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CEOs Work to Figure Out Trump

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12/04/2018 | 08:49am CET

By Alex Leary-- WSJ -- WASHINGTON -- At a June 2016 Business Roundtable meeting of 100 of the nation's top executives, a speaker asked for a show of hands from those who had dealt with Donald Trump, who would officially become the Republican presidential nominee the following month. Not a single hand was raised.

 

Today, nearly two years after Mr. Trump took office, the business community is still trying to figure out how to work with the businessman-turned-president. Progress is being made, in fits and starts.

Chief executive officers early on were eager to join various councils created by the White House -- a head-on approach that collapsed after Mr. Trump's controversial response to a white-supremacist rally in Charlottesville, Va., last year that resulted in the death of a peaceful counterprotester.

Since then, individual companies and trade groups have employed a mix of quiet diplomacy and occasional splashy displays of support to create an alliance that has produced broad regulatory rollbacks and curbs on new rule making, as well as the biggest one-time drop in the corporate tax rate, now the lowest since 1939. Those gains have come against the backdrop of a booming economy and stock market, though the latter has wobbled in recent months.

That alliance, however, is being tested anew with Mr. Trump's provocative moves on trade, tariffs and immigration.

"The uncertainty is terrible," says Carlos Gutierrez, former CEO of Kellogg Co. and commerce secretary under President George W. Bush. "Sure, we need to have serious discussion with China, but do we need to get in a trade war that is going to impact U.S. companies and consumers?" CEOs, he says, "are on the edge."

Jeffrey Sonnenfeld, a Yale School of Management professor who conducts regular CEO surveys, sums up the business leaders' political journey this way: "In the course of two years, CEOs have moved from skepticism, to fearful concern, to cautious optimism, to widespread enthusiasm, to disappointment, to guarded fear with lingering targeted hope."

Fresh whiplash came last week when General Motors Co. said it would end production at several U.S. factories next year. CEO Mary Barra, once a member of a presidential advisory council, took the news directly to Mr. Trump a day before the news became public. The next day, she attributed the move to shifting consumer taste and a bet on electric and self-driving vehicles. GM's stock jumped.

But Mr. Trump lashed out, telling The Wall Street Journal that GM "better damn well open a new plant" in Ohio -- a crucial election battleground -- and stop making vehicles in China. The flogging continued the next day, with Mr. Trump threatening on Twitter to cut off electric-vehicle and other subsidies. This time, GM's shares fell.

At first, CEOs discovered an ally in President Trump, who in meetings with executives made personal requests for lists of problem regulations and solicited advice on policies. He charmed guests with impromptu invitations to visit the Oval Office.

During a meeting in February 2017, Mr. Trump turned to David Farr, CEO of Emerson Electric Co., and asked him to come up with a list of regulations the industry found onerous. Within a month, the National Association of Manufacturers, which Mr. Farr chairs, submitted a 42-page report.

"That's what most Americans don't get to see, how great our president is at listening. He's dealing with innumerable issues and crises and truly values input of U.S. business leaders," Harold Hamm, chief executive of shale-oil producer Continental Resources Inc., said last month. "I was drawn to Mr. Trump much like the rest of the American people. He was not a politician seeking to advance his career, but rather a businessman who was more interested in solutions than the political norm."

But the unconventional aspect of his presidency quickly cut both ways. Mr. Trump's freewheeling Twitter feed, for example, has complicated relations. In December 2016, before being sworn in, Mr. Trump shocked Boeing Co. with a complaint about the cost of a replacement Air Force One, tweeting "Cancel order!"

Meanwhile, CEOs who have publicly praised the president, such as Under Armour Inc.'s Kevin Plank, stepped into a minefield of polarized consumer reaction. Mr. Plank called Mr. Trump a "real asset" to business, amid an uproar over the president's attempts to impose a targeted travel ban. The company faced boycott calls and rebukes from customers and its contract athletes. A year later, after Charlottesville, Mr. Plank was the second executive to resign from the president's American Manufacturing Council -- eliciting a new wave of calls for boycotts, this time from Trump supporters.

Business leaders soon decided that new tactics were needed.

Boeing CEO Dennis Muilenburg called up Mr. Trump almost immediately after the Air Force One tweet and sought a face-to-face meeting. Amid negotiations over the price, Mr. Muilenburg explained how government security requirements drove the costs, but also publicly flattered the president as a "tough negotiator" and "a good businessman."

He opened Boeing's doors for Mr. Trump, throwing a campaign-style event in February 2017 in South Carolina in which workers held signs touting American jobs, and he continued to attend the president's industry roundtables on national-security matters.

That has afforded Mr. Muilenburg room to pursue other issues -- he played a role in the president's reversal of a campaign pledge to kill the Export-Import Bank. Mr. Trump's posture toward China, a rapidly growing market for Boeing, remains problematic for the company, but Mr. Muilenburg has maintained a positive profile, extolling the value of a "seat at the table."

Lockheed Martin Corp. CEO Marillyn Hewson has been similarly nimble, saying she welcomed a discussion about the F-35 jet-fighter program costs after Mr. Trump complained about them. She has joined with the White House on attempts to crack down on Chinese theft of intellectual property. This summer, when the White House held a showcase of American-made products, Lockheed delivered an F-35 and an Orion spacecraft to the South Lawn.

"She's tough," the president has said of Ms. Hewson. Mr. Trump the critic has since become the salesman, helping curry favor for the F-35 program on Capitol Hill, where costs have been a bipartisan issue for years. In November, Lockheed was awarded a contract worth up to $23 billion from the Defense Department to deliver 255 F-35 jets.

Ms. Hewson has also ensured a role for Lockheed in the White House's focus on workforce development, pledging millions of dollars for vocational and trade programs. Businesses are increasingly concerned about a lack of skilled employees, and dozens of companies, from Amazon.com Inc. to FedEx Corp. and Raytheon Co., have been eager participants in the push, spearheaded by Mr. Trump's daughter, Ivanka. Similarly, many companies joined efforts to combat the opioid crisis, which has had a ruinous effect on workers across the country.

Boeing and Lockheed Martin declined to make executives available for interviews, as did a number of other top corporations, which have courted Vice President Mike Pence as well.

In August, a year after Charlottesville, Mr. Trump gathered a group of about 15 CEOs for a dinner at his Bedminster, N.J., golf resort that served as a sort of reset.

Among those in attendance were Mr. Muilenburg, Fred Smith of FedEx, Michael Manley of Fiat Chrysler Automobiles NV, Jim Koch of Boston Beer Co., Mark Weinberger of Ernst & Young and Indra Nooyi, then CEO of PepsiCo.

Mr. Koch brought Sam Adams beer and toasted the president for the tax bill, saying a lower corporate tax rate improved competition with foreign companies. Then came the hangover: Boston Beer faced its own customer revolt.

Apple Inc.'s Tim Cook has had good results from his interaction with the president. Mr. Cook, who endured candidate Trump's calls for a consumer boycott of Apple over its refusal to unlock an iPhone used by a terrorist attacker in San Bernardino, Calif., has visited the president at the White House and dined with Mr. Trump in Bedminster. In these meetings Mr. Cook has pressed an array of issues, including immigration, something he and the president don't agree on.

Tariff reprieve

For Mr. Cook, the alliance has resulted in Apple being spared from tariffs on products made in China, though Mr. Trump floated possible levies in an interview last week with The Wall Street Journal.

Other executives have had less success in moving Mr. Trump off his trade position. Robert Lighthizer, the U.S. trade representative, visited the Business Roundtable last year and delivered a tough-luck message, telling the group that its interests didn't always line up with the interests of the American worker and that the two sides would be at loggerheads.

After seeing little chance to avoid a trade fight, the business community pivoted focus and helped persuade the White House to forestall it until they could get the tax bill through the narrow Republican majorities in Congress. Their argument: Their coalition wasn't strong enough to fight on two fronts.

Mr. Leary is a Wall Street Journal reporter in Washington. He can be reached at alex.leary@wsj.com. Doug Cameron, the Journal's Chicago deputy bureau chief, contributed to this article.

 

Stocks mentioned in the article
ChangeLast1st jan.
AMAZON.COM -0.31% 1658.38 Delayed Quote.41.81%
APPLE 1.09% 170.95 Delayed Quote.1.02%
BOEING COMPANY (THE) -1.49% 326.22 Delayed Quote.28.79%
BOEING COMPANY (THE) -0.37% 325.47 Delayed Quote.10.78%
FIAT CHRYSLER AUTOMOBILES -1.20% 15.66 Delayed Quote.-12.22%
FIAT CHRYSLER AUTOMOBILES 0.09% 13.958 End-of-day quote.-6.39%
GENERAL MOTORS CORPORATION -1.60% 35.11 Delayed Quote.-14.35%
LONDON SUGAR 0.55% 344.9 End-of-day quote.-12.64%
PEPSICO 1.15% 118.35 Delayed Quote.-2.44%
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