A CEO's Hopes For Corporate Tax Reform
Originally published on Sat January 29, 2011 9:10 am
SCOTT SIMON, host:
Eric Spiegel knows about corporate taxes. He's the chief executive officer of the Siemens Corporation. That's the U.S. division of the multinational engineering company Siemens AG that's based in Germany. Mr. Spiegel is traveling in Mexico but he's found a few minutes to talk with us about the Obama administration's plans for corporate tax reform. Mr. Spiegel, thanks so much for being with us.
Mr. ERIC SPIEGEL (Chief Executive Officer, Siemens Corporation): Thank you, Scott, for having me on.
SIMON: And first, let's understand the particular nature of your company. Is most of your corporate tax burden in the U.S. or Germany?
Mr. SPIEGEL: The U.S. is by far is the largest market for Siemens. It's basically about a quarter or 25 percent of everything that Siemens does globally. And the company globally is well over $100 billion a year, so it's a pretty good size business here in the U.S.
SIMON: And what's the difference in corporate tax rates between the U.S. and Germany?
Mr. SPIEGEL: I'm trying to think of the exact number but it's a substantially higher. I mean, I think the U.S. has the second- or third-highest corporate tax rate among developed countries.
SIMON: Given the nature of the kind of business Siemens does, do you ever contemplate moving more of your assets out of the United States?
Mr. SPIEGEL: Well, it's a big issue. Since I, you know, since I've been in the CEO role for just over a year, I can think of at least several big decisions that looked at putting assets either in the U.S. or in Asia or in other parts of the Americas and/or Europe. And, you know, when you run through the analysis of what these big investments cost and what the profitability of them is going to be, you know, corporate taxes obviously plays into the decision as to where you're going to locate these things.
Despite the fact that we're a player here in the U.S., there's no doubt that that has limited to some extent businesses that we would put here if the corporate tax rate were lower.
SIMON: It might be less of a matter if you're tempted to relocate the asset you have here elsewhere, than it's you dont want to put further assets here.
Mr. SPIEGEL: Yeah, I can think of at least a couple of cases where there was a decision not to put something here and put it somewhere else, just because the total economics. Now whether the corporate tax rate alone would have swung the decision, I think in some cases it probably would.
So, you know, we are building a new business. We just added four or five new manufacturing facilities in the last year here, because a lot of the things that the president talked about in his State of the Union the other night. I mean we've just broke ground on a new gas turbine plant in Charlotte, which is going to be aimed at not just the U.S. market but also export. We just are expanding are rail facility in Sacramento for light rail and medium-speed rail. We just expanded our wind facilities - or opened new wind facilities in Hutchinson, Kansas and Fort Madison, Iowa. And those were all decisions based on the size of the market here.
And I think this is a good time, by the way, the revitalization of manufacturing - it's starting now. In the first quarter of this year, our orders were up 23 percent and our sales were up 24 percent. And thats just a huge jump over last year. And we currently have 3,000 open jobs in the U.S. right now that we're trying to fill. And we're finding difficulty because a lot of those jobs are in engineering, science and technology, and things.
But it really bodes well, given - cause we're a pretty good proxy for the U.S. where so many industries including, you know, health care and most of the major industrial, and oil and gas, and energy and power. When our orders are up 23 percent, that typically means sales - translates into sales about 18 months down the road.
SIMON: Jeffrey Immelt, the CEO of General Electric, is going to be chairman of President Obama's job council. General Electric is, guessing, might even be your major competitor. Do you think he understands all this?
Mr. SPIEGEL: Yeah, I've been - Im on several committees and things in Washington with Jeff. And, you know, I think the good news about his appointment is that I think he understand a lot of these issues. Im hopeful that he can have a positive impact on helping to get jobs moving again and also to get some of these policies.
I think once you get the policies in place, you'll get companies making investments because investments require understanding the long term, not just putting some stimulus money in place or some investment tax credits. Those are short-term fixes. We really need some longer term policies in place. And then, you know, I think when I heard the president saying we need to set a better environment for business here in the U.S. If we do that and everyone understands what the rules are, then you're going to see people make investments. Then the market will work.
SIMON: Mr. Spiegel.
Mr. SPIEGEL: Yes.
SIMON: Are you a little surprised to hear this proposal from a Democratic administration?
Mr. SPIEGEL: Yeah...
(Soundbite of laughter)
Mr. SPIEGEL: I have to admit I've been in several events over the past couple of years where the president and other senior people for the administration have been in talking. And I've been at some of these meetings where people have raised the question of corporate tax, and it didnt get much discussion.
(Soundbite of laughter)
Mr. SPIEGEL: I have to admit. You know, I've heard a lot of people say that a lot of the things he said in his State of the Union were things he's been talking about for quite a while. But I think this issue around the corporate rate and trying to find ways to reduce it, I think is really something new that I haven't seen the administration engaging, at least in the meetings that I've been in and some of the people I've been talking to.
So I think it that was definitely a change of course. I think the tone from the president sounded more pro-business than it has in the past. I think, you know, the devil is going to be in the details. It's going to be all about the execution now.
SIMON: Eric Spiegel, CEO of the Siemens Corporation, thank you so much.
Mr. SPIEGEL: Thank you.
SIMON: You're listening to WEEKEND EDITION from NPR News. Transcript provided by NPR, Copyright NPR.