President Barack Obama wants voters to know that not all chief executive officers are created equal. Some excel at manufacturing jobs, while others succeed in making money.
In the battle to be the nation’s CEO-in-chief, Obama is building the argument that the U.S. economy would suffer with the latter, someone from the private equity world where Mitt Romney, his chief potential challenger and Bain Capital LLC co- founder, hails.
“We can’t go back to an economy that was weakened by outsourcing and bad debts and phony financial profits,” Obama said March 9 at Rolls-Royce Holdings Plc’s Crosspointe advanced manufacturing facility in Prince George, Virginia. “We’ve got to have an economy that’s built to last, and that begins with manufacturing.”
Obama has recently appeared alongside some of the nation’s most prominent business leaders, including Rolls-Royce North America CEO James Guyette and Boeing Co. (BA) CEO James McNerney, shaking hands on factory floors and inspecting industrial equipment. He’s promoting policy initiatives focused on boosting the American worker with manufacturing incentives, skills training and community college partnerships.
Business Model Preference
In doing so, the president is aligning himself with a certain kind of business model, while undercutting the private- sector experience of Romney, who stakes his economic bona fides on his financial management background.
“America sells itself based on industry, that’s what made people profitable, that’s what got people into the middle class,” said Shari Anne Brill, a media strategist who owns her own consulting firm. “That’s the type of story that appeals to people versus the people who are in the business of wheeling- and-dealing and increasing wealth.”
Andrea Saul, Romney’s campaign spokeswoman, said the president’s message is evidence that he’s “scared at the prospect” of facing Romney in the general election.
“The last thing President Obama wants to do is run against a conservative businessman who has worked in the real economy and have to explain why his policies have been unable to get millions of Americans back to work,” she said.
Obama hasn’t drawn the contrast in such direct terms and Romney has yet to secure the Republican Party’s nomination. And the effort to distinguish between the two types of business models may also be borne from Obama’s lack of management experience and tense relationship with the business community.
Wall Street Distrust
Still, the president’s aides see the former Massachusetts governor as the likely nominee and are tapping into the public’s distaste for Wall Street. A December Pew Research Center poll found that 51 percent of respondents said Wall Street hurts the U.S. economy more than it helps. Sixty-one percent of those polled said the economic system “unfairly favors the wealthy.”
In a Jan. 13 memo, Stephanie Cutter, Obama’s deputy campaign director, highlighted comments by a former managing partner at Bain, Mark Walpow, who said: “The primary goal of private equity is to create wealth for your investors.”
“Voters need to understand the kind of economy Mitt Romney’s experience entails - and it doesn’t sound like the kind of economy that’s built to last,” Cutter wrote.
Obama’s “America Built to Last” slogan tries to channel the business model of a CEO at a company like Boeing, Ford Motor Co. (F), or General Electric Co. (GE) that exports goods and services around the world and needs to make sure it’s equipped for the future with a long-term growth strategy.
Obama’s Credibility Gap
Whether voters will hold Romney accountable to the negative aspects of private equity is yet to be determined. And Obama has a credibility gap to overcome, not just with business, but with the broader public, said Steven Reinemund, dean of Wake Forest University’s Schools of Business.
“So much criticism has been laid at the feet of business that it’s hard at this point for the president to delineate between these two models that he’s trying to create,” said Reinemund, a former PepsiCo CEO.
As Romney touts his own business experience, the president’s campaign will point out the distinction between Obama’s emphasis on investing in America’s workers with examples of workers being fired during Romney’s time at Bain.
While Romney tells campaign audiences he helped create a net of 100,000 jobs during his years at Bain, a Bloomberg News review of several Bain transactions during Romney’s tenure found deals that resulted in hundreds of job cuts along with companies filing for bankruptcy or facing lawsuits from shareholders who said they were misled by management.
Romney touts his record of creating retail jobs at companies including Staples Inc. (SPLS) and The Sports Authority Inc., yet retail sales positions are among the fastest-growing and lowest-paid jobs in the U.S., according to the Bureau of Labor Statistics. The average compensation, including benefits, across all retail jobs, from chief executive officer to clerk, is $17.15 an hour, the bureau says, compared with $32.95 an hour for manufacturing.
“I want us to make stuff. I want us to sell stuff,” Obama said last month at Boeing’s Everett, Washington jet factory after he toured the 787 Dreamliner assembly floor with McNerney.
Obama has taken his message to a United Parcel Service Inc. (UPS) facility in Las Vegas with the company’s CEO Scott Davis in January, a stop at a Master Lock Co. factory in Milwaukee last month and last week in a visit to a Daimler Trucks North America Plant in Mount Holly, North Carolina.
‘Suits and Ties’
“You want to communicate that ‘Hey, I’m standing with the people in America who are working, who by the dint of their labors, the sweat of their brow built this country and are building our future,” said John Engler, president of the Business Roundtable and a former Republican governor of Michigan. “You don’t want to be with people in suits and ties.”
A challenge for Obama will be streamlining the mixed messages he’s sent about business.
“This is after two years of making all CEOs pariahs and spurning them -- It’s not so easy,” said Bill George, a professor of management practices at Harvard Business School in Cambridge, Massachusetts. “This is not about leadership, this is about politics.”
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