EuroWire September 2014

Transatlantic Cable

believe that immigrants put Americans out of work. An irony of current American politics is that Mr Cantor’s support for a sole “lenient” proposal – that children brought to the United States by their illegal-immigrant guardians should be safe from deportation – may have cost him, an arch-conservative on immigration as on most other issues, his career. For reasons other than price and wage rates, US multinationals are moving production facilities and jobs back home “Don’t expect stable exchange rates around the world. Don’t expect help from Washington. Don’t expect disruptive technological change to slow down.” This bracing advice to US manufacturers came from Jim Mo att, a panellist in a Detroit Economic Club discussion held 10 th June and titled ‘Deglobalisation: Retooling Global Opera- tions for Strategic Advantage.’ The moderator, business writer Tom Walsh of the Detroit Free Press , said it was hoped that the panel might shed light on a perceived trend in the American Midwest toward bringing production facilities and jobs back home from overseas. (“US Firms Are Moving Factories Home to be Closer to Customers,” 15 th June) All three panellists told Mr Walsh that the word deglobalisation is inadequate. In their view, it simply does not convey the dizzying cross-currents of costs, technology, security issues, and trade policy that CEOs of global companies deal with today. The shift toward repatriation should not, they said, be taken to mean that companies are simply chasing the lowest price or wage rate around the globe. At rst it was “all about labour arbitrage,” said Mr Mo att, who is CEO of the global nancial services rm Deloitte Consulting; but as worker pay goes up and quality problems arise in low-wage countries, the math gets more complex. Another panellist, veteran auto industry sage David Cole, noted that the German automaker Audi is building a new plant in Mexico to make its Q5 luxury crossover vehicle. This is, at least in part, because Mexico has better free trade agreements than the US does with many nations that are export markets for the Q5. The third panellist, Whirlpool’s global product organisation leader David Szczupak, cited two examples of work that the household appliance manufacturer has brought back to Ohio from China and Mexico. The shift from Chinese production has enabled Whirlpool to shrink its shipping costs and to more quickly accommodate customer preferences.

Business

Firms large and small are feeling the shocks from a stunning political defeat in the United States Congress

Representative Eric Cantor, of Virginia – a powerful ally of business interests including many independently owned manufacturers that rely for nancial support on the federal government – is the rst congressional leader in modern American history to lose his seat in a primary election. The consequent relinquishment of his position as majority leader of the House means that many businesses face diminished in uence in Washington. Their anxiety is not irrational. On 12 th June, the day after Mr Cantor announced he was surrendering the top job (he will continue to represent his district until January), the share price of Boeing tumbled, wiping out all the gains made by the huge aircraft manufacturer this year. Analysts attributed the drop to the startling defeat of an apparently unassailable ten-year incumbent in a surge of anti-corporate populist sentiment. Several major initiatives that business had hoped to see through Congress this year are now in doubt. Among the causes to which Mr Cantor was expected to lend his prestigious support is reauthorisation of the Export-Import Bank, comprehensive immigration reform, and nancing for the nation’s highway system. Companies like Boeing and General Electric and hundreds of smaller rms look to the Export-Import Bank to provide subsidised loans to foreign customers, enabling sales of American goods by ensuring buying power to overseas customers. Stock analysts said Boeing expected the bank to help nance purchases of $10 billion this year. Mr Cantor’s loss puts those sales in jeopardy. Another imperilled issue is nancing for the nation’s crumbling highway system. A trust fund for that purpose is about to run out of money, but many austerity-minded legislators balk at replenishing it. Business groups, led by the Chamber of Commerce, have argued that bulking up the fund is essential to US competitiveness, given the major infrastructure investments made by competitors like China. But they have lost a champion. As to reform of the immigration system, it is generally favoured by US business interests but ercely opposed by those who

Image: www.bigstockphoto.com Photographer Zsolt Ercsel

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September 2014