Trade as a Dirty Word: What CEOs Must Do to Defend Global Commerce

The very concept of "trade" took a beating in the American presidential campaign from across the political and ideological spectrums.

Trade 2

Explain that just because you have built or are building a factory in another country does not mean you are taking jobs away from Americans. It’s quite possible that you are defending their jobs if that factory helps your company achieve greater sales and compete better against foreign rivals.

Be very public about the gains you have achieved from trade. Many communities know that factories are hiring and offering great wages, but they may not understand why. Go talk to the Lions Club or the Kiwanis. Brag about it in your annual report.

Encourage your staffers and other executives also to talk about it. Invite reporters in to your factories to witness wealth creation. Job losses make headlines but the gains in new jobs don’t.

WHAT CEOS SHOULD BE DOING IN THEIR BUSINESSES

Offer more training and retraining to existing employees to prevent them from becoming “obsoleted.” Explain that if they don’t upgrade their skills, their jobs could be on the line. This discussion doesn’t happen candidly enough or often enough.

“Just because you have built or are building a factory in another country does not mean you are taking jobs away from Americans.

Create alliances with vocational schools and community colleges to identify young people who might be interested in working for your company. Help shape the curricula of those schools by sitting on advisory panels. Provide old equipment so that students can train on it. Send in executives occasionally to teach a class. Create apprenticeship programs such as the ones that exist in Germany.

Pay a percentage of the costs of retraining existing workers and training new
ones. That sends an incredibly positive message not only to employees but also to communities and states.

Take a hard look at the complete cost of going offshore. The Chicago-based Reshoring Initiative, a nonprofit that encourages companies to consider bringing jobs back to the U.S., has created a formula for evaluating the complete costs, including the hidden “coordination” costs, or moving factories offshore and sending engineers and executives to manage them. Fewer CEOs would move manufacturing offshore if they did rigorous analysis, the Reshoring Initiative argues.

If you are considering moving some manufacturing back to the United States, work with state and city governments, as well as community colleges, to see what incentives and training programs are available. Finding workers with the right skills sets is key.

If you build a plant abroad, try to help your U.S. suppliers “piggyback” on your efforts. Helping them to go global serves your long-term corporate interests and yields even more benefits to your home geography.

If you are one of the CEOs with large profits still held offshore, a figure that amounts to more than $2 trillion in all, take advantage of a long-awaited deal with the U.S. Treasury to bring the money home at a reduced rate of taxation. Average Americans would feel the effects of an infusion of that much capital.

THE IMPACT

This approach, if embraced, would have a positive impact on the American debate about trade, which appears certain to intensify as Donald Trump takes office. Revving up the success of American companies and their international strategies—and explaining why that is important—would be a far more effective way of generating jobs than imposing tariffs on goods made in China and Mexico. American tariffs could generate retaliation from other governments. It’s an important argument—and there’s no time to waste.


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