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Area Development - Site Selection, Facility Planning and Workforce Development

Editor’s Note: Manufacturing Execs Offer Insights on the Effect of Trump Administration’s Policies on Growth

75% of C-level manufacturing executives surveyed believe that economic conditions under the new Trump administration will be favorable to moving ahead with new facility or facility expansion plans.

Q1 2017
With a new president and administration in Washington, what’s to be expected for the U.S. economy, and how will the administration’s policies affect Area Development’s readers’ new facility and expansion plans? Our 31st annual Corporate Survey, which was conducted in early December 2016, attempts to answer these questions (full results to be released in early March.) A preliminary examination of the responses from C-level executives — i.e., company owners, CEOs/presidents, CFOs, and other corporate officers — of manufacturing businesses reveals optimism.

Seventy-two percent of the C-level respondents examined are responsible for their companies’ final location decisions. About half of them plan to open a new domestic facility (not relocate an existing one) over the next five years. Interestingly, three quarters of these respondents believe that economic conditions under the new Trump administration will be favorable to moving ahead with their new facility or facility expansion plans.

This optimism on the part of the respondents echoes what other C-level executives have been saying. For example, post-election, Thomas Williams, CEO of Parker Hannifan Corp., told Bloomberg news, “I think a lot of things that Trump is thinking about, whether it’s tax reform, regulatory reform, infrastructure, are all things that would help Parker.”

It would appear Trump is putting his thoughts into action. On January 23rd, Trump’s first official day in the White House, he hosted CEO’s from a cross-section of the of the country's largest manufacturing corporations where he requested they present a “series of actions" within 30 days to spur domestic manufacturing growth. For his part, President Trump promised to simplify regulation, fast-track plans to open factories (including incentives) and cut corporate taxes “massively.”

Only 15 percent of all the C-level respondents say they believe potential penalties for moving operations/jobs offshore — as proposed by President Trump — will have an effect on their plans for new foreign facilities. (Half did not respond to this question.) However, only about 18 percent of the respondents have plans to open new foreign facilities. And just 3 percent plan on relocating a domestic facility offshore.

None of the C-level respondents have plans to reshore facilities back to the U.S. And, only 3 percent believe there will be financial inducements under the Trump administration to do so. Bringing jobs back that have been moved offshore is more complicated than the new administration in Washington would have its supporters believe. According to an MIT Technology Review released in November 2016, Trump’s promise to bring back production jobs ignores the realities of advanced manufacturing. As noted by Scott Paul, president of the Alliance for American Manufacturing, in a reaction to the President’s inaugural address: “The offshored jobs President Trump has promised to return will not look like those that left. Manufacturing industries change rapidly, and so do the skill sets they require of workers upon entry. His administration must lead the way in preparing our workforce for this changing economy, so they can participate and reap its benefits too.”

The respondents we examined echo this sentiment, 60% believe availability of skilled labor is having an effect on new facility/expansion decisions. Of those, 70% believe workers are lacking the “advanced skills” necessary in the advanced manufacturing economy. In light of these responses, it should not be surprising if workforce development and training is emphasized in the “series of actions” that the leaders from our nation’s largest manufacturers will soon be presenting Mr. Trump.
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