And Now in Risk Management: Trump Tweets

Ford. Macy’s. General Motors. Lockheed Martin. Carrier. Rexnord.

What do these companies have in common? Well, one thing is that each has been rebuked on Twitter by President-elect Donald Trump, mostly for using foreign-made materials or having operations overseas or “moving to Mexico.”

The moving to Mexico bit is a particularly sore subject for Trump. “Any business that leaves our country for another country, fires its employees, builds a new factory or plant in the other country, and then thinks it will sell its product back into the U.S. without retribution or consequence is WRONG!” said tweeted Trump back in December.

Now, I don’t disagree with Trump on everything he says tweets. Trump’s pledge to return manufacturing jobs back to the U.S. would be a boon for this country’s blue-collar workers, increasing the consumer base and theoretically cutting down on supply chain risk (fewer factory fires due to unscrupulous sub-suppliers). Not to mention, it’s a page straight out of the liberal playbook.

“Is it possible to de-globalize today’s supply chains?” one might ask. “And how might that affect the prices of our commodities?” But just think about how much less anti-American your company will seem (though, granted, this would be irrelevant for non-U.S. companies). And on that note, there are a few points Trump’s Twitter rhetoric brings up.

Is Your Company “Anti-American”?

What Trump says tweets about your company should not be ignored. Last Wednesday, Reuters reported that companies are “beefing up their Twitter monitoring for any Trump tweets that could affect them and engaging public relations firms for advice on potential lines of attack and how to respond if they were to come.” According to several top Wall Street bankers who spoke with Reuters, companies are “putting on hold mergers and acquisitions that may involve significant job cuts or moving production or tax domicile abroad, out of fear that such deals could be seen as ‘unpatriotic.’”

Does this mean that we should be monitoring the Trump’s Twitter account as a potential source of risk? By the way, for 12 risk areas you definitely need to consider this year, join Spend Matters on tomorrow’s webinar. But back to Trump tweets. Consider how, after Trump tweeted about General Motors, the company immediately issued a statement, saying that only a small number of its made-in-Mexico models are sold in the U.S. Ford cancelled a planned $1.6 billion plant in Mexico. Last weekend, Fiat Chrysler announced plans to create 2,000 U.S. jobs. And on Friday, Marillyn Hewson, CEO of Lockheed Martin (another target of @realdonaldtrump), met with Trump to discuss a deal that would create thousands of jobs in the U.S.

There are certainly downsides to a globalized supply chain. Lax regulations, leading to inferior and sometimes dangerous products. Lax labor laws, leading to the risk of exploiting cheap labor. But this “anti-American” argument seems to have become our modern-day perverse version of McCarthyism – perverse, because instead of promoting capitalism, Trump’s tweets are hindering it and businesses.

That said, not all businesses. L.L Bean was given the Trump Twitter seal of approval.

But where are most of L.L. Bean's products made? Where do you think?

But Can You Get Away With It?

For some people and some industries, being the subject of a Trump Twitter tirade can’t get more lucrative. Vanity Fair has twice printed a Trump tweet on its cover, and when a particularly mocking review of Trump Grill was published in December, the magazine took its new marketing slogan (“Way down, big trouble, dead!”) verbatim from a Trump tweet. Subscriptions shot up. And if you’re the “no-talent illiterate hack” Jonathan Chait from the “piece of garbage” New York Magazine, a tweet can help you sell your new book.

Tremendous Hypocrisy. Sad!

Setting aside the obvious matter that, like most clothing sold in the U.S., Trump’s daughter Ivanka’s fashion line is manufactured overseas, Trump himself has a penchant for hiring foreign workers. In February 2016, the New York Times reported that Trump’s Mar-a-Lago Club in Florida has hired almost exclusively foreign workers (“Since 2010, nearly 300 United States residents have applied or been referred for jobs as waiters, waitresses, cooks and housekeepers there. But according to federal records, only 17 have been hired.”)

Then there are all of Trump’s foreign properties. And there is Ivanka Trump, closing a  business deal with a Japanese clothing company while in a meeting with Trump and the Japanese Prime Minister Shinzo Abe. And there are, of course, the times that Ivanka promoted clothing and jewelry from her own collections at the Republican National Convention and on 60 Minutes.

The $138 non-U.S.-made dress that Ivanka wore to the RNC sold out within hours.

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First Voice

  1. Taras Berezowsky:

    To the point of a DJT tweetstorm being lucrative for the victims, I especially loved Buzzfeed’s limited-time release of schwag with “Failing Pile of Garbage” printed on it!

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