CEO Who Heads Manufacturers’ Group Warns Washington To Pass Tax Reform – Or Else

L to R: David Farr (Chairman & CEO, Emerson; NAM Board Chairman), Jay Timmons (NAM President & CEO), Sen. Roy Blunt (R-MO). Photo Courtesy of David Bohrer, National Association of Manufacturers.

The CEO who chairs the National Association of Manufacturers sent a strong warning shot across the bow of the Trump administration and Congress at appearances in Washington, D.C., this week: Don’t you dare not cut taxes.

In fact, warned David Farr, CEO of Emerson Electric as well as chairman of the NAM, many of the lobbying group’s members already have made corporate investment decisions on the assumption that the tax reform promised by President Trump and the Republican-led Congress is indeed coming.

“We are investing in anticipation of Congress passing a tax-reform bill,” Farr said at a Daily Caller National Foundation event. “I think the key issue Congress has to understand is that we think something is going to get done, and if it doesn’t get done, the U.S. economy will be hurt.”

Farr’s comments echoed the consensus of the 20 CEOs interviewed by Chief Executive about their 2018 outlook, for the November-December issue of the magazine and for related stories online. The high economic hopes of most of the highly diverse group of CEOs for next year were pinned more on their assumptions of U.S. tax reform than on any other single factor.

The Emerson Electric chief also used Wednesday to meet with key senators ahead of a budget-resolution vote in the Senate that is meant to take a first major step toward tax reform.

He told the Daily Caller meeting that St. Louis-based Emerson is raising its capital spending this year by a little over 10 percent compared with 2016, and that the maker of items ranging from home garbage disposals to monitoring systems for liquefied natural-gas production platforms plans to raise that by another 15 percent in 2018.

“Manufacturing is doing this now because we are thinking about higher growth in 2019 and 2020,” Farr said. But Farr cautioned that Emerson and other manufacturers can pull “it all right back out” if Washington doesn’t come through on tax reform.

He said that many small- and medium-sized American companies don’t have the financial wherewithal to move production abroad. Many larger manufacturers save on labor costs and also pocket savings from lower foreign tax rates by moving production abroad.

And, Farr added, foreign-owned companies will join U.S.-based companies in pulling back on capital investment in America “if they see a failure from Congress.”

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Dale Buss
Dale Buss is a long-time contributor to Chief Executive, Forbes, The Wall Street Journal and other top-flight business publications. He lives in Michigan.

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