Nation/World

Trump on Twitter makes corporate executives hunker down

It started with Carrier. Ford was next. So by the time Donald Trump singled out Boeing for a Twitter taunt on Tuesday, corporate executives across America had read the writing on the wall: It was time to hunker down.

Initially aiming to pressure companies like Ford and Carrier to keep factory jobs at home instead of moving them to Mexico, Trump has upped the ante in recent weeks, forcefully reminding business leaders of his campaign vows to impose painful tariffs on companies that ignore him.

Fresh off a deal intended to keep roughly 1,000 Carrier jobs in Indianapolis, Trump took aim at Boeing on Tuesday with a complaint that it was overcharging the government on a potential $4 billion contract to replace Air Force One. "Cancel order!" he wrote in a Twitter message.

Unlike the earlier factory-focused attacks, Boeing's turn as a target of Trump's ire caught big business off guard, especially since Boeing is among the bluest of the blue chips and is not just a substantial employer in the United States but the single largest U.S. exporter.

For all of Trump's theatrics, the fear in the executive suites of ending up in the crosshairs of the president-elect is real, according to Bill George, a former chief executive of Medtronic, a large medical equipment maker based in Minneapolis with more than $30 billion in global revenues.

"All the CEOs I know are trying to stay below the radar screen, and these lightning strikes have certainly gotten everyone's attention," he said. "CEOs are very concerned, and if I were at Lockheed or Northrop Grumman" — which, like Boeing, are major military contractors — "I'd be thinking about how do I stay out of the president's way."

And it is not just those who do a lot of business with the government. More broadly, the country's chief executives find themselves in an unusual and unexpected position with an incoming Republican administration — on the defensive.

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And whether they like it or not, current and former business leaders said Trump's Twitter messages and other statements will filter through corner offices and boardrooms and influence decision making.

"Not that they didn't think about it before, but CEOs are going to think harder about the consequences for the economy of moving jobs overseas," said Kevin Sharer, who ran biotech giant Amgen for more than a decade beginning in 2000 and has served on the boards of Chevron, 3M and Northrop Grumman.

"What the president-elect is trying to do," he said, is send the message "that his priority is jobs and the economy."

But Sharer said Trump's methods so far are limited and relatively easy for big business to accommodate.

"This is a very, very minor move," he said, referring to how United Technologies, Carrier's parent, agreed last week to keep roughly 1,000 jobs in Indiana following pressure from Trump. "If a new president says please don't, it's a no-brainer."

Blair Effron, co-founder of Centerview Partners, a leading independent investment bank in New York, echoed Sharer's analysis.

"All in all, this is probably more important in terms of symbolic impact than it is in terms of substance," said Effron, a prominent Wall Street Democrat who strongly supported Hillary Clinton for president. "But symbols matter."

Trump said he intended to continue his crusade. In an interview with Time magazine, Trump said he would ask his newly appointed chief of staff, Reince Priebus, for a list of companies that have announced plans to leave the United States.

"I can call them myself," he told Time. "Five minutes apiece. They won't be leaving. OK?"

Still, for all the sturm und drang, the underlying message from the president-elect's Cabinet appointments is that he is building an administration of business-friendly veterans of government and Wall Street who favor a wish list of corporate goodies like tax overhaul and deregulation.

Trump, and the vice-president elect, Mike Pence, have made clear that in addition to sticks like public shaming and the threat of tariffs, they would push for these carrots for big business as well.

"I don't blame the companies," Trump said in an interview last week on the floor of Carrier's Indianapolis plant. Washington, he said, "has been taxing and regulating companies to death. We're untaxing and unregulating."

Hopes are already running high among leaders of the biggest public companies that the Trump administration will relax what they see as burdensome regulations, along with overhauling the corporate tax code.

Trump's taunts, after all, may be a small price to pay for looser regulations or being able to pay only a modest tax when repatriating hundreds of billions of dollars parked overseas.

"I don't think anybody wants to be shamed," said Mark Sutton, chief executive of International Paper, in an interview with CNBC. "If it created a dialogue, if taxes were your problem, and that's why you made some decisions and that created dialogue, then I think maybe it could be for the good."

At the same time, though, Trump has been highly unpredictable, more reminiscent of a European or Latin American-style populist, said George, who is a professor at Harvard Business School. And he lacks the inhibitions that have governed past U.S. presidents, Democratic and Republican.

"Boeing is building a brand new 747 Air Force One for future presidents, but costs are out of control, more than $4 billion," Trump wrote on Twitter on Tuesday morning. "Cancel order!"

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At almost the same moment, he publicly thanked SoftBank, a Japanese company, for investing and creating jobs in the United States. Earlier, Masayoshi Son, SoftBank's chief executive, met with Trump at Trump Tower.

Although Trump claimed credit for SoftBank's decision to invest as much as $50 billion in the United States, those plans predated the election, and Son has owned a controlling stake in the mobile phone carrier Sprint, among other companies, for several years.

Since the election, Sprint shares have risen 40 percent, partly on hopes that it could be acquired by its rival T-Mobile. While antitrust officials under President Barack Obama have been wary of deals in the telecom sector, Son and investors are hoping the Trump administration might look more favorably on any potential deal.

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George, who has served on the boards of several Fortune 500 companies, acknowledged that Trump's threats on Twitter will force chief executives to think twice before moving production abroad, at least initially.

"It will act as a short-term deterrent in terms of closing factories and moving overseas," he said. "It won't change the long-term trend, but he clearly promises to be an activist president who will use the bully pulpit throughout his presidency. And doing it before the inauguration sends an even stronger message."

Taking on individual companies is practically uncharted territory for a modern-day president, raising the risk, some say, of potential abuses by those who might have advance knowledge of Trump's actions. Boeing's shares, for example, initially took a dive after his Twitter message Tuesday before subsequently recovering.

"If you knew about the tweets beforehand, that would be insider trading," said Adam Pritchard, a University of Michigan law professor who served at the Securities and Exchange Commission in the 1990s. "You could make small sums of money, I suppose, but if you are buying in large enough volume to move the market or make a lot of money, that would be enough to alert the surveillance units of the exchanges."

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Investor reaction to Trump's Twitter messages has been sharp.

Not long after his standoff with Carrier, Trump sent notice that he wanted Rexnord, another manufacturer with a factory in Indianapolis, to reverse plans to move roughly 300 jobs to Mexico. Rexnord's shares are down nearly 10 percent since Thanksgiving.

And while some chief executives may be rattled by Trump's off-the-cuff style, others, especially in the manufacturing sector, say they welcome the idea of a businessman in the White House and his focus on keeping jobs in the United States.

"I didn't vote for him, but I can't overstate what a bunker mentality most businesses have after eight years," said Frank Sullivan, chief executive of RPM International, an Ohio manufacturer of paints, sealants and specialty chemicals with more than $5 billion in sales.

Sullivan said that he had supported Gov. John Kasich of Ohio in the Republican presidential primaries; even though he did not vote for either main-party candidate in the general election, he said that he now looked forward to working with the new administration. "We're not looking for a fight," he said.

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