If you sit where I sit as the CEO of a global company, Thermo Fisher Scientific, with 35,000 employees, we manufacture in 25 countries around the world. Every time we make an investment decision, we basically have a choice to make it in any country we want to make it. If we build a new factory, we can go anywhere we want. If we want to create a big new push on R&D in a certain technology area, we can essentially do it in any country we want. What I've found in the last 5 to 10 years is my own desire to do it in the U.S. has gradually eroded. It has to do with a number of things. One, talent—it is becoming harder and harder to get good technical people. That goes back to what is happening in schools right now.
It also has to do with the environment toward large corporations. Corporate taxes here are some of the highest of any country in the world. Labor availability and labor issues are a problem, not so much in the U.S. yet, but I worry about the future. There are certain European countries—the one with the really good cheese comes to mind. It's just really hard for the CEO of a global company to now say, "I'm going to build a new factory in France and I'm going to hire 500 people." Because if you do and you may want to adjust the workforce—you have no flexibility, it's tremendously expensive to do anything in terms of adjusting your workforce up or down. We're going to see more of that in the U.S. as well. So corporate taxes, labor relations, and availability of technical talent are issues that are becoming more and more urgent as we move into the next decade.
It's an issue in general that the quality in public schools, K through 12, has eroded. It's particularly true for math and science education where a lot of children at the middle-school age really need to—if they're going to become scientists or engineers—pick up that interest at that particular time. There are very few dedicated teachers in public middle schools that can teach those subjects in an interesting way. You lose them before they even turn 13 years old. We are now in international testing of high school students 24th in science and 28th in math. That is a horrendous rating. Our manufacturing capability is eroding, so we must win in the area of high technology and high-level services. If we don't have the future workforce to enable that, it's going to be very hard.
After 9/11 we've made it harder for foreigners to come and study here, to get visas, so there's no longer a pool of foreigners who can take over certain gaps in this respect. Many Chinese students now don't bother to come to the U.S. They're just going to create education in China. And China is now producing four times as many engineers as the U.S. at the moment. The next government needs to take a hard look at that and spend serious time figuring out how we can improve math and science education in the public schools in particular.
We have one of the highest corporate tax rates in the world. That's probably not going to improve—it might get worse in the future. There are some things that a new government could do. One would be to declare a tax holiday on repatriated cash that a lot of international companies have overseas. We have almost half of our cash outside of this country, tied up outside of this country, because there is a tax penalty when you bring it back. There is some temporary relief now as a result of the financial crisis, but in the end to me as a long-term policy it doesn't make sense not to allow us to bring that money back. If we can't bring it back, we won't invest it here. We'll invest it somewhere else. Only when you allow it to be brought back in a tax-efficient way is there a chance we would spend it in the U.S.
Tax incentives for companies to put new factories in the U.S. combined with a better-educated workforce, long-term, is the way to [prevent outsourcing].
Worries from the Financial Crisis
You read about all of the problems going on and you wonder, Where is the money going to come from for all of this if we have to bail out banks? The money you could spend on education, on environmental protection, on new energy sources, on all of this stuff, health care, that we really need to do now we're using to keep banks afloat that made a bunch of bad loans. The bad loans gave us a standard of living in the past that we're going to pay for in the future. It is paying for past sins that will make it harder for us to invest in the future at a time when we really need it. That's a challenge for any government.
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