After a presidential election that shocked many pundits, I am contemplating what to share with my friends in the industry.
Only days after the election, thoughts about protests and riots kept running through my head. I have no doubt that President Trump has the best intentions when it comes to directing the changes that are coming for our country for important international relationships, infrastructure developments, job creation, trade decisions, treaty changes, Supreme Court justice appointments, etc. But it is clear that many other people don’t feel the same way. They are worried. But, I have seen a lot of elections through my years, and I believe that regardless of who won – the key to success remains the same.
All you can really focus on is your company and its future. You are the one who will make it better or not. Sure, the actions of the government will impact the overall business environment. But your innovation, tenacity and strategy execution is what will mean the difference between doing well or possibly even going out of business.
In a recent interview, investment guru and Berkshire Hathaway CEO, Warren Buffett, who supported Hillary Clinton commented on the election to CNN. Buffett said, “I support any president of the United States. It’s very important that the American people coalesce behind the president…That doesn’t mean they can’t criticize him or they can’t disagree with what he’s doing maybe. But we need a country unified.”
Buffett also added that he remains bullish on America and its prospects as a “fantastic country.” And he plans to continue his investment in America’s future. Buffett’s attitude offers a lesson to every business person. Sure, we need to analyze the changing landscape and tax advantage of reforms. But if we only look for the negative don’t be surprised if the outcome is less than what we desire.
So let’s take a look at how a Trump presidency might impact the pallet and low-grade lumber sector.
In his acceptance speech, Donald Trump stated, “We are going to fix our inner cities and rebuild our highways, bridges, tunnels, airports, schools, hospitals. We’re going to rebuild our infrastructure, which will become, by the way, second to none. And we will put millions of our people to work as we rebuild it.”
This was obviously a way of paying homage to the working class people who helped Trump win fairly long-standing Democratic strongholds. It appears that Trump will invest in infrastructure and use that as a way to thank his base and help drive domestic job growth. Investment in infrastructure could lead to more pallet demand in the industrial sectors as public works and private projects move forward.
Trump added, “And I can only say that while the campaign is over, our work on this movement is now really just beginning. We’re going to get to work immediately for the American people.” This suggests that Trump will not delay in starting to institute his agenda. Earlier this year, Trump released a full plan for his first 100 days. It can be seen at https://www.donaldjtrump.com/contract/
Trump has proposed some major tax reductions for both businesses and individuals. Lowering corporate tax rates could boost economic growth, and Congress will likely jump on some if not all of those proposals in 2017. Trump called for repealing the estate tax, which could be of interest to family-owned businesses in the forest products industry.
Trump would definitely be tougher on trade and trade agreements. This could impact exports if other countries retaliate in some way. At the same time, it could lead to more domestic job growth if companies decide to stay here or grow U.S. capabilities. Stronger stances on trade would certainly make negotiation of a new Softwood Lumber Agreement (SLA) with Canada more difficult. Trump’s people have suggested that the new president might try to lump the SLA into an effort to renegotiate NAFTA. But that is something that U.S. softwood lumber interests might oppose. Tying softwood lumber to NAFTA could be complex and might not give U.S. lumber producers the flexibility they want to respond to market changes. Canadian leaders have said that any effort to heavily tax Canadian lumber would only hurt the United States in its infrastructure spending and housing sector growth.
Seeing the need for more energy options, Trump is calling for lifting blocks to the Keystone Pipeline and allowing vital energy infrastructure projects to move forward. This could lead to more North American energy production. This action would inevitably impact the economy and could drive more demand for board roads/crane mats and crossties. Both of those products use low-grade wood and can be a competitor to pallets for raw material supplies.
Maybe the biggest area of contention in a Trump presidency will be what to do about Obamacare. Although the law is unpopular for many Americans, it has brought some benefits to others. Trump promised to repeal Obamacare and replace it with a more market-based system. Key aspects of his proposal on health care include: repealing Obamacare, replacing it with Health Savings Accounts, allowing people to buy insurance across state lines, letting states manage Medicaid funds, and cutting red tape at FDA for approval of new drugs.
Probably the one area of Trump’s domestic policy that has pallet companies most concerned is his immigration proposals. Refugee and foreign workers, especially Hispanics from the Americas, are a key labor source. At a time when many pallet companies are struggling to find enough people to keep one shift running, any effort that would spook undocumented workers or cause them to return to their home country could cause an important source of labor to dry up. It isn’t clear how aggressive Trump will be in enforcing his immigration agenda. His first 100-day action plan calls for “removing the more than two million criminal illegal immigrants from the country and cancel visas to foreign countries that won’t take them back.” Notice this focuses on criminals and not just normal workers.
Even though the GOP will have control of Congress and the White House, at the same time, they will face some opposition to their agenda. The Republican majority in the Senate is not enough to drive through all reforms depending on how much opposition the Democrats can muster. Also, remember that not all Republicans are on the Trump train. But it appears that they can find some common ground.
Whatever happens in a Trump presidency, it will probably change the business landscape. And smart companies will stay flexible and look for opportunities to take advantage of shifting policies and political values.
The second thing we need to do is pray for our leaders. Having seen our country go through the Cold War, various serious economic downturns, and horrific fights in Washington, I too, just like Buffett, am optimistic about America. And I believe that we need to come together, pray for our leaders and work toward common-sense solutions.
