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Some CEOs advising Trump are job killers

Rick Newman
·Senior Columnist

President Donald Trump has lined up dozens of CEOs to help him create more jobs in the United States. But some of those Trump advisers have more experience killing jobs than creating them.

IBM (IBM), for instance, has reduced total employment by more than 56,000 since its current CEO, Virgina Rometty, took the helm in 2012. That’s more than any other company whose CEO is represented on Trump’s list of advisers. Rometty is one of at least half a dozen CEOs due to meet with Trump on Friday, along with Jamie Dimon of JP Morgan Chase (JPM), Robert Iger of Disney (DIS), Mary Barra of General Motors (GM) and several others.

Tech giant IBM, which has been under financial pressure for years, doesn’t say how many people it employs in the United States, so it’s unclear how many Americans have been affected by Big Blue’s headcount reduction. But earlier research by Yahoo Finance found that IBM is also an aggressive outsourcer, moving at least 450 jobs—and perhaps three times as many—out of the United States during the last two years alone. That makes Rometty a practitioner of yet another practice Trump has decried.

Trump with his Secretary of State, former Exxon Mobil CEO Rex Tillerson.
Trump with his Secretary of State, former Exxon Mobil CEO Rex Tillerson.

Yahoo Finance examined employment levels for 38 companies with CEOs Trump has named as advisers, plus former Exxon Mobil (XOM) CEO Rex Tillerson, now Trump’s Secretary of State, who retired from Exxon earlier this year. On the whole, those companies have added more than 426,000 jobs during the time their current CEOs have been on the job. But there’s a large variation in each company’s performance on jobs—and lessons for Trump in which companies have been hiring, and which firing.

Here are the companies run by Trump advisers that have cut and created the most jobs under the current CEO:

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Startups account for an outsized share of the 426,000 new jobs created by the 38 companies on the list. Five startups still led by their founders—Dell Technologies, Under Armour (UA), Tesla (TSLA), BlackRock (BLK) and the Blackstone Group (BX)–account for 34% of the jobs created by the companies Yahoo Finance analyzed. That’s not surprising, since new, growing companies account for the vast portion of new jobs in the US economy.

The old, established companies on the list, by contrast, were more likely to reduce employment. Of the 14 companies that have cut jobs under the current CEO, nearly all are long-established Fortune 500 companies. And some big companies on the list added employees only through mergers or acquisitions, which are often job killers on net, since the new entity usually sheds workers with duplicate functions, leaving fewer workers than the two independent companies once employed.

Rometty and other CEOs who preside over job losses aren’t necessarily to blame. Big, established companies often face relentless pressure from shareholders to slash costs, maximize profitability, transform and keep up with nimble upstarts. Private companies often have more freedom to invest in future growth—at least until they go public.

Lockheed Martin (LMT), United Technologies (UTX) and Boeing (BA) are all defense contractors vulnerable to federal cuts in defense programs that went into effect as part of the so-called sequester in 2011. Tillerson’s Exxon had to slash workers and costs on account of the recent plunge in oil prices. Merck (MRK) has undergone a big reorganization meant to refocus the firm on hot fields such as biotechnology. And US Steel (USX) has been struggling with weak demand for steel and low prices worldwide. CEOs of those firms, in fact, can effectively advise Trump on the many challenges in the global economy that wreck profits and impede hiring.

Big job creators face challenges, too. Dell was once much bigger, and it only survived a wrenching downturn in the PC business when Michael Dell and a group of investors took the company private in 2013. Walmart (WMT) has grown despite constant criticism of substandard pay and working conditions for its employees. JP Morgan Chase (JPM) and General Electric (GE) both struggled during the financial crisis, with GE selling off its entire financial-services division afterward. Most of the CEOs advising Trump, in fact, can tell him how hard it is to run a business and keep Americans employed. Trump would be wise to listen to CEOs representing both groups of companies.

Confidential Newman tip line: rickjnewman@yahoo.com

Rick Newman is the author of four books, including Rebounders: How Winners Pivot from Setback to Success. Follow him on Twitter: @rickjnewman.