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Trump: CEOs who left advisory council are 'not taking their jobs seriously'

President Donald Trump speaks to the media in the lobby of Trump Tower in New York, Tuesday, Aug. 15, 2017. (AP Photo/Pablo Martinez Monsivais)

Following four high-profile defections from his manufacturing advisory panel, President Donald Trump alleged that the CEOs who stepped down were “not taking their jobs seriously as it pertains to this country.”

Speaking to reporters after delivering a statement on infrastructure Tuesday, Trump accused the CEOs of shipping jobs overseas and making products abroad, something his family’s companies have also done.

After the impromptu press conference in which Trump passionately defended people who attended a white nationalist rally in Charlottesville Saturday, AFL-CIO President Richard Trumka resigned from the council, stating that Trump "tolerates bigotry and domestic terrorism."

Earlier in the day, Trump called executives who withdrew “grandstanders” on Twitter and insisted that “For every CEO that drops out of the Manufacturing Council, I have many to take their place.”

About 15 minutes after that tweet, Scott Paul, president of the Alliance for American Manufacturing, announced that he too is dropping out of the council.

“I'm resigning from the Manufacturing Jobs Initiative because it's the right thing for me to do,” Paul tweeted.

On Monday morning, Merck CEO Kenneth Frazier resigned from the council, saying in a statement, “America’s leaders must honor our fundamental values by clearly rejecting expressions of hatred, bigotry and group supremacy, which run counter to the American ideal that all people are created equal.”

He did not name President Trump as an American leader failing to live up to that standard, but coming in the wake of Trump’s widely-derided initial response to the death of a counter-protester after a white nationalist rally in Charlottesville Saturday, many took it as an implicit criticism.

While Trump took two days to specifically condemn white supremacists, he fired back at Frazier personally within minutes.

“Now that Ken Frazier of Merck Pharma has resigned from President's Manufacturing Council,he will have more time to LOWER RIPOFF DRUG PRICES!” Trump tweeted about Frazier, who he had praised weeks earlier as a “great, great business leader” at a White House event.

In the hours after Frazier’s announcement and Trump’s subsequent slam, Intel CEO Brian Krzanich and Under Armour CEO Kevin Plank released similar statements withdrawing from the council.

“I joined the American Manufacturing Council because I believed it was important for Under Armour to have an active seat at the table to represent our industry,” Plank said, tweeting that he is “stepping down from the council to focus on inspiring & uniting through power of sport.”

“Earlier today I called on all leaders to condemn the white supremacists and their ilk who marched and committed violence,” Krzanich said in a blog post. “I resigned because I want to make progress, while many in Washington seem more concerned with attacking anyone who disagrees with them.”

Several other members of the council issued statements denouncing hatred and bigotry but also defending their role as advisers to the president on manufacturing issues impacting their employees and customers.

“As we watched the events and the response from President Trump over the weekend, we too felt that he missed a critical opportunity to help bring our country together by unequivocally rejecting the appalling actions of white supremacists,” Walmart CEO Doug McMillon said in an email to employees posted on the company website Tuesday, adding that Trump’s denunciation of hate groups Monday was “a step in the right direction.”

However, McMillon also emphasized the importance of remaining engaged with elected officials to address the issues facing the country, a sentiment that suggests he has no intention of leaving Trump’s Strategic and Policy Forum.

Thousands of tweets Tuesday implored companies to #QuittheCouncil, some also singling out Campbell’s Soup Co. with the hashtag #SoupNazis.

Dozens of executives remain members of Trump’s White House advisory councils—positions that are largely ceremonial and have generally not been controversial under previous presidents—including leaders from Dell, Boeing, JP Morgan Chase, and General Motors.

The Charlottesville response was not the first Trump action to spur an exodus from the panels. Elon Musk of Tesla and Bob Iger of Disney jumped ship when Trump withdrew the U.S. from the Paris Climate Accords. Travis Kalanick, then-CEO of Uber, stepped down in February after facing criticism and boycott threats over Trump’s immigration executive orders.

“Twenty-first century CEOs have to carefully balance multiple stakeholders, including the interests of customers, concerns of employees, and agendas of policymakers,” said David Bach, deputy dean and professor at the Yale School of Management. “Just as Elon Musk would have lost credibility with his employees and customers after Paris had he remained, Frazier – one of the nation’s most respected African American business leaders – could not have quietly continued after Trump’s reaction to Charlottesville.”

Even now, though, there are undoubtedly benefits to sitting on these councils.

“It’s important for leading US-based companies to be engaged in important public policy matters and these councils provide a platform,” Bach said. “And it’s important for them to be seen as being engaged.”

In addition to providing the president with their perspective, they can also learn more about his positions and policies, according to Dr. Michael Lord, president and CEO of the Washington Campus, a non-profit consortium of university business schools.

“The two main benefits I would think are to try to influence economic policy, like on trade, in a way that benefits their business and the economy more generally,” Lord said, “and the second benefit would be to gain some insight into the administration’s policies, especially in regard to regulations that might affect their companies.”

Owen Eagan, a management consultant and executive-in-residence at Emerson College, noted that Trump’s decision to back out of the Paris agreement despite widespread support from council members like Musk and Iger showed executives the limitations of the influence they hold over the president.

“In theory, these councils serve as a means of influencing public policy,” he said. “However, it’s clear that some business leaders feel that their voices are not being heard and that their values are not reflected in this administration.”

For some, Trump may have crossed a tipping point in both behavior and public opinion where the liability of being publicly associated with him outweighs whatever they stand to gain.

“Many gave Trump the benefit of the doubt,” Bach said. “But as more and more realize that he won’t pivot, that he won’t become less divisive, and that he frequently treats well-meaning critics worse than major foes, fewer and fewer will be willing to serve.”

Lord observed that there have been issues where council members appear to have had an effect on the president and the direction of administration policy, such as trade matters involving NAFTA and China. They have to measure that influence against the damage of association with a man many of their employees, customers, and stakeholders disapprove of.

“The risks grow as Trump becomes more and more unpopular, and the risks also grow the more and more he does things that are considered outrageous by much of the public,” he said.

CEOs have already made a cost-benefit calculation when they accepted Trump’s invitation to serve, but an incident like this can upset the equation.

“There’s always a risk involved in allowing your brand or your company to be associated with politics,” said Stephanie Martin, an assistant professor of corporate communication and public affairs at Southern Methodist University.

Target took fire from the right for wading into the transgender bathroom issue last year. Chick-Fil-A is still facing backlash from some over its CEO’s opposition to same-sex marriage in 2012.

“You can’t always predict how your stance is going to be interpreted,” she said.

In this case, brands may see an opportunity to stand on the right side of a pretty clear debate, even if that means standing against the president of the United States.

“What I think it’s pointing to is a perception…that he was willing to pander to the worst of his supporters at the expense of the good nature of most of the American people,” Martin said. “And most of the American people are the ones CEOs and executives want as their consumers. They don’t want the Klan for their consumers. The CEO of Under Armour wants the mom who’s about to go buy soccer uniforms.”

Still, the New York Times reported Tuesday that some CEOs are privately outraged at Trump but afraid to speak out publicly.

“Just look at what he did to Ken [Frazier]. I’m not sticking my head up,” one executive told reporter Andrew Ross Sorkin.

Trump has attacked a number of companies since launching his presidential campaign, some for decisions that negatively impacted his family’s businesses and others for practices like outsourcing that cost Americans jobs.

When he went after Lockheed Martin and Boeing in December for the costs of aircraft they were building for the government, the companies did experience slight dips in stock prices. The effect was brief, though, and other businesses have gotten a boost from being in Trump’s crosshairs.

Experts agree it is a case of diminishing returns. As Trump’s airing of grievances on social media grows more common and more petty, the novelty and impact of it have lessened greatly.

“Early on in the administration, many CEOs feared Trump’s Twitter wrath but as he increasingly turns on people who the public think have done nothing wrong, or as he goes after his own Cabinet members, becoming the target of a Trumpian Twitter attack is becoming a bit of a badge of honor, at least in some circles,” Bach said.

One exception Lord cited may be defense contractors and others whose business with the government is under the administration’s control.

“Certainly if you’re in the defense sector, you’re hedging your bets and you would rather the president not tweet about you,” he said.

Dampened though the impact of his 140 characters may be, Martin said no company wants to spend a news cycle at the center of a Trump tweetstorm.

“You don’t want to be on the other end of that megaphone,” she said. “That’s not the kind of publicity you’re looking for. Because anytime people are talking about your business and Donald Trump, they’re not talking about your business and great products.”

Seeing how rapidly Trump turned on Frazier may give other CEOs pause, as could his public attacks on House and Senate leaders who have been trying to enact his agenda.

Senate Majority Leader Mitch McConnell, who spent much of the summer cajoling his colleagues into backing another extremely unpopular health care reform bill only to fall one vote short of success, faced days of attacks from Trump last week for suggesting the president had “excessive expectations.”

“He keeps getting stymied because throwing his weight around has gotten him into these matches where people are throwing their weight around back,” Martin said.

Ultimately, CEOs may look at the president’s actions, his treatment of other allies, and his policy decisions and ask how much he values their input.

“The president has access to all the information in the world,” Bach said. “The question is, does he want to listen and learn?”


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