Obama's Victory: 10 Spend Management Considerations

With Obama's resounding victory on Tuesday night, I thought it would be prudent to come up with a list of items for Spend Matters readers to consider as they think about the overall business, cost-cutting and global sourcing and trade environment that we'll be facing in the coming years. This list is not complete, but it's what is on my mind at the moment as I ponder how things might change and what these changes might bring to the procurement and supply chain world. Enough backdrop. Let's begin.

1) Supply disruptions and other supplier performance related issues could rise as labor gains greater power (and costs could potentially go up as a result of labor demands). Obama's focus on streamlining the union organization process through the Employee Free Choice Act would not alter the existing small business exemption of the National Labor Relations Board which, if inflation-adjusted, would be about $3.3 million gross volume, even though there are many thousands of suppliers in the US above this level.
2) Look for serious incentives (including both carrots and sticks) for investment in alternative and clean energy sources. This could spur significant investment interests in these areas and it's likely that many companies and suppliers could retool their manufacturing interests to go after this market
3) Government will attempt to prop up failing businesses and markets where jobs are at stake and that would otherwise not survive without significant restructuring (e.g., the automotive market). These credits and investments may require the use of on-shore workers and suppliers.
4) Plan for a wholesale investigation of the outsourcing market and a quiet PR campaign that makes US trading partners that take jobs away from the domestic shores look increasingly negative in the public eye. Will it be a true outsourcing backlash? That depends, in part, on the need to create a perceived enemy, but as we all know, populists need enemies.
5) At Treasury, look for more of the same -- a continuation of the Paulson policies (at least in the near-term) to get the credit markets working again. Potentially these efforts will be supplemented with new direct government lending schemes to businesses and individuals (or government guarantees for consumer and business debt).
6) Commodity prices will continue to remain highly volatile, but certain domestic markets might see significant reduced demand (e.g., coal) as Obama enacts reforms designed to reduce Co2 emissions. However, world demand for US commodities should pick up much of the slack if demand falls domestically thanks to policy changes. The success or failure of Obama's middle-east policy -- which we do not yet know -- will have a direct correlation to energy prices.
7) An Obama administration will attempt to ease tort reform, making it easier for individuals and companies to file for larger damages and claims. Supply chain liability will become an even greater issue.
8) Expect a more permissive and encouraging demeanor when it comes to the willingness of the Feds to hear anti-dumping cases where US companies were harmed by imports that they could not compete against on price (this has the potential to turn into a vicious cycle as US companies become less competitive as union wages and benefits drive up the cost of domestic protection).
9) Tariffs will go up in certain categories as a tool to encourage US manufacturing and to protect US industries -- and as a political stick.
10) Rising infrastructure spending designed to spur job growth will spur commodity demand in certain industries and markets.

Please contribute your own thoughts as well.

- Jason Busch

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