Spot check: Democratic group revisits McCormick’s local business record

This election season, WESA and PublicSource are analyzing the political advertising you’re seeing on air and online. Look for Spot Check on Thursdays.

The spot

A 30-second ad attacking Republican U.S. Senate candidate David McCormick,”along with a rejoinder from McCormick’s campaign, revisits one of the most scrutinized chapters of his business career: his role as an executive at the formerly Pittsburgh-based online auction firm FreeMarkets.

When did it launch? Sept. 24

How many airings? At least 316 airings on broadcast TV since Sept. 24, almost all of which have been placed with TV stations in the Pittsburgh market, per ad-tracking firm AdImpact

How much? $801,589 as of Oct. 3, according to an AdImpact estimate.

Who’s paying? The ads are placed by WinSenate, a Democratic “superPAC” whose $64 million in total ad buys makes it the largest spender in Pennsylvania’s Senate race, according to AdImpact. Campaign finance records show that its sole source of funding this year, to the tune of $52.8 million, has been the Senate Majority PAC — a committee tied to Senate Democrats, which in turn is funded by unions and other Democratic supporters.

The claims

The commercial concerns FreeMarkets, once considered a key Pittsburgh entrant in the dotcom boom of the late 1990s and early 2000s. Using archival footage of the company’s former headquarters and staff, the ad hails the firm as “a Pittsburgh software company developing new technologies, employing hundreds of Pennsylvanians — until Dave McCormick became its CEO.” Using stock film of an office lights going out, workers at a — presumably offshore — technology manufacturing plant, and footage of McCormick speaking, the ad contends that McCormick “laid off his employees, shipped jobs to China, then sold off his company for nearly half a billion dollars” to buy private aircraft and a mansion — “and now he wants to buy our Senate seat too.”

The facts

McCormick’s record at FreeMarkets has featured both in this race and an unsuccessful 2022 bid for the Senate seat now held by John Fetterman. His critics have faulted him for job cuts that took place in Pittsburgh while the firm expanded modestly overseas; defenders have said such moves were necessary to preserve a much larger number of jobs in Western Pennsylvania.

A review of financial filings and contemporaneous news reports, meanwhile, suggests that election-season rhetoric can give a misleading impression both of McCormick’s role in the company’s explosive growth and its later challenges.

FreeMarkets was founded in 1995; McCormick joined it in late 1999, just as it was going public with a stock offering. U.S. Security and Exchange Commission reports show that at the end of 1999, the company had 376 employees and by the following year its global workforce had more than doubled to 968. He became president and later CEO in 2002, after holding an executive vice-president post overseeing customer sales and service.

During his leadership, FreeMarkets did expand overseas while domestic employment lagged. The company said the moves were to expand its business globally rather than to offshore work, though media accounts noted that the firm’s decision to open an auction center in India followed a modest layoff of 50 Pittsburgh workers. And the company did shrink from its 2002 peak of 1,068 employees, 758 of which were in North America and concentrated in Pittsburgh, to a 2003 year-end total of 967 workers, 702 of which were in North America. Employment in Asia and Australia grew from 119 to 190 positions in that time, financial reports show.

McCormick shepherded the sale of FreeMarkets to Ariba in early 2004, holding the title of president in the merged firm until 2005.

But when McCormick was accused of moving jobs overseas in the 2022 Republican Senate primary, former Ariba CEO Bob Calderoni told the New York Post that “Dave insisted on keeping jobs in Pittsburgh. It really mattered to him as part of the transaction. … [H]e worked hard to create and save jobs in the city.” Half a year after the sale was announced, employment in Pittsburgh was reportedly 500 employees, down from the 650 local FreeMarkets workers employed when the sale was announced. But it was reportedly still more than any other Ariba office.

And McCormick’s campaign argues that he deserves credit for helping to build the company — and for preserving as many jobs as he did. Many other dot-com firms didn’t survive the boom-and-bust cycle that accompanied the rise of the internet at all.

“Hundreds of Western Pennsylvania jobs were added during Dave’s tenure as a senior executive helping to build FreeMarkets between 1999-2005,” campaign spokeswoman Elizabeth Gregory said in a statement. By contrast, she said, his Democratic rival “Career politician Bob Casey has been living on Pennsylvania taxpayers’ dime for three decades and has never had to worry about making payroll.”

In a book published to coincide with his campaign, Superpower in Peril, McCormick acknowledges that “the bursting of the tech bubble eventually found its way to our sector,” leaving the Ariba acquisition as the company’s best option. And while “a small number of jobs were ultimately eliminated” as part of the sale, “I explicitly ensured that Pittsburgh would remain a central hub for the company.”

The WinSenate ad correctly notes the approximate purchase price for the firm: Reports at the time valued the deal at $493 million. But the spot arguably misleads viewers into believing that money went solely into McCormick’s pocket, when the sum represents the total price paid, in cash and Ariba shares, to FreeMarkets shareholders.

(WinSenate could not be reached for comment, and the organization provides little mechanism for doing so. A message to its affiliate, the Senate Majority PAC, was not returned.)

Two days after the WinSenate spot dropped, McCormick’s campaign launched a 30-second FreeMarkets-themed ad of its own. Titled “Bounce Back,” it has gotten about half as much exposure as the WinSenate attack, having aired in Pittsburgh’s broadcast TV market 186 times at a cost of nearly $320,000, per AdImpact.data. The ad features a former employee hailing McCormick as “the most impressive guy I’ve ever met,” while another says of FreeMarkets, “it’s crazy how the company grew.

“It literally changed the skyline of Pittsburgh,” the second employee recalls, a claim the ad illustrates with footage of the FreeMarkets logo being installed on its former Downtown headquarter of One Oliver Plaza. The firm “hired hundreds of people Downtown,” she continues. “It really helped Pittsburgh bounce back.”

The ad correctly identifies McCormick as having been the CEO from 2002 to 2004, but it may mislead viewers into assuming that the transformations described in the ad date to that period. In fact, the FreeMarkets sign was installed in 2000, the same year the company’s growth was most explosive. SEC records show that at the end of 2003, the last full year of the company’s existence and of McCormick’s tenure as CEO, the firm employed 967 workers — essentially the same as the 968 it reported having at the end of 2000.

PublicSource’s access to AdImpact data on political advertising is made possible through a partnership with WESA and support from The Heinz Endowments.

Chris Potter is 90.5 WESA’s government and accountability editor. He can be reached at cpotter@wesa.fm.