Emerging from the gilded doors of an elevator in Trump Tower on Jan. 13, Lockheed Martin Chief Executive Officer Marillyn Hewson said she’d just promised President-elect Donald Trump to hire 1,800 workers in Texas. Four days earlier, Jack Ma of Chinese e-commerce giant Alibaba stood in the marble-clad lobby to announce an expansion of his company’s U.S. business. That same day, French luxury mogul Bernard Arnault was there to tell Trump that his LVMH group might step up U.S. manufacturing.
Why the CEO parade? It’s clear that Trump’s threats and tweets are having some effect on global corporations. Lockheed, for one, looks ready to do whatever the new President asks -- but that’s no surprise, since the Pentagon is its biggest customer. Besides adding jobs in Texas, Hewson promised to lower costs “significantly” for Lockheed’s F-35 fighter jet program, which Trump has blasted for cost overruns.
Most companies, though, simply seem to be trying to avoid the presidential crosshairs by showcasing projects already in the works. General Motors Co. on Tuesday announced $1 billion in U.S. investments that will add or retain 7,000 jobs. But its plans were approved before the election in November, according to a person familiar with the matter. At the Detroit auto show, Toyota said it’ll invest $10 billion in the U.S. over the next five years -- the same amount it spent during the past five. And on Jan. 3, Ford Motor Co. scrapped plans for a $1.6 billion expansion in Mexico after months of Trump calling for levies on U.S. companies that send jobs abroad. The carmaker later said it would’ve made the same decision regardless of Trump’s comments.
Foreign manufacturers have good reason to fear Trump’s wrath, as he has proposed new trade barriers to keep their products out of the U.S. In an interview published Jan. 15 by Germany’s Bild newspaper, he threatened a 35 percent levy on BMWs from a new $1 billion factory in Mexico. BMW countered that the Mexico facility will ship cars worldwide, and that its biggest plant in the world is in Spartanburg, S.C., most of which are exported. The company sees “no reason” to change its plans, Peter Schwarzenbauer, head of BMW’s Mini and Rolls-Royce brands, told reporters at a conference in Munich on Jan. 16.
Overseas companies account for a growing share of U.S. manufacturing employment as factory jobs have fallen to 8 percent of the U.S. workforce, from 13 percent in 2000. Foreign multinationals created some 11,400 manufacturing jobs in 2015 by expanding their U.S. operations or establishing new U.S.-based ventures, up from 8,300 jobs created in 2014, according to the U.S. Commerce Department. The U.S. remains attractive because of its vast consumer market, skilled work force, strong intellectual property protections, and predictable regulatory environment, says Aaron Brickman, senior vice president of the Organization for International Investment, a Washington-based association of foreign corporations with U.S. operations. “Politics can be emotional, but companies tend to look past emotion” when deciding on investments, Brickman says.
Chaney Ho, president of Taiwanese computer maker Avantech, says his company has been expanding its U.S. footprint for several years and now has 90 workers at an assembly facility in Milpitas, Calif., along with more than 500 sales, marketing, and technical-support staff nationwide. That growth would have continued no matter who won the presidential election, he says. “The U.S. is quite strong in networking systems, network security and cloud computing,” Ho says. “A lot of our business comes from that sector.”
Foxconn Technology Group, a major supplier to Apple, has said it’s considering an expansion of its investments in the U.S., stirring concern in China, where many of the Taiwan-based company’s factories are located. Foxconn Chairman Terry Gou has promised Chinese authorities that he won’t withdraw capital from the mainland, according to people familiar with the matter. Taiwan Semiconductor Manufacturing Co., another key Apple vendor, has said it wants to help create jobs in the U.S., without giving details.
Luxury group LVMH, which already makes Vuitton bags in California, has an incentive to increase U.S. production as it seeks to boost sales in the country, says Deborah Aitken, a Bloomberg Intelligence analyst. “Time to market has become more important, having the product there to meet rising demand as you’re expanding,” Aitken says. Still, CEO Arnault’s visit to Trump Tower was clearly intended “to preempt adverse moves by the incoming administration,” says Luca Solca, an analyst at Exane BNP Paribas in Geneva. “Arnault meeting Trump was a masterpiece of diplomacy.”
Sometimes, the visits are simply optics. Trump, who has accused China of stealing U.S. jobs and called for higher tariffs on Chinese imports, praised Ma as a “great, great entrepreneur,” even though Alibaba isn’t even planning to hire any U.S. workers. The company does, though, predict it will create 1 million U.S. jobs by recruiting more American small businesses and farmers to sell goods in Asia via its website.
One CEO who apparently didn’t get the memo about Trump diplomacy is Fiat’s Sergio Marchionne. Fiat drew a “thank you” tweet on Jan. 9 after announcing a $1 billion investment for U.S. production of three new Jeeps and a Ram pickup now made in Mexico. Marchionne, though, quickly pointed out that the move had long been planned. “We don’t make decisions,” Marchionne told reporters at the Detroit Auto Show, “based on the risk of a tweet.”