Republican control could signal significant change
January 16/23, 2017: Volume 31, Number 16
By Ken Ryan
Republican president and Republican-controlled Congress would ordinarily be greeted with cheers from small businesses. And that may indeed turn out to be the case. However, the 2016 campaign was anything but ordinary, and President-elect Trump is anything but an ordinary politician, so it is anyone’s guess what the next four years will be like for the flooring industry.
With the new administration set to take over Jan. 20, many business leaders are hopeful, albeit a tad skeptical, about the next four years and the potential impact on their businesses.
Policy shifts
Torrey Jaeckle, vice president at Jaeckle Distributors, Madison, Wis., said he believed a Trump administration could be a mix of both positive and negative. “Trump has no guiding political ideology or philosophy from which to forecast what he might do. We therefore can only go by what he has said he will do, keeping in mind all that might change as circumstances change and evolve. Trump is more pragmatic than ideological, and that can lead to more frequent policy swings and changes than you would see in someone with a more ideological bent. We shouldn’t be surprised if he completely changes course on some issues.”
Potential red flags?
For those flooring companies that import from China, Trump’s protectionist bloviating concerned some dealers and distributors who argue that the benefits and virtues of trade, specifically free trade, have been proven—not just from a theoretical standpoint but also from real-world experience. “It remains to be seen if Trump’s rhetoric in this area is just bluster that he is using as a negotiating tactic, or if he truly would slap tariffs on imported products which would prove detrimental to our economy in the long run,” Jaeckle said. “As a free-market businessman in an industry that relies on a fair amount of imported product, this is the area that most concerns me about Trump.”
During the campaign Trump was often criticized for his lack of understanding—or even interest—in some policy issues. But then again, some executives said Ronald Reagan was not an expert on every issue but was a great delegator and communicator nonetheless.
“When a Fortune 500 company hires a new CEO, they don’t hire someone who has the answer and solution to every problem plaguing the business,” Jaeckle explained. “Instead they hire someone with good instincts who can assemble a competent team, work proactively with others and lead the entire group toward a common goal. Whether Trump can do that remains to be seen, but we’re about to find out.”
Positives
On the positive side, executives point out that Trump has promised to help ease the burdens on business that have been imposed and increased under President Obama. Executives agree most retailers would welcome a more pro-business, or at least more even-sided Department of Labor than we have seen under President Obama. “Good intentions don’t necessarily lead to good policy, and much of Obama’s labor policy has unfortunately fallen into that category, in my opinion,” Jaeckle said. “Several DOL rulings have been challenged in court and are still in flux as we speak—specifically the recent overtime changes. If Trump can end that uncertainty, specifically by undoing those detrimental DOL rulings, then that will be a positive thing.”
Michael Geisler, president of The L&L Company, sees a more business- centric climate emerging, one he hopes is less controlled by government interference. “I think changes to regulations and oversight that may have been necessary in the past have outlived their usefulness and have made it difficult for us to operate even more efficiently,” he said. “The change with the new administration is welcomed, but I am sure it will come with its own set of issues. That being said, we are betting on more growth as a result and feel the next two years will add jobs and opportunity.” Executives said they were happy to see the new overtime rule postponed.
The Labor Department’s contentious overtime rule was supposed to go into effect Dec. 1. However, a federal judge in Texas issued a temporary injunction halting the rule nationwide. The rule would have extended overtime pay to more than 4 million workers. It would have required employers to pay overtime to most salaried workers who earn less than $47,476 annually, a much higher threshold than the current annual salary limit of $23,660.
While flooring dealers breathed a sigh of relief on the OT change, there are other onerous regulatory issues still out there, including rising cost of health care and escalating tax rates. Many hope Trump is the elixir to cure these ills. “Hopefully a Republican president and Congress can help with the financial aspect of our business,” said Casey Dillabaugh, owner of Dillabaugh’s Flooring America in Boise, Idaho. “All in all though, I think the pros outweigh the cons for the small to medium, family-owned business.”
Rick Holden, COO of Derr Flooring, Willow Grove, Pa., said two things come to mind regarding a Trump presidency. “He stated he wants to remove onerous regulations that impede businesses from growing. Lowering corporate tax rates is another promise from Mr. Trump that will improve the ability of companies to reinvest in their businesses and people. Both of these initiatives should help businesses.”
Sam Roberts, owner of Houston-based Roberts Carpet & Fine Flooring, also sees positive signs. “Lower taxes, less regulation and pro-growth government policies are all generally good for both small and large business,” he said. “I think most dealers would welcome change that might alter current business realities.”