She tried to use us for propaganda. I thought, wait a minute. The plant may have moved in 2003, but it was sold in 1995. It was her husband who actually approved the sale of the company. We don't forget. What, we're not supposed to remember what happened a few years ago?"

Told that the Chinese buyers had assured the U.S. government that they wouldn't move the jobs or work out of the country, Dixon said that President Clinton should have been more skeptical. "Clinton should have stepped in and said no, he should have said, `No, I can't guarantee that they won't move after my presidency.'''

Here’s how Clinton tells it in a recent television ad she aired in Indiana.

“Right here, over 200 Hoosiers built parts that guided our military's smart bombs to their targets,” the New York senator says.

“They were good jobs, but now they're gone to China. And now America's defense relies on Chinese spare parts. George Bush could have stopped it, but he didn't. As your president, I will fight to keep good jobs here and to turn this economy around. I'm Hillary Clinton, and I approve this message because American workers should build America's defense." Here’s how she told it a few weeks ago at a union meeting in Washington.

“A Chinese company bought the company, called Magnequench, and they wanted to move the jobs to China. The people in Indiana protested, did everything they could to convince the Bush administration that this was a terrible mistake. Couldn't even get a hearing,” she said.

“The jobs went to China, but so did the technology. And now the United States military has to buy the magnets we need for the smart bombs we invented from China,” she said as the union members booed. Here's the complete story.

In 1995, General Motors decided to sell the Indiana-based Magnequench to a Chinese-American consortium.

The consortium included:

  • San Huan New Materials and Hi-Tech Co, a company owned by the Chinese Academy of Sciences;
  • Onfem Holdings, a company controlled by the State Nonferrous Metals Industry Administration in the Peoples Republic of China;
  • Soros Fund Management, headed by George Soros;
  • The Sextant Group, founded by Archibald Cox Jr.;

Soros, of course, is the wealthy investor who has contributed vast sums to Democratic candidates and liberal causes.

He’s given more than $250,000 to Democratic campaign committees, tens of thousands to individual Democratic candidates and about $2.5 million to the liberal group Moveon.org, according to Federal Election Commission records.

He’s also contributed to Hillary Clinton’s Senate campaign and to Obama’s Senate and presidential campaigns. He contributed to Republican Sen. John McCain’s first presidential campaign, in 1999, when McCain was running against Bush for the Republican nomination.

Because Magnequench made magnets for smart bombs, the sale to a group that included foreign owners required approval under a 1988 law.

After a 30-day review, the Clinton administration’s Committee on Foreign Investment in the United States, which includes representatives of the Pentagon, approved the sale in 1995.

The buyers reportedly promised to keep manufacturing in the United States.

Yet in 1998, they started building a plant in China, close to the source of the raw materials used in the magnets.

The company reorganized in 1999, buying out Soros as well as Onfem Holdings.

In 2000, Magnequench bought a magnet factory in Valparaiso, the same year it started operations at its China plant.

In 2001, it closed its original plant in Anderson, Ind.

And in 2003, it decided to close the Valparaiso plant, laying off its 225 workers.

Indiana politicians asked the Bush administration to intervene.

Sen. Evan Bayh, D-Ind., and Rep. Pete Visclosky, D-Ind., said the move would leave the United States without a significant domestic source of rare-earth magnets used in smart bombs. The Valparaiso plant made about 80 percent of the magnets bought by the Pentagon, they said.

The administration didn't block the move.

The Clinton campaign said she doesn't mention the role her husband played in the sale because it wasn’t relevant.

“In 1995, when this group bought Magnequench, there were assurances made that production would stay in the United States,” said Clinton campaign spokesman Jonathan Swain.

“The important thing is that in 1995, there was no indication that this production would leave the United States. Based on the information at the time this was reviewed, there was no indication that there was some risk to national security because these jobs would stay in the United States.”

Asked why the administration wasn’t concerned when the Chinese operators opened a factory in China, he said the real problem arose during the Bush administration when U.S. production was shut down.

Swain also noted that security was less of an issue in 1995 because the country had other producers of the magnets. By 2003, it did not.

The Clinton campaign issued a rebuttal to this story. Its first sentence is factually inaccurate. The story does not say that the Clinton administration approved the move of an Indiana factory to China. The story accurately reports that the Clinton administration approved the sale of an Indiana factory to a Chinese-American consortium, and that years later the Chinese bought out the American partners and moved the factory work to China. Read the rebuttal.

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