The fruit of its labor
How a company that exports jobs pushes for a Capitol Hill handout
By ADAM ZAGORIN/WASHINGTON
November 1, 1999
Web posted at: 12:10 p.m. EST (1710 GMT)
If you are an underwear mogul, you surely cannot lack confidence.
So it is with Bill Farley. The handsome physical-fitness buff has
under his belt brands like BVD, Munsingwear and his flagship,
Fruit of the Loom. He rubs shoulders with the rich and powerful,
and recently co-chaired a lunch that raised more than $500,000
for George W. Bush. Muscles rippling, Farley, 57, has also shown
up wearing a tank top in Fruit of the Loom advertising. He once
even put himself forward as a candidate for President of the
These days, however, Farley's political focus is squarely on
Congress, where Fruit's adventures in lobbying offer a choice
example of how the game is played. Fruit of the Loom is a
tattered company, suffering from bad performance and poor
management and lobbying heavily for a bill that would ripen its
How likely is it that the company's case will be heard on the
Hill? Well, last year alone Fruit handed out more than $435,000
in soft-money donations, a figure that puts contributions by the
firm (1998 sales: $2.2 billion) ahead of those of such giants as
Coca-Cola, Exxon and Bank of America. Most of Fruit's plums go to
Republicans, including $265,000 to the National Republican
Senatorial Committee, run by Kentucky Senator Mitch McConnell,
the principal opponent of campaign finance reform.
This week, with Congress having for now killed campaign finance
reform, McConnell and other Republicans will get on with other
business, such as an amendment to an African trade bill that
would allow apparel produced in the Caribbean Basin to enter the
U.S. duty free, provided it is assembled from U.S. fabric.
Fruit's lobbyists--along with those from competitors like the Sara
Lee Corp., which makes Hanes underwear, and retailers like the
Limited and the Gap--are pushing hard for passage. Fruit officials
claim the measure, which Bill Clinton supports, will create jobs,
and deny that the company's donations can buy influence. Says Ron
Sorini, a Fruit lobbyist: "There's absolutely no correlation
between our soft-money donations and those who decide to vote in
favor of this bill."
Whether there is or not, Farley's much coveted tariff break comes
at a cost. Eliminating duties on apparel from the Caribbean will
run U.S. taxpayers at least $1 billion in lost revenue over five
years--a figure that, by congressional rules, must be made up with
cuts in other programs.
Fruit confirms that the bill is expected to deliver a quick $25
million to $50 million to the bottom line, adding to savings
achieved after moving some 17,000 of its U.S.-based jobs, mostly
to the low-wage Caribbean Basin, and reincorporating in the tax
haven Cayman Islands. The job cuts were spread across the South,
especially Kentucky, where earlier in this decade Fruit was one
of the largest employers. "They are trying to win in Washington
what they've been unable to achieve in the marketplace," says
Charles Lewis, executive director of the Center for
Public Integrity, a watchdog group. "They're now trying to secure
advantages from Congress at a time when they're in dire financial
Dire is right. After a major inventory snafu, Fruit's financial
elastic stretched again last month, when it had to make a $45
million interest payment on accumulated debt of $1.3 billion. Its
stock, traded at $48 a few years ago, now sells for less than $4.
The board, its confidence in Farley shaken, managed to shunt him
into the role of nonexecutive chairman in August, and the company
is searching for a new CEO. Farley retains a role in large
measure because he still controls 28.5% of Fruit's voting shares.
He has also arranged for the company to guarantee loans to
himself worth $65 million.
Fruit of the Loom's favorite trade bill has led to a rare split
between Kentucky's two conservative Republican Senators. While
McConnell is expected to support the tariff cut, his colleague
Jim Bunning has no intention of backing the measure. Asks
Bunning: "How many more jobs do we have to lose until we wake up
and smell the Caribbean coffee?"
Yet for Bill Farley, the aroma is nothing if not enticing. By one
count, he's tried to get versions of the bill through Congress
six times in recent years. Perhaps seven's the charm.
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Cover Date: November 1, 1999