The world's leading maker of car batteries, and a manufacturer of heating and cooling equipment and controls, wasn’t used to such sensational stuff.
Then on Feb. 4, 2016 -- less than two weeks after Johnson Controls announced it would move its headquarters from suburban Milwaukee to Cork, Ireland, as part of a merger with Tyco International -- the typically low-key company was smacked again, on national television, by Hillary Clinton.
At an MSNBC-hosted presidential debate in New Hampshire, Clinton criticized Johnson Controls as something of a pork barreling tax evader.
Alluding to her rival for the Democratic nomination, U.S. Sen. Bernie Sanders, Clinton said:
"Look at what I am proposing, and — we have a vigorous agreement here. We both want to reign in the excesses of Wall Street.
"I also want to reign in the excesses of Johnson Controls that we bailed out when they were an auto parts company, and we saved the auto industry, and now they want to avoid paying taxes."
The next Democratic debate is Feb. 11, 2016 in Johnson Controls’ home territory, hosted by PBS at the University of Wisconsin-Milwaukee. And it’s possible we’ll hear a repeat of Clinton’s attack.
So let’s assess of both parts her claim.
Clinton’s reference to a bailout was a bit muddled.
Unlike big automakers, Johnson Controls wasn’t facing bankruptcy back in 2008. But it did benefit -- indirectly -- from a federal bailout of the auto industry.
As the Milwaukee Journal Sentinel reported a week before Clinton made her claim:
Johnson Controls Inc. was as patriotic as they come back in 2008, when the U.S. auto industry was teetering on bankruptcy and the company knew it desperately needed help from U.S. taxpayers. The company's president at the time, Keith Wandell, didn't hesitate to ask Congress to support the massive government bailout that ultimately rescued two major U.S. automakers, along with uncounted businesses that provide parts and services to them. "It saved a whole lot of suppliers that would have gone out of business," said Steve Roell, then Johnson Controls' chief executive.
In 2008, of course, the entire auto industry was in very bad shape as the recession took hold. Layoffs at auto plants and among auto parts suppliers were on track to reach 250,000 workers. General Motors was virtually out of cash to pay its bills and Chrysler was not far behind.
In December 2008, President George W. Bush used $17.6 billion in TARP money to keep GM and Chrysler afloat. And in 2009, President Barack Obama continued the rescue of the two automakers that was financed with about $80 billion in taxpayer money.
Clinton’s campaign notes that the Obama White House has touted the importance of the auto bailout beyond General Motors and Chrysler. In a statement in 2011 that mentioned Johnson Controls, the White House said:
GM and Chrysler were supported by a vast network of auto suppliers, which employed three times as many workers and depended on the auto companies business to survive. An uncontrolled liquidation of a major automaker would have had a cascading impact throughout the supply chain, causing failures and job loss on a larger scale.
Johnson Controls, meanwhile, has acknowledged that Wandell had "encouraged the Congress to support the automakers, noting that failure of even one of them would have devastating consequences for many U.S. suppliers." But the company emphasized that it did not receive any of the auto bailout money.
So, while the money went to the automakers, part of the intent was to help businesses that supply them, as well.
As we noted, Johnson Controls itself has said that the move of its headquarters to Ireland will save $150 million per year in taxes.
With the so-called inversion -- in this case, Johnson Controls relocating its headquarters outside the U.S. through being acquired by Tyco -- lets a company pay corporate income taxes on its overseas earnings at the tax rate of its new home country.
At 35 percent, the United States’ statutory corporate rate -- that is, before deductions -- is the highest among developed countries. In Ireland, the corporate tax rate is 12.5 percent.
Clinton, Sanders and others have decried inversions, while some Republicans, including Wisconsin U.S. Sen. Ron Johnson, have said the moves are evidence that corporate tax rates in the United States are too high.
New York Times commentator Andrew Ross Sorkin, while lamenting the inversions, has said: "Ultimately, the only way inversions will stop is when the corporate tax code changes so it becomes more attractive for American companies to be American companies.
A Johnson Controls spokesman did not respond to our requests for comment.
But the company hasn’t disputed the tax benefits.
Clinton said "we bailed out" Johnson Controls when "we saved the auto industry" and "now they want to avoid paying taxes."
Johnson Controls was not a direct recipient of the 2008-’09 federal bailouts of the auto industry, but it did push for the funds and, as an auto parts supplier, benefited indirectly.
On federal taxes, the company has said it will save $150 million per year by moving its headquarters from suburban Milwaukee to Ireland.
For a statement that is accurate but needs clarification, our rating is Mostly True.