President Donald Trump’s tariff regime may not be having the desired effect of bringing manufacturing back to the US yet, but it’s making companies sound a lot more patriotic.
At least that’s what executives are projecting during earnings calls.
During first-quarter conferences, they touted their “Made in America” credentials or domestic production capabilities at a record rate, with firms in the S&P 500 Index calling out their domestic production over 200 times, compared with a 25-year average of around 50 mentions per earnings season, according to data compiled by Bloomberg News.
Talk is cheap, though, much cheaper than actually investing in the US. Despite the patriotic enthusiasm, there’s little evidence corporate America has broken ground on new domestic facilities.
“There have been anecdotal announcements from drug companies, or otherwise, talking about investments here in the US,” Brent Thielman, who covers the construction and engineering industries for DA Davidson & Co., said in an interview. “But when that comes to fruition remains to be seen.”
Altogether, companies ranging from Apple Inc. and International Business Machines Corp. to Eli Lilly & Co. and Bristol-Myers Squibb Co. have pledged hundreds of billions of dollars of spending in the US since Trump’s election. Many of those commitments weren’t new or were in line with previous spending patterns.
Touting new projects in response to tariffs could appear reactive, while highlighting projects already underway is a savvy way to calm investors in uncertain times, said Emily Borders, chief client officer at Highwire, a public relations agency.
“It’s very difficult to set up a ‘Made in the USA’ program overnight. In fact, you can’t do that,” Borders said. “However, many organizations have been doing really interesting things in that regard or have had initiatives in that regard for a while and those may not have been top of mind with some of their constituencies.”
Like some of those investment announcements, touting your domestic production bona fides could have the added benefit of keeping the heat from the White House at bay, though that’s not a certainty.
Trump has showered ire on firms who he sees flouting the “America First” mindset he’s seeking to impose by taking production abroad, and Apple’s $500 billion investment pledge wasn’t sufficient to keep Trump from threatening a 25% levy on all imported iPhones sold in the US.
The threat of retaliation from the White House has some companies seeking advice on how to stay out of trouble.
“Sometimes we’re as much trying to remain less of a focus as we are, as PR professionals, trying to make sure our companies are in the spotlight,” said Lori Ruggiero, managing partner at PR firm 5WPR. “Why become part of the story if you don’t have to be, right?”
After targeting Apple, Trump became even more menacing with Barbie-maker Mattel Inc., threatening a 100% levy on its toys if the company continued overseas production.
El Segundo, California-based Mattel had only days earlier pulled its outlook, citing the impact of tariffs on toy demand and production. During its call, Chief Executive Officer Ynon Kreiz took time to detail the company’s plans to decrease its exposure to Chinese suppliers by shifting more production to India.
Around 76% of Mattel’s suppliers are outside of the US, where it generates about half of its revenue.
Talk the Talk
In uncertain times, management commentary on where the business is heading is critical, especially as specific financial outlooks become less reliable.
Executives should “think beyond the traditional revenue and earnings guidance because we see that most investors find operational guidance is more reliable in times of uncertainty,” Laura Kiernan, senior vice president with Rivel Inc., an investor relations consultancy, said in an emailed statement.
In a volatile economy, information on mitigation efforts, capital allocation and general strategic direction for companies is considered more reliable than financial guidance for 51% of buy-side investors, according to a Rivel survey. Only a third of respondents found specific fiscal targets more dependable.
This quarter, at least 50 major US companies have withdrawn or suspended their outlooks as economic conditions made forecasting too difficult.
Snap-on Inc., which doesn’t typically offer profit projections, remained vague in its first-quarter press release announcing results. CEO Nick Pinchuk used the earnings call, instead, to expound on the company’s domestic capabilities.
“We’re positioned well with American products,” Pinchuk said during the call. “Our major product lines are already made in America, using American steel, and our US plants already produce some version of almost all our product lines.”
Deere & Co. was similarly patriotic during its latest earnings call.
“We’re proud of our storied US history,” CEO John May said in opening remarks. “With nearly 80% of our US sales, and 25% of our international sales, built right here in US manufacturing locations, we stand by and continue to embrace our American manufacturing heritage.”
