More CEOs Speak Out
Add Intel’s Paul Otellini and T. J. Rodgers from Cypress Semiconductor. Corporate America is courteous but firm: Government must back off before job creation will resume.
On August 4, I mentioned my surprise that CEOs of business and industry have been speaking out on government policy issues. Here’s a link to that posting (which includes even more links…)
Business And Industry Leaders Speak Out
By far, the easiest route for a CEO is to maintain a positive, sanitized, no-fingerprints posture that will be good for business and will offend the fewest people.
I was startled when I first noticed some major leaders taking bold, clear stands against destructive behavior in Washington. (Of course, secretly, I was gratified that I may not be the only oddball pointing out serious weirdness for almost two years.)
Certainly, CEO-speak is carefully crafted. There are no raucous statements. The passion is muted. Words like “outrage” never show up. “Deeply concerned” or “worrisome” carry the burden. Nevertheless, the message is clear.
More and more high-profile corporate leaders are stepping forward, making unusually strong statements.
I’m not seeking out these people. They just keep showing up.
And the outspoken leaders I’m finding seem to have a reputation for not being outspoken. They don’t typically do or say controversial things.
I simply think we’re getting an answer to my question from long ago: Where are all the people who have a lot to lose?
The answer: They’re not going to lose. They’ve moved on.
They are scoring huge wins by adapting with the game. For now, at least, the United States brutally punishes businesses of all kinds. Emerging nations offer attractive invitations.
The global message, in short: Don’t stay here. Please go there.
Intel At TPI In Aspen
On August 23rd, Paul Otellini president and CEO of Intel Corporation delivered that evening’s keynote speech at the Technology Policy Institute’s Aspen Forum.
Text Of Otellini TPI Keynote Speech
Mr. Otellini pointed out the powerful and accelerating technological advances of our time. And he observed that these achievements are the result of a “culture of investment.”
Other countries saw long ago what made America’s economy the strongest in the world. And they, too, have invested in the very same things.
… while the United States pulled back.
“At one time, the US could boast about the best students in math, science, and engineering. Our research centers were without peer. No country was more attractive for start-up capital or global investors. We seemed a generation ahead of the rest of the world in information technology.
“That simply is no longer the case.”
Mr. Otellini referenced a study that measured the rate of change over the last decade in what 40 major industrial countries were doing to make themselves more innovative for the future.
The U.S. ranked dead last.
“The news may sound shocking,” he said, “But it shouldn’t be. When you take a hard look at the things that make any country competitive, it becomes clear that we are slipping.”
“Slipping” would seem to be an understatement.
Mr. Otellini explained that it costs an extra $1 billion to build, equip and operate a semiconductor manufacturing facility in the U.S. He said, “Ninety percent of the cost difference is the result of tax and incentive policies.”
“With such policies,” he asked, “are we surprised that companies are investing overseas?”
Intel itself, earns 75% of its revenue overseas, but it has concentrated 75% of its manufacturing and R&D spending here, in this country.
Early in his remarks, Mr. Otellini cautioned, “There’s no guarantee that the U.S. will receive all of this investment in the future.”
I highly recommend reading Mr. Otellini’s statements, or if you prefer, here’s a link to a video of his speech…
On the heels of that speech, I caught this comment from CEO T. J. Rodgers of Cypress Semiconductor. He said, “Like other CEOs, I’m very apprehensive about the way the macro economy is being managed by our government. And therefore, I’m hunkering down, and I haven’t hired anybody in a year, because I’m worried.”
He’s right. He’s not alone.
In the same industry group, you can clearly see that IBM has been aggressively hiring overseas and quietly trimming its payroll here, in the U.S. Hewlett-Packard has been doing the same thing.
I’ve mentioned before that construction giant Fluor has all but closed its branch location in Greenville, South Carolina, while committing heavily to overseas projects.
Cramer Calls For Leadership
A lack of confidence weighs heavily on U.S. equities markets. Mad Money host Jim Cramer spoke to the causes on Wednesday, August 25th. Here’s a link to his recap:
Cramer’s ‘Mad Money’ Recap: Small Worries Plague Market (Final)
Cramer said the markets are coming down hard because there is no leadership. The leadership he most specifically pointed to is Presidential. “I don’t think that he knows…” he said. Cramer pointed to these obvious areas of trouble:
Unemployment is sky high. People can’t rely on their incomes. Nobody knows what their house is worth. They have no clue what their capital gains taxes will be on investments. There’s no way to predict health care costs. Nobody knows the consequences of the 2,000 page financial regulation monstrosity. And there’s no telling when surprise labor regulations or cap and trade might burst back on the scene.
That’s pretty ugly. And so is the reaction.
Retail investors are visibly pulling out of the markets. Hedge funds are reducing their exposure or closing entirely. Gold trades at historic highs.
This is not a time for an obituary, dark as some of this sounds.
What we’re hearing is greater participation of qualified professionals, stepping forward to address these issues. I’m thankful they’re getting involved.
We do have leadership. It is found in the major corporations of America.