Major US organisations are starting to rethink their manufacturing strategies for fear of being labelled “un-American” by the President-Elect.
Every US-based supply manager with outsourced supply chains should follow Donald Trump on Twitter. Why? Because for major companies with overseas manufacturing operations, there’s every chance that the President-Elect will label your organisation “un-American”.
Since November 2016, Trump has criticised companies including Ford, Toyota, GM, United Tech and, more recently, pharmaceutical organisations including Johnson & Johnson, Pfizer and Bristol-Myers for moving U.S. jobs abroad. His focus appears to be on companies outsourcing to Mexico and China, where historically low-cost labour enables organisations to manufacture their products at a competitive level.
Companies changing plans
According to a report from Reuters, boards of a number of U.S. companies that manufacture overseas have directed their public relations teams to plan a response in case the President-Elect singles them out on Twitter.
Similarly, some companies are reportedly re-thinking mergers and other moves that would involve outsourcing to China for fear of being cast as “anti-American” by the President-Elect. Ford has backed away from plans to build a $1.6 billion plant in Mexico, while United Tech has announced plans to keep half of the 2,100 jobs it was shifting over the border. Reports have also emerged of dozens of major organisations contacting government relations and PR advisors to assess if they have any “red flags” that would draw Trump’s attention and lead to a damaging Tweet being sent.
New risk metric: weighing national interest
According to the Reuters report, “corporate leaders can no longer focus only on maximising shareholder value; they must now also weigh national interest.” Essentially, being labelled as un-American has become a new risk metric that needs to be weighed against the cost benefits of overseas manufacturing.
Trump’s aggressive rhetoric against China may also lead to a reduction of outsourcing to the manufacturing powerhouse as the relationship between the two countries is expected to decline. Trump has also flagged high tariffs as another way in which he plans to move manufacturing jobs from China back to the U.S.
The effects of a Trump Tweet cannot be downplayed. Lockheed Martin lost $4 billion in value as share prices feel immediately after Trump criticised the organisation on Twitter, while Toyota saw $1.2 billion in value wiped in five minutes following a similar Tweet. Developers have even created an App to alert investors to Trump’s market-moving Tweets. This week, the nine biggest pharmaceutical companies that use manufacturing plants in Europe, Asia and Africa lost roughly $24.6 billion in 20 minutes during a news conference in which Trump singled out the industry.
Alongside potential losses in share value, coming under fire from the soon-to-be President puts organisations at risk of brand damage and consumer boycotts.
It is unclear whether Trump will continue to use Twitter to drive his “Made in America” agenda, or use more traditional tools to affect change such as policies and import tariffs.
What do you think about “Made in America”? Are organisations right to be wary of a tweet from Trump? Let us know in the comments below.
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