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NY Times, Jan. 24 2017
Call to Create Jobs, or Else, Tests Trump’s Sway
By NELSON D. SCHWARTZ and ALAN RAPPEPORT
President Trump summoned the titans of American business to the White
House on Monday for what was billed as a “listening session,” but it was
the new president who delivered the loudest message: Bring back domestic
manufacturing jobs, or face punishing tariffs and other penalties.
The contrast between Mr. Trump’s talk and the actual behavior of
corporate America, however, underscored the tectonic forces he was
fighting in trying to put his blue-collar base back to work in a sector
that has been shedding jobs for decades.
Many of the chief executives Mr. Trump met with have slashed domestic
employment in recent years. What is more, their companies have
frequently shut factories in the United States even as they have opened
new ones overseas.
Mr. Trump said he would use tax policy, among other means, to deter
companies from shifting work abroad. “A company that wants to fire all
of its people in the United States and build some factory someplace
else, then thinks that product is going to just flow across the border
into the United States,” he said, “that’s just not going to happen.”
Union leaders also met with Mr. Trump on Monday afternoon, the same day
that Mr. Trump withdrew the United States from the Trans-Pacific
Partnership trade agreement. While unions often ascribe the shift of
manufacturing jobs abroad to “corporate greed,” the migration is a
result of a more complex corporate calculus.
Wall Street is pushing industrial companies to increase earnings at a
double-digit rate when the American economy is growing by only 2
percent, and the quickest way to deliver higher profits is by reducing
labor costs, whether through automation or by moving jobs to cheaper
locales like Mexico or China.
In some cases, Gordon Gekko-like hedge fund managers are to blame, but
much of the time, it is the drive for bigger returns on 401(k) accounts,
pension plans and other retirement vehicles that depend on steadily
rising corporate profits and, in turn, a buoyant stock market.
Just as significant is the desire by multinational corporations to go
where the growth is, and many emerging-market economies, as well as
China, are growing at more than twice the rate of the United States.
“Global capital doesn’t have a social conscience,” said Kevin W. Sharer,
who teaches corporate strategy at Harvard Business School and served on
the boards of 3M, Northrop Grumman and Chevron, in addition to running
the biotech giant Amgen. “It will go where the returns are.”
A case in point is Dow Chemical, whose chief executive, Andrew N.
Liveris, leads a panel on manufacturing that Mr. Trump created. Mr.
Liveris was at the White House on Monday.
At the end of 2015, Dow employed 49,500 people, about half of them in
the United States, nearly 5,000 fewer than it did at the end of 2012.
During the same period, the number of domestic Dow manufacturing
locations fell to 55, from 58, but increased by five in Latin America
Not that Mr. Liveris is necessarily to blame — he and the company were
targeted in 2014 by the activist investor Daniel S. Loeb, who called for
splitting the company in two to bolster profits and for the ousting of
Mr. Liveris. After a multiyear battle, Mr. Loeb essentially prevailed,
and Mr. Liveris will exit Dow after it completes a merger with DuPont
later this year, with a breakup to follow.
Dow is hardly the only company to reduce its head count in recent years.
International Paper, whose chief executive also attended the White House
meeting, had its work force in the United States fall to roughly 34,000
in 2015, about 2,000 fewer than at the end of 2010.
The final piece of the manufacturing jobs puzzle is technology, said
Bill George, who formerly ran Medtronic, a producer of pacemakers,
stents and other medical devices, and who now teaches at Harvard
Mr. George noted that Ford Motor, which Mr. Trump has tangled with and
whose chief executive was at the White House on Monday, employed a
fraction of the workers it did two decades ago because its production
lines were now highly automated.
Even boosters of the factory sector, like Scott Paul, president of the
Alliance for American Manufacturing, an advocacy group, reacted
cautiously to Mr. Trump’s initial approach Monday.
“It’s easy to get C.E.O.s to come in on the first day of his presidency
and warn them they are on watch,” Mr. Paul said. “I believe a lot of the
C.E.O.s in that room want do the right thing and create jobs in America,