Whether it is Carrier Air’s decision to keep up to 1,000 jobs in Indiana; SoftBank Group Corp.’s commitment to invest $50 billion dollars in the U.S. and create 50,000 jobs; U.S. Steel’s commitment to re-hire as many as 10,000 former employees; Apple supplier FoxConn’s, (the assemblers of Apple’s IPhones) planned expansion of operations in the U.S.; or the return of Trans-Lux, (maker of LCD and LED displays) manufacturing back from China to the U.S., President-elect Donald Trump is already winning for American workers. Simply put, what is unfolding, which might have been anticipated by “common sense” observers, is remarkable. The only element that is surprising to most people is the time factor; that is, how quickly this, soon to be trend, has developed. The real question is, why is this happening, and why didn’t this occur prior to Trump’s election?
The answer is simple to anyone who understands the mind of corporate leaders – changing business environmental circumstances. Corporate leaders are myopically focused on the best short and long-term financial and market interests of their companies. During his primary and general election campaigns, Trump, in effect, promised a more business friendly environment in the U.S. economy – and business leaders believe that he will deliver on that promise.
Trump has proposed a massive tax cut for businesses. The corporate tax rate, currently the highest in the free world at approximately 39%, will be cut to 15% – for all businesses, both corporations, and small businesses. Individual tax rates will be cut to 12%, 25%, and a maximum rate of 33%, reflecting a dramatic tax cut for middle-class Americans. This policy is a real incentive for business leaders to remain in the U.S. market, and return to America. However, what may be even more appealing to business leaders is the promised roll-back of regulations governing U.S. business operations.
According to the National Association of Manufacturers, total cost of Federal regulations exceeded $2 trillion dollars in 2012. The average U.S. company pays $9,991 per employee per year to comply with federal regulations. The average manufacturer in the United States pays nearly double that amount—$19,564 per employee per year. Small manufacturers, or those with fewer than 50 employees, incur regulatory costs of $34,671 per employee per year. This is more than three times the cost borne by the average U.S. company. In short, the cost of regulation in the U.S. drives corporate leaders to look elsewhere around the planet to relocate manufacturing, and by virtue thereof, move jobs out of America – which destroys the middle-class.
In addition to the impending tax and regulatory changes, U.S. manufacturers can also anticipate an increase in consumer spending, when the roughly 95 million Americans, effectively out of the workforce today, return to work with full-time good-paying jobs. Moreover, the repeal and replacement of Obamacare, which increases the cost of employer-provided health insurance, will also reduce the cost of business operations, further incentivizing businesses to remain in the U.S.
All factors considered, the election of Donald Trump completely changes the business landscape in America. Business leaders and executives, are merely doing what they always do; surveying the landscape, and pursuing the options that support their interests; and for the first time in decades, those options include manufacturing in America.
Trump’s mantra is, “America will truly be the greatest place in the world to invest, hire, grow and to create new jobs, new technologies and entire new industries.” Trump, though not sworn-in, in his indefatigable way, is already winning; and is going to win business, and jobs, for America; as he would say, “Big league.”
By Allen Sutton