Business Leaders Skeptical but Hopeful in Response to Obama’s SOTU
In the wake of President Obama’s State of the Union (SOTU) address there was a wide range of reactions from business leaders who heard different things. “It’s not going to have a big impact on the markets,” said Len Blum, CEO of Westwood Capital to CNBC. “Historically SOTU addresses move the stock market no more than 15 basis points, and there was nothing in the speech that was market moving.” Other business leaders had mixed responses.
February 20 2013 by ChiefExecutive.net
“After shedding jobs for more than 10 years, our manufacturers have added about 500,000 jobs over the past three. Caterpillar is bringing jobs back from japan. Ford is bringing jobs back from Mexico and this year, Apple will start making macs in America again,” said President Obama during his State of the Union address.
The President appeared to look up at Apple CEO Tim Cook, sitting in the first lady’s box with Michelle Obama, when making the comment. TV cameras zoomed in on Cook’s smiling face. The news that Apple would manufacture some of its Macintosh computers in the United States was not unexpected — Cook told Bloomberg Businessweek in December as much. And bringing jobs to the US instead of off-shoring them to China could go a long way to improving Apple’s sometimes blemished image of hiring Chinese workers on the cheap and then working them to the bone.
Doug Oberhelman, CEO of Caterpillar told CNBC that he “ was a little surprised and happy to hear [Caterpillar cited by name]. We have brought jobs into the U.S. as the U.S. economy has grown and we needed to match some of our job base here with our jobs outside the U.S. The key to all this is growth. That’s really what we need desperately here and around the world. A worldwide growth rate of 2.5 % maybe somewhat lower than that in the U. S. This is the core and root of our problem right now.”
Oberhelman may have been delighted with the talk of the American manufacturing renaissance, although he thinks the use of this phrase is premature. He stated the most important element, which was not specifically addressed by the SOTU, was economic growth. “We have to get the debt thing, the fiscal thing, off the front page. That is holding us back.” Caterpillar’s CEO also called for entitlement reform, something that also was not addressed by the President.
Also speaking on CNBC was Don Peebles, an Obama supporter and CEO of Florida-based real estate firm, The Peebles Corp. He generally found the President’s message hopeful but worried “ that the method in which he approached new revenue in terms of increasing taxes is counterproductive. Once again the President spoke of business with a sense of disdain and I find that a bit troubling. The President didn’t spend a lot of time on the private sector. With an 8% jobless rate, and 2% growth, why wouldn’t you spend more time on that?”
Former HP CEO Carly Fiorina said, “The state of the union is not particularly good. Our economy is sort of grinding along at one and half percent [growth] which is certainly not success for the American economy. We have long term structural problems whether it’s lack of new business creation or education or immigration,” Fiorina told ABC News.
Fiorina added that she had hoped that President Obama would “strike a genuinely bipartisan tone, put forward his view of how to solve these fundamental problems, whether it’s entitlement reform or immigration reform, and then work with everyone to come up with a win-win solution which will actually allow us to make some progress.” Most observers agree that the President’s tone was distinctly less than bi-partisan.
Speaking on behalf of the National Association of Manufacturers, NAM president Jay Timmons, said, ”Manufacturers welcomed the President’s remarks on immigration reform and STEM education, which show a true commitment to developing the skilled workforce desperately needed. It is encouraging to see a promise of infrastructure investment that will serve as a foundation of future manufacturing. The announcement of negotiations toward a free trade agreement with the European Union represents a significant step forward in leveling the playing field in foreign markets. However, equally important is creating an atmosphere where employers can hire workers and invest in their businesses.
Timmons added, “It is impossible to expect manufacturing to thrive when manufacturers are deprived of the tools they need to compete in the global economy while battling a 20 percent cost disadvantage. While tonight’s speech had a familiar focus on economic growth and recovery, we unfortunately didn’t hear a call for action on comprehensive tax reform that will benefit manufacturers. A manufacturing resurgence won’t come from limiting the global power of manufacturers. Tax reform is essential because it is our uncompetitive system that is hurting manufacturers both at home and in the global marketplace. We need a regulatory policy that lessens the burden on job creators and an ‘all-of-the-above’ energy policy and approval of the Keystone XL pipeline that will power manufacturers for years to come.”
The American Petroleum Institute President Jack Gerard was disappointed. “Tonight was a missed opportunity, Gerard said. “The President focused on job growth through federal spending, but was silent on one of the best ways to create jobs: allow more energy development. Natural gas and renewables are important components of our energy mix, but we will need our nation’s vast oil resources for decades to come. The oil and natural gas industry is a key driver of new jobs and economic prosperity Producing more oil and gas at home, which most Americans want, could create hundreds of thousands of jobs, reduce our deficit by billions, and enhance our energy security. Even better, the government wouldn’t have to invest a single taxpayer dollar – just give industry a green light to invest its own money.
In a press release issued by the Medical Device Manufacturers Association. responding to the State of the Union address, the MDMA said that the industry is “prepared to answer the challenge” to help strengthen the U.S. economy, but that the 2.3% tax imposed on medical device sales [as a result of the Affordable Care Act] is in the way.
“MDMA agrees with the President that we need to grow our economy by expanding our manufacturing base while creating more middle class jobs,” MDMA president & CEO Mark Leahey said in prepared remarks. “Unfortunately, a huge barrier stands in their way in the form of a medical device tax that is harming job creation and eroding the quality of care for patients.”
“Pres. Obama expressed interest in tax code reforms that would help small businesses put more of their money toward “expanding and hiring” rather than dealing with complicated forms, as well as incentives for companies that companies that keep manufacturing in the U.S. Medical device makers have long warned that the new tax, contained in the landmark Affordable Care Act would have the opposite effect – preventing small medtech companies from investing in new hires and pushing more companies to shift their manufacturing overseas.”