Four Years of Living Dangerously: CEOs Brace for the Trump EraBy
The challenge of planning for an unpredictable president
‘We just don’t know where the bully pulpit is going’
That’s a disorienting mix for chief executive officers trying to suss out whether Trump in the White House will be a blessing or bad luck. Planning ahead’s no easy task when the next commander in chief is a guy with a hair-trigger Twitter finger who touts policies that could both help and hurt U.S. companies. Many said in interviews that they’re cautiously optimistic -- and a tad nervous.
“I’ve got a great deal of confidence with the new administration coming in,” Manny Chirico, CEO of apparel giant PVH Corp., said on Bloomberg Television, adding in the next breath, “You have to be concerned about some of the talk and the rhetoric on trade.”
The challenge is anticipating what Trump will do once in office. Will he crack down on immigration, dealing a blow to labor markets for restaurants, retail and construction? Hike tariffs on foreign-made goods and exit trade deals, which would be a hit to companies from Apple Inc. to Nike Inc.? Push to slash tax rates and ease regulations, things business tends to like?
“I don’t think anyone has any idea what to expect,” said David Yermack, a professor at New York University’s Stern School of Business. “Companies have to make educated guesses about what may happen when, but there’s a huge amount of uncertainty.”
Prepping for Trump’s four years has added a new plank to public-relations strategy and the assessment of reputational risk. At Weber Shandwick, Liz Cohen, an executive vice president for financial communications, said she’s advising clients to perform vulnerability analyses just as they would for outspoken activist investors. “Clearly, in this environment, it’s important companies take a look at what parts of the business could be criticized.”
Such is the power of the Trump Twitter feed, with its 17.3 million followers. He’s been using it to harass companies just as he did Hillary Clinton and his GOP primary rivals. A CEO can be thrust into the news cycle with no warning.
“That’s a little bit unnerving,” said Southwest Airlines Co.’s Gary Kelly. “There is some volatility there. We just don’t know where the bully pulpit is going to come from.”
Lockheed Martin Corp. was a recent target, slammed in a tweet for what the president-elect said were out-of-control costs for the F-35 fighter jet. The immediate fallout was painful, with the tweet sending the stock down 2.5 percent and erasing almost $2 billion in market value. In fact, Trump’s gripe with Lockheed caused drops in other defense contractors, which had been rallying in anticipation his administration would boost defense spending, considering he said when he was campaigning that he wanted to beef up the number of U.S. troops, ships and warplanes.
Whatever the industry, “a lot of guys are thinking, ‘Oh man, I don’t want him tweeting about me and my company,”’ said Ken Lowe, CEO of Scripps Networks Interactive Inc., which owns lifestyle-oriented websites and cable-television channels. And there’s no telling who Trump will assail next. “A lot of us also think, ‘That’s one day. What’s he on to tomorrow?’”
General Electric Co.’s Jeffrey Immelt said many chief executives would gladly accept fleeting bad publicity in exchange for the tax reform and job creation the next president may bring. Immelt said he’s not worried about getting in the man’s crosshairs -- and that he keeps a sharp eye on @realDonaldTrump.
“Sure,” he said with a laugh during an exchange last week with reporters in New York. “Who doesn’t?”
Bosses should totally get what Trump’s doing when he calls a company on the carpet, because it’s what so many of them do within their own operations. He’s acting just like a CEO, Lowe said, by publicly asking, “Why are you spending so much money?”
In the corporate world, “it’s been an effective strategy,” said Davia Temin, founder of the crisis-management company Temin & Co. “It will be a fascinating experience to see how things that have worked inside global organizations translate to the political arena.”
For all that, the victim of a Twitter pounce must be careful, she said. “Never start a press war with someone who can outgun you. A CEO could choose to have a battle of the titans and fight back. That is a strategy, but not one I’d recommend.”
Boeing Co. , another recent mark, certainly didn’t take that road. In fact, according to people familiar with the matter, Boeing executives reached out to transition-team members to tell them the Air Force One pricetag Trump had complained about could be lowered -- if the government reduced the requirements. The company said CEO Dennis Muilenburg had spoken with Trump and was committed to keeping the project as affordable as possible.
That’s the kind of outcome, squishy as it is, that Trump can trumpet as a victory. There was a similar result after he hammered United Technologies Corp. during the campaign for its plan to move some U.S. jobs to Mexico in its Carrier unit. Post-election, Carrier made a deal to keep an Indiana factory open with more than 1,000 employees in exchange for tax incentives provided by the state -- whose governor is Vice President-elect Mike Pence -- while still sending jobs to Mexico.
Some executives profess not to be sweating it all. “We’re not big enough to be on that radar screen,” said Wendy’s Co. CEO Todd Penegor. Maybe, but Trump has gone small too, even badgering a local union representative in Indiana.
Asked if presidential unpredictability will make it harder to run a business, Lululemon Athletica Inc. CEO Lauren Potdevin said only time will tell. The company generates about 70 percent of its revenue in the U.S. But as Potdevin took pains to point out, it’s based in Vancouver, British Columbia, in a country not ruled from the White House.
“Being a Canadian brand is awesome,” he said. “Everyone loves Canada.”
— With assistance by Craig Giammona, Rick Clough, Jennifer Kaplan, Gerry Smith, Mary Schlangenstein, Stephanie Hoi-Nga Wong, and Lindsey Rupp
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