Ford’s surprise announcement yesterday that it would cancel a planned $1.6-billion plant in Mexico and would invest $700 million in a Michigan plant illustrates the bind in which President-elect Trump has put business leaders. Ford chief Mark Fields spun the decision as totally good news, but it’s hard to believe he’s happy about it. The larger significance is that Trump is badly muddling his message – promising a wave of pro-business legislation and rulemaking while bullying individual companies in a way that makes the U.S. a less attractive place to do business.
Recall that Trump had been haranguing Ford for months over its plans to build that Mexican plant, sending error-filled tweets that nonetheless made his displeasure clear. Fields had defiantly stayed the course, which makes his sudden reversal all the more shocking. Look carefully at his statement: “We’ve made this decision independently on what’s right for Ford, but we look at all the factors.” You don’t need to be a cryptologist to decode the message. The decision was based “on what’s right for Ford” – that is, we weren’t bullied – but “we look at all the factors” – that is, this wasn’t a normal business decision. How could it have been? Ford’s U.S. labor costs, including benefits, are close to $60 an hour; Mexican autoworker labor costs are a little over $8 an hour, says the Center for Automotive Research. When Fields says “all the factors,” the obvious unmentioned factor has nothing to do with business-as-usual considerations; it’s the risk of angering the tweeter-in-chief.
Underscoring that risk was an apparent coincidence: At 5:30 yesterday morning, shortly before Ford chairman Bill Ford called Trump to tell him about the company’s decision, Trump lambasted GM for selling Mexican-made Cruzes in the U.S.: “Make in U.S.A. or pay big border tax!”
To see why such behavior is corrosive to the U.S. economy, let’s spell out what’s implicit in Trump’s tweets. Company X is getting in the way of Trump’s campaign promises. As president, he can punish that company by imposing tariffs unilaterally within wide constraints. He could conceivably order executive agencies to go after that company, which is illegal but has been done; even without his being explicit, bureaucrats who value their jobs could take it upon themselves to please the boss. In short, it’s personal – Trump vs. Fields, Trump vs. GM’s Mary Barra, Trump vs. Greg Hayes, CEO of Carrier’s parent, United Technologies.
That’s the opposite of the long established rule-of-law business environment that has helped make the U.S. so attractive for employers. It would be a shame if Trump’s impulsive tweeting were to undercut the economic growth he’s trying to spark.
You can share Power Sheet with friends and followers here.
What We’re Reading Today
ExxonMobil and Tillerson cut ties
As former CEO and secretary of state-designate Rex Tillerson awaits confirmation hearings, he and ExxonMobil have reached a separation agreement. If confirmed, he will not receive two million deferred Exxon shares he would have received over the next decade, and the value of those shares will be placed in an independently managed trust. He will not receive a $4.1-million cash bonus set to pay out over the next three years. Tillerson previously pledged to sell all of his 600,000 ExxonMobil shares if confirmed. Reuters
Obama meets today with congressional Democrats over healthcare
The topic will be defending the Affordable Care Act against Republicans. President-elect Trump and Republican leaders have put repealing the ACA atop their agenda. The meeting coincides with a similar confab VP-elect Mike Pence will hold with Republicans on healthcare reform. WSJ
Zuckerberg’s U.S. tour
As part of his yearly self-challenge, Facebook CEO Mark Zuckerberg says he will visit about 30 states this year in an effort to meet people he has never spoken with. Why? He said only that he chose the goal in response to a “tumultuous last year,” which presumably includes Trump‘s surprise victory. Fortune
Assange: Russia didn’t leak DNC emails
Wikileaks founder Julian Assange says the Russian government didn’t provide the reams of emails and documents from the Democratic National Committee and Hillary Clinton campaign chairman John Podesta. The Obama administration and intelligence sources have claimed Russia was the culprit. Assange said his source wasn’t a “state party.” CNN
Building Better Leaders
To reduce your work…
…to 40 hours a week, establish clear goals. Limiting yourself to three big goals each week will reduce the chances of overworking yourself. Fast Company
Becoming an “exponential” entrepreneur…
…combines the goals of building something great with something good. You’ll always be asking “what next?” Fortune
To encourage someone to work faster…
…first understand the delays. Is the employee a perfectionist? Just doesn’t understand the job? Determine the cause, explain a better way, then set clear benchmarks. Harvard Business Review
Trump attacks delay in intelligence briefing
The President-elect derided U.S. intelligence agencies again, this time for delaying until Friday a briefing on the possibility of a Russian hack to influence the election. Trump tweeted that “perhaps more time needed to build a case.” It the latest of his many attacks on the intelligence community since the election. CNN
Ford scraps Mexican plant
Ford canceled plans to build a $1.6-billion Mexican plant for small cars and instead will add 700 jobs in Michigan. While CEO Mark Fields said the change was a “vote of confidence” in Trump‘s pro-business policies, he also said the decision was in response to weaker demand for small cars. Just before Ford’s announcement, Trump threatened Mary Barra‘s GM with a border tax for cars it imports from Mexico. Fortune
House Republicans cancel plans to weaken ethics office
They reversed a closed-session vote to restructure the independent Office of Congressional Ethics, which investigates House members in cases of potential wrongdoing. The about-face followed a Trump tweet asking, “With all that Congress has to work on, do they really have to make the weakening of the Independent Ethics Watchdog, as unfair as it . . . may be, their number one act and priority.” Washington Post
Up or Out
The California legislature has hired former U.S. Attorney General Eric Holder to represent it in legal fights against the Trump administration. NYT
Fortune Reads and Videos
Volkswagen faces first lawsuit in Germany…
…over the emissions scandal. It could increase pressure on VW to compensate European drivers for the fraud. Fortune
Could Starbucks replace McDonald’s…
…as the world’s largest restaurant company? One analyst sees Starbucks doing so in four to five years. Fortune
The stock market’s January effect…
…isn’t as strong as it once was; the month no longer foretells the market’s direction for the year. In the past 11 years, the market turned down six times in January but ended down in those years only twice. Fortune
Much maligned taco…
…created by Jack in the Box still sells. The fast food chain sells over 550 million of the tacos each year, despite complaints that they’re like eating “cat food.” Fortune
Quote of the Day
“Our view is that we see a more positive U.S. manufacturing business environment under President-elect Trump and the pro-growth policies and proposals that he’s talking about, so this is a vote of confidence for President-elect Trump and some of the policies that they may be pursuing.” — Ford CEO Mark Fields on the company’s decision to scrap plans for a manufacturing plant in Mexico. Fortune