Back in September, Ford Motor CEO Mark Fields vehemently denied allegations by then-candidate Donald TrumpDonald TrumpJan. 6 committee chair says panel will issue a 'good number' of additional subpoenas Overnight Defense & National Security — Presented by AM General — Pentagon officials prepare for grilling Biden nominates head of Africa CDC to lead global AIDS response MORE that the second-largest U.S. automaker planned to fire employees in America to expand its production in Mexico. Calling Trump’s allegations “completely wrong,” Fields stressed that Ford’s plans to hire 2,800 workers in Mexico and shift production of smaller vehicles across the border—while necessary to ensure competitive prices for U.S. consumers—would not result in job losses in Michigan since workers there would make larger and more expensive vehicles instead.
Having been one of the few CEOs to strongly push back against candidate Trump’s populist attacks on U.S. companies (“It's really unfortunate when politics get in the way of the facts,” Fields said then), his announcement this week that Ford had scrapped its Mexico expansion plans and would instead create 700 new jobs in the United States. raised eyebrows from Washington to Wall Street. Has Ford suddenly discovered a new love of country? Has Trump set off an irresistible patriotic impulse across C-suites?
The short answer is no. Then as now, Ford was and is driven by a focus on what it believes best for its shareholders. After the company had placed a big bet on making smaller, more fuel efficient cars in the United States, falling gas prices depressed demand and eventually led to plans to shift production to Mexico in an effort to trim costs.
Demand for small fuel efficient cars is unlikely to suddenly spike under a Trump administration, and the mere possibility of a renegotiated North American Free Trade Agreement (NAFTA) suggests that spending $1.6 billion on a new Mexican plant now is not in shareholders’ best interest. This is just business. As Fields explained, “We didn’t need [the Mexican factory] anymore. We just don’t need the capacity anymore given the demand for small cars.”
What is noteworthy, however, is how artfully Fields has sought to turn a straightforward business decision into political capital with the new boss in town. Most CEOs don’t call the president-elect and the vice president-elect to tell them about a plan to create 700 jobs, but that is exactly what Fields did before going public.
Even though he did not hide the market rationale, he added, “We are encouraged by the pro-growth plans that President-elect Trump and the new Congress indicate they will pursue.” Fields thus deliberately played into Trump’s own narrative that his mere election is bringing jobs back to the United States.
In fact, this was exactly the same tune played by Sprint when it announced in late December that it would bring 5,000 jobs back to the United States. “We are excited to work with President-elect Trump and his administration to do our part to drive economic growth and create jobs in the U.S.,” Sprint CEO Marcelo Claure said last week. “We believe it is critical for business and government to partner together to create more job opportunities in the U.S. and ensure prosperity for all Americans.”
Naturally, Trump immediately claimed credit, proclaiming that "because of what's happening and the spirit and the hope, I was just called by the head people at Sprint and they're going to be bringing 5,000 jobs back to the United States and taking them from other countries.”
What was predictably missing from the announcement yet surprisingly also from most media coverage was Sprint’s and its owner Softbank’s interest in currying favors with Team Trump. In 2014, the Obama administration rebuffed Sprint’s plans to merge with T-Mobile.
Yet according to Forbes, “Marcelo Claure, Sprint’s CEO and Masayoshi Son, the head of its parent Softbank, have previously indicated that they could re-look at the possibility of a deal, if the election brought about changes to the regulatory environment.”
A pattern seems to be emerging. When companies’ business interests converge with Trump’s political interests, each has an incentive to make the other look good. While Democrats have pledged to deny Trump a honeymoon, he may well get one courtesy of U.S. business.
Trump’s attacks on Carrier, Boeing and most recently (and quite ironically in light of the Ford announcement) GM, have shown CEOs the potential costs of crossing the Twitterer-in-Chief. Ford and Sprint now illustrate the benefits of providing Trump with ostensible quick wins. Expect to see more of the latter in the days and weeks ahead.
Yet honeymoons don’t last forever. For one, to say that Trump is prone to changing his views quickly and without prior warning would be an understatement. Making business decision with an eye toward delighting the soon-to-be occupant of the Oval Office thus carries a big risk.
More importantly, the interests of major U.S. companies (and their shareholders) and those of the Trump administration are likely to diverge before long. An Obamacare repeal-and-delay might be a winning strategy for the midterms, but prolonged uncertainty will unnerve business. For every company hoping to benefit from an infrastructure spending spree, there will be 10 concerned about a ballooning deficit.
While many CEOs might enjoy some praise from the White House, most don’t want the government to pick winners and losers. And virtually without exception, U.S. business leaders shudder at the thought of a trade war with China, Mexico or other key trading partners. How Trump responds when business begins to oppose him, and how CEOs will navigate the increasingly complex political terrain, are among the most critical questions of the next four years.
David Bach is senior associate dean and professor at the Yale School of Management, where his research and teaching include a focus on business-government relations and global market regulation.
The views expressed by contributors are their own and are not the views of The Hill.