Business leaders are anxious to avoid an angry call from the president-elect
Bill George knows all about pressure from big government.
When he was chief executive of medical device giant Medtronic Inc. in the 1990s, he decided to close a plant in France and move jobs to more cost-efficient sites in eastern Europe. He was promptly told by French political leaders that he would have to continue paying wages to idled workers in France for a year. It hurt, but that’s the price he had to pay.
Today, from his perch as a senior fellow at Harvard Business School, he is watching Donald Trump strong-arm and threaten companies. And like others at the business school, he is trying to gauge how to handle a president-elect who has castigated Carrier for moving jobs to Mexico, ripped into Boeing Co. for making too much money on an Air Force One contract, and rattled drug makers by vowing to bring down prices of medicines.
George’s advice to today’s chief executives? “Right now, you just want to stay out of the line of fire,” he said. “Carrier was willing to absorb a noneconomic decision for a period of time by keeping jobs in Indiana. I see this as more of a symbolic move by the president-elect to make a statement. There’ll be two or three more of these moves. Then we’ll get back to business.”
Others see Trump’s bluster as part of his personality and longer-term strategies, and say captains of commerce should learn to adapt. Some believe the downside could be offset by Trump’s proposal to lower taxes which, if enacted, would prove a boon to business.
“You have to decide how important the presidential crankiness is going to be to your company’s future,” said Harvard Business School professor Joseph Fuller, former chief executive of the global consulting firm Monitor Group. “When the president-elect of the United States calls and says, ‘I need a favor’ — and it’s not material to your business and you know he’s going to be cutting your corporate tax rate — I’m going to say, ‘Yes sir, I’ll do everything I can.’ ”
Still, the former business leaders say chief executives will resist proposals that would force their shareholders to lose money, or thwart a company’s business strategy. One test could come soon, they say, if Trump follows up on his stated opposition to the merger of AT&T Inc. and Time Warner Inc. and tries to block the $85 billion deal.
“CEOs aren’t going to be cowed by being called out in tweets,” said Kevin Sharer, another Harvard business professor who was chief executive of biotech Amgen Inc. “If they think a move is fundamental to the company, they’re going to go forward with it.”
At the same time, Sharer said, business leaders should recognize Trump’s tweets carry a message — US jobs will be valued by the new administration.
“He is certainly laying down a marker to the country, saying he cares about jobs in America,” Sharer said. “He’s saying one of his priorities is saving jobs. He’s not doing it in a skillful or elegant way, but he’s saying it’s a priority. Companies will think harder about moving jobs out of America. And there’ll be policies that will make it attractive to keep business here.”
On Wednesday night, Trump expanded the ring of his business wrath beyond the executive suites. After Chuck Jones, head of the Indianapolis local of the United Steelworkers Union, said Trump had “lied” in talking about how many Carrier jobs had been preserved, the President-elect tweeted that the union should “spend more time working — less time talking.”
Trump’s use of social media has amplified his messages, but there’s a long history of presidents pressuring businesses or wading into the marketplace, Fuller said. He cited President John F. Kennedy forcing steel makers to roll back prices in the 1960s and, more recently, President Barack Obama’s bailout of Chrysler and General Motors Corp.
“You can go back to Teddy Roosevelt and see frequent interventions by political executives in business decisions,” Fuller said. “We used to call this jawboning. The president would use the bully pulpit to cajole both employers and unions in the national interest.”
While Trump’s focus has been on outsourcing and foreign trade deals he says have sapped American jobs, ex-Medtronicchief executive George said the larger issue is technology advances that have made many manufacturing jobs obsolete. George said the new administration should focus on German-style industrial policy to upgrade the skills of US workers and prepare them for jobs in fields like robotics and computer programming that match the needs of domestic businesses.
Manufacturers in Massachusetts appear to betaking a wait-and-see attitude toward the incoming administration.
“My guess is that he might continue doing this from time to time, parachuting into these situations,” said Christopher Geehern, executive vice president at Associated Industries of Massachusetts, a trade group concerned with costs and regulations. “It won’t solve the problem, but it focuses attention on manufacturing issues, and that’s OK. Manufacturers are pleased he’s shining a light on some of the issues that are driving companies overseas.”
Christopher Anderson, president of the Massachusetts High Technology Council, which represents computer software, hardware, medical device, and robotics companies, said no company wants to be singled out — but Trump’s actions appear to be purposeful.
“I don’t know who he’s going to be tweeting about tonight or tomorrow,” Anderson said. “But when people see 1,000 jobs [at Carrier] not leaving the US, they say he’s off to a good start, and he’s not even president yet. There’s a high expectation that there’s going to be a reduction of barriers and regulations in the Trump administration. And that’s going to make it easier to bring cash back into the country and expand the manufacturing base here.”