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In Iowa, Herman Cain's business background could come back to haunt him

Posted by Alan Wirzbicki  November 3, 2011 07:03 PM

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The next time that GOP presidential hopeful and former Whirlpool director Herman Cain comes to the depressed factory town of Newton, Iowa, he may face some angry questions from former employees of a company that the household appliances manufacturer acquired in 2005.

Cain, the former Godfather’s Pizza CEO who is suddenly one of the Republican frontrunners, was also a member of the Whirlpool board of directors when the company shut down a plant in Newton in 2007 that had employed 1,700 workers, devastating the local economy. Cain’s tenure on the board also coincided with the company cutting health insurance benefits for thousands of Maytag retirees in 2009.

Whirlpool “just screwed us,” said Max Tipton, a Maytag retiree, former union official, and one of about 3,000 retirees in Newton who saw their benefits reduced.

Now, as Cain, who has shot up in the polls, comes under more serious scrutiny, his role at Whirlpool could emerge as a liability in the first-in-the-nation Iowa caucuses.

The Newton factory was acquired by Whirlpool in August 2005 in its purchase of appliance manufacturer Maytag, although the deal did not become official until March 2006. Newton, a factory town about 30 miles from Des Moines, had been the corporate headquarters of Maytag since its founding in 1893, and thousands of area residents had worked not just in the factory but also in white-collar office jobs.

The plant closure dealt a profound blow to the area. The unemployment rate in Jasper County, of which Newton is the county seat, is 35 percent higher than the statewide average, according the Iowa Department of Workforce Development. Newton’s mayor, Chaz Allen, told the Des Moines Register earlier this week, “the region lost 40 percent of its disposable income with Maytag.” In an interview with the Globe, Allen estimated that the additional $200 a month that the average retiree now has to spend on health insurance has taken approximately $7.2 million a year out of Newton’s economy.

As one of 12 directors, it’s unclear what role Cain may have played in the decisions; his campaign did not reply to requests for comment, and Whirlpool did not respond to a request for minutes of its board meetings from the period. But Cain has a long and lucrative history with the company, which paid him $359,008 to serve on the board just in the last 18 months, according to Cain’s filing with the Federal Election Commission. Before his presidential bid, Cain had been a member of the board since April 2005. Prior to that, he had served on the Whirlpool board between 1992 and December 2003, when he briefly stepped down to run in the Republican primary in Georgia for the United States Senate.

The sexual harassment allegations against Cain, dating from his leadership of the National Restaurant Association in the late 1990s, might be getting headlines now. But if Cain survives them and stays in the top tier of candidates, the questions about his private-sector record may only be beginning.

AP Photo/Carolyn Kaster: Republican presidential candidate Herman Cain speaks on Capitol Hill in Washington Nov. 2.

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ABOUT THE ANGLE Online commentary and news analysis from the Boston Globe. The Angle is produced by Rob Anderson and Alan Wirzbicki. You can follow Rob on Twitter at @rcand.

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