Trump’s campaign was so fraught with surprises that it’s hard to imagine his presidency will be any different.
Whether you’re expecting the country to be Made Great Again with a chicken in every pot and a car in every garage, or for it to descend into a nightmarish hellscape reminiscent of Biff Tannen’s version of Hill Valley, we can all agree that the next four years will certainly be interesting.
The American manufacturing sector will be watching Trump’s presidency with particular interest.
We’ve already seen suggestions that President-elect Trump was responsible for Ford’s decision to invest in Michigan over Mexico, though that inference seems dubious. On the international stage, China has been doing some sabre-rattling of its own, in anticipation of a potential trade war.
So, what can manufacturers expect from the Trump administration?
Industry Thought Leaders Debate Policy Options
Frost & Sullivan’s Manufacturing Leadership Council recently held an online panel discussion regarding the industrial priorities and potential policies for US manufacturing under the Trump administration. The panelists made a number of predictions about what the Trump administration will do, as well as offering suggestions for what it should do.
“I don’t see any reason to suspect the Trump administration will not continue to focus on individual deals,” said Robert Atkinson, president and chief executive of the Information Technology and Innovation Foundation. “We’ve seen just a couple of those announced in the last week, where individual firms agreed to do something because of pressure by the Trump administration.”
Jerry Jasinowski, former president of the National Association of Manufacturers and member of the board of advisors at the Manufacturing Institute, emphasized the importance of ensuring that US manufacturers, particular SMEs, are using the latest technologies.
“The Trump administration has to take a checklist, go down all of its agenda items and say, ‘Are we really using the latest technology as best we can?’ The federal government ought to be spending far more on many aspects of technology than it is right now. It ought to be putting money into the kind of programs in some of the infrastructure that Obama put together to try to get technology out to small manufacturers.”
John Bernaden, co-founder and past vice-chairman of the Smart Manufacturing Leadership Coalition, and former director of corporate affairs at Rockwell Automation, agreed that the Trump administration needs to focus on and incentivise manufacturing technology, but he also emphasized the importance of forming a “grassroots” manufacturing initiative.
“We have about 34,000 midsized manufacturing firms left in America. As Robert [Atkinson] said, many of our different industries have disappeared or are in desperate or dying conditions. But of those 34,000, we still do have some strategic strengths, and finding those strengths in doubling down on those midsize manufacturers is where I would like to see us make our emphasis.”
“Financing is everything. We’ve had, according to the Manufacturing Alliance, a few years now of cap ex malaise. So, the paradox really is that despite this huge potential for productivity increases, top line growth and firm technology, we just don’t see cap ex moving in America. That would be my suggestion to Trump: a package focused not on infrastructure so much as directly giving a shot in the arm to the mid-sized manufacturers, the small manufacturers who are ready to scale up as well as the large manufacturers like Ford who want to jump into the factory of the future.”
Peter Holicki, Dow Chemical’s senior vice president of manufacturing and engineering, environment, health and safety operations and emergency services and security offered an outsider’s perspective, advising the Trump administration to consider the educational needs of the manufacturing workforce.
“I come from Germany,” Holicki said. “I’ve been here in the US for three years leading Dow’s manufacturing. When I come to the US, what I see is a fairly strong college and university system that really educates some of the very best people around the world. I don’t see the same emphasis on craftspeople and I don’t see the emphasis on vocational education. If we want to be on top of the house when it comes to manufacturing, we need a much stronger crafts capability and vocational capability than we do today.”
President Trump and US Manufacturing
For a broader perspective, the contract manufacturing marketplace MFG.com has released a report entitled “How Will President Trump’s Polices Affect U.S. Manufacturing?” The report is based on a survey of more than 45,000 American manufacturing professionals encompassing both Buyers (original equipment manufacturers) as well as Suppliers (small to midsize manufacturers).
In addition, when it comes to the relationship between US manufacturing and China, the report found considerable support for labeling China a currency manipulator and for leveling tariffs on Chinese products. While Buyers are resistant to Trump’s proposed 30 and 45 percent tariffs, both Buyer and Supplier groups voiced support for them even at the risk of potentially higher costs for consumer products and industrial inputs.
You can download the full report here.
Carrots and Sticks for US Manufacturers
Thus far, Trump’s strategy appears to lean more toward punishing manufacturers who deviate from his vision, rather than incentivising them to get on-board. But instead of threatening recalcitrant manufacturers with economic penalties, President Trump might do well to take a page from India’s playbook.
“[Information Technology Minister] Prasad also said a government panel headed by the cabinet secretary would now clear investment proposals in the electronics sector above [USD] $1 billion, instead of them going through multiple government departments.”
In other words, if a company is willing to make a big enough investment in Indian manufacturing, the government will streamline the process for doing so. This doesn’t specifically cater to Apple, but the list of companies able to make billion-dollar investments in manufacturing is a short one indeed.
If President Trump truly wants to revitalize American manufacturing, he’d do well to remember the carrot as well as the stick.
What do you think the next four (or eight) years hold in store for American manufacturing?
Comment below.