Category Archives: Business

Trump thanks Ford for halting Mexico plant

Mark Fields_ford_Getty.jpg

Ford CEO Mark Fields said his company had not cut a deal with Trump, but that the president-elect’s promises to make America more business friendly had played a role in the company’s decision. | Getty

One day after criticizing General Motors for manufacturing cars in Mexico, President-elect Donald Trump sung the praises of its chief competitor, Ford Motor Company, for abandoning plans to build a new Mexican plant and build instead in Michigan.

“Thank you to Ford for scrapping a new plant in Mexico and creating 700 new jobs in the U.S. This is just the beginning – much more to follow,” Trump wrote on Twitter Wednesday morning.

Story Continued Below

Ford announced on Tuesday that it will invest $700 million into a plant in Michigan and eliminate plans to build a new facility in Mexico. Ford CEO Mark Fields said his company had not cut a deal with Trump, but that the president-elect’s promises to make America more business friendly had played a role in the company’s decision.

“We see a more positive U.S. manufacturing business environment under President-elect Trump and the pro-growth policies he’s talking about,” Fields said Tuesday at the Michigan factory that will get the new investment. “This is a vote of confidence for president-elect Trump and some of the policies he may be pursuing.”

Trump campaigned hard on his promise to rebuild America’s base of manufacturing jobs, promising to impose a 35 percent tariff on companies that move jobs overseas and then import products back into the U.S. He railed against trade agreements like NAFTA and the Trans-Pacific Partnership, vowing to tear them up and renegotiate more favorable conditions for American workers.

Trump’s praise for Ford came one day after he attacked General Motors for building its Chevrolet Cruze models in Mexico and the importing them back into the U.S. He said the automotive manufacturer should “make in U.S.A. or pay big border tax!” In a statement released in response to Trump, GM said it makes all of its Cruze sedans in Ohio and makes some hatchback models in Mexico, most of which are sold internationally although some are brought back into the U.S.

Wall Street Lawyer Jay Clayton Emerges as Top Candidate for SEC Chairman

WASHINGTON—Wall Street lawyer Jay Clayton has emerged as the leading candidate to be chairman of the Securities and Exchange Commission and could be announced as the nominee as soon as Wednesday, according to an official working with the transition team of President-elect Donald Trump.

Mr. Clayton, whose clients have included Goldman Sachs Group Inc. and Barclays Capital Inc., would succeed SEC Chairman Mary Jo White, another lawyer with a history of representing Wall Street banks before becoming a regulator. Mr. Clayton,…

Exxon Mobil Cashes Out Ex-CEO Tillerson Ahead of Confirmation Hearings

Exxon Mobil Corp. has awarded former Chief Executive Rex Tillerson a $180 million retirement package as the company moves to break financial ties with President-elect Donald Trump’s nominee for secretary of state.

If Mr. Tillerson is confirmed, Exxon will transfer the equivalent value of two million unvested shares that he was set to receive at his previously expected retirement in March into a trust, according to the company.

Toshiba Shares Recover From Early Plunge on Accounting Report

Shares of Toshiba Corp. recovered from an early dive after the Asahi newspaper reported regulatory concerns about the company’s earnings.

Toshiba rose 2.3 percent to 289.6 yen as of 11:13 a.m. in Tokyo after slumping as much as 6.9 percent in early trade. Japan’s Securities and Exchange Surveillance Commission suspects the company padded earnings by about 40 billion yen ($339 million) in the three fiscal years through March 2014, Asahi reported citing unidentified sources. Toshiba didn’t immediately respond to a request for comment.

Toshiba shares have been under pressure for more than a week after announcing it may write down billions of dollars at its energy unit. That news came as the company, which also makes personal computers and memory chips, recovers from an accounting scandal in 2015 that claimed the jobs of three presidents, led to record losses and prompted job cuts and the sale of businesses.

Investors have priced in a lot of bad news and the focus is shifting to positives, such as the company’s semiconductor business, according to Masahiko Ishino, an analyst at Tokai Tokyo Securities.

“The market instead seems to be focusing on the strength in the semiconductor names,” Ishino said. “Whether it is their nuclear or other businesses, Toshiba is an organization that possesses very beneficial technology for Japan. And that’s the frame-of-mind we should be taking when looking at this.”

Semiconductor names rallied globally after Wells Fargo Co. analysts said they see a chip recovery gathering momentum in 2017. Micron Technology Inc. gained 2.9 percent on Tuesday in New York, while Japan’s Sumco Corp. climbed 3.3 percent on Wednesday. 

Toshiba shares slumped 37 percent last week after announcing the potential writedown.

The company is likely to take emergency actions such as selling more assets and negotiating with unions, Claudio Aritomi and Amit Garg, analysts at CLSA Ltd., said in a report last week. The company may also need to carefully work with lenders for continued support.

“Negative newsflow is likely to continue near term, but we expect a rebound once fears of the bankruptcy/delisting scenario starts receding,” the analysts wrote in the report.

Shaming Firms That Export Jobs Has Worked For Trump So Far

Ford CEO Mark Fields addresses employees in Flat Rock, Mich., on Tuesday, about changing plans to build a new factory in Mexico.

Carlos Osorio/AP

hide caption

toggle caption

Carlos Osorio/AP

Ford CEO Mark Fields addresses employees in Flat Rock, Mich., on Tuesday, about changing plans to build a new factory in Mexico.

Carlos Osorio/AP

Ford and General Motors both reacted Tuesday to President-elect Donald Trump’s continued criticism of U.S. companies manufacturing products in Mexico.

Ford announced it would cancel its $1.6 billion plans to build a plant in San Luis Potosi, Mexico, and instead invest an additional $700 million to expand an existing plant in Michigan to make autonomous and electric vehicles. That comes on the heels of another decision in November to keep production of some small SUVs at its plant in Kentucky.

That announcement came a couple of hours after Trump took to Twitter to criticize General Motors: “General Motors is sending Mexican made model of Chevy Cruze to U.S. car dealers-tax free across border. Make in U.S.A.or pay big border tax!”

GM responded that only a small number of hatchback models are manufactured in Mexico and sold at U.S. car dealers. “All Chevrolet Cruze sedans sold in the U.S. are built in GM’s assembly plant in Lordstown, Ohio. GM builds the Chevrolet Cruze hatchback for global markets in Mexico, with a small number sold in the U.S.”

Why did Ford change its mind?

The move marks a departure for Ford, whose CEO last month said it was looking forward to working with the Trump administration on trade but that it very likely wouldn’t change plans for its $1.6 billion factory.

Now CEO Mark Fields tells NPR that Trump’s rhetoric was a factor in reversing the earlier decision, but one of several factors. He says the carmaker was influenced by promises of new tax and regulatory reforms and the prospect of keeping jobs at home. “Ford is a global automaker, but our home … is right here in the United States,” he said.

What is the significance of this change?

It means 700 additional Ford jobs will come to Michigan, and Ford says every factory job is likely to create another seven related jobs. “We’ve created 28,000 jobs and we’ve invested $12 billion in the U.S. in our plants in the last five years,” Fields said in a press conference.

Shifting a factory itself would not be news but for the fact that it is highly unusual for companies to respond to direct, public pressure from an incoming president.

“I know from talking to business people that no major firm wants to be a subject of a Trump tweet,” says Gary Hufbauer, a senior fellow at the Peterson Institute for International Economics. He says companies realize Trump controls the Justice Department, the Defense Department, the IRS, Treasury and regulatory agencies, and “the amount of control that intersects with what companies are doing is enormous.”

Will such moves inspire retaliatory trade barriers that hurt other U.S. firms and cost American jobs?

Trump has pledged to rework U.S. trade agreements, including the North American Free Trade Agreement. Trump has also called for high tariffs on companies that manufacture products overseas and then import them for sale in the U.S. The question is how broad such tariffs would be, and whether American trading partners would object and retaliate with similar measures.

So far, Trump has (or claims to have) put pressure on American companies including Carrier, Sprint, Ford, Boeing, Lockheed Martin and GM. But Hufbauer says if Trump makes good on actually raising tariffs, “I think some form of retaliation [from other countries] is almost certain.”

Who’s next, and what is the possible economic impact?

So far, tweeting trade and other corporate policy has played well for Trump. He has targeted Boeing for a potentially large contract to build a new Air Force One, and he criticized Lockheed Martin for its expensive F-35 fighter jet contracts.

Hufbauer says it remains unclear what the economic impact of all this will be. So far, the tweets have gotten a massive amount of media attention, and that may mean it will continue and that others — consumer brands in particular — could find themselves targets. “Some people may wrongly think this is the way to create jobs in the U.S.,” Hufbauer says.

“My estimate is that this kind of thing [companies responding to tweets] is not going to have a major effect,” and it is not in keeping with a well-functioning economy,” says David Dollar, senior fellow for the Brookings Institution.