Most Recent Articles In Government and Trade
Latest Government and Trade Articles
- First Round Goes to Wal-Mart, Skechers in Converse Trademark Hearing
- Key Issues Detailed in Retail Sourcing Report
- British Retailers Unfazed So Far by Calais Immigrant Crisis
More Articles By
Let’s get the economy going.
This story first appeared in the November 8, 2012 issue of WWD. Subscribe Today.
That was the overriding message from the fashion industry on Wednesday following President Obama’s election to a second term. Job creation and avoiding the “fiscal cliff” that could send Wall Street reeling and consumer confidence plummeting after recently reaching highs were the top solutions to get there. Executives also want Obama to create more tax incentives for U.S. manufacturing and settle the income tax debate, while easing regulations and promoting more free trade. Reducing partisan tensions and dealing with immigration policy qualified for many executives’ wish lists as well.
Obama will have little time to celebrate his second-term victory over Republican challenger Mitt Romney as he pivots from the grueling campaign to face a divided Congress and a still-high — 7.9 percent — unemployment rate.
Congress is scheduled to hold a lame-duck session starting next week and at stake as part of the fiscal cliff are the expiring tax cuts enacted under former President George W. Bush and deep spending cuts to federal agencies and the Pentagon that will take effect unless action is taken. The path to compromise in Congress will be complex, and if the past four years are any indication, the President will have a difficult time overcoming gridlock in Washington.
With Republicans retaining their majority in the House, Obama will need to work more closely with Speaker John Boehner (R., Ohio) to craft a compromise on reining in the soaring federal debt, which has grown about $1 trillion a year, and trying to jump-start what until now has been an anemic economic recovery. Democrats strengthened their majority in the Senate but did not reach the 60-vote threshold needed to overcome Republican filibusters.
While Obama has not fully outlined his second-term priorities, beyond getting the economy back on track, he has indicated he would like to turn to immigration reform, climate change and federal investments in education and manufacturing. He has touted economic solutions, such as an elimination of tax cuts for families with incomes above $250,000 and individuals with incomes above $200,000, a reduction in the corporate income tax, elimination of tax breaks for companies that move operations offshore and more scrutiny of trade agreements and unfair trade practices, combined with more market-opening trade initiatives.
For many industry chief executive officers, bringing down the federal deficit and restoring confidence in the economy are the top priorities for an Obama second term.
Here, what industry executives had to say about what the President’s agenda should be as he maps out his second term:
Terry J. Lundgren, chairman, president and chief executive officer of Macy’s Inc.:
“With the election now behind us, it’s time for our elected representatives in Washington to come together to address our country’s most pressing problems. Primary among them is avoiding the fiscal cliff and reducing our national debt. These are not Democratic or Republican problems — they are American problems that affect every individual and industry, including fashion and retailing. Financial uncertainty and excessive debt stifle growth and innovation, and we must overcome these issues if we are to continue to create jobs in America — which is what retailers do so consistently. The lame-duck Congress has a major role to play, as does the White House. We in the business community are prepared to be supportive of genuine long-term solutions that will help our nation to prosper. Let’s get to work.”
Diane von Furstenberg, designer, president of Council of Fashion Designers of America:
“The most important thing is America wants to be united. We don’t want to be polarized. Everything else will take care of itself. United makes us stronger.”
Stephen I. Sadove, chairman and ceo of Saks Inc.:
“This country is facing some serious long-term fiscal and other challenges, and it is imperative that the President take the lead in consensus building and collaboration — working with both parties — to address these issues. It is time for action. For retail, as in many industries, the number-one priority is jobs creation. There are many opportunities to spur this growth — from infrastructure rebuilding to relaxing restrictions on tourists’ visas.”
“He should make sure his relief efforts [for the Hurricane Sandy victims] are successful, first and foremost. I think it would be great to see manufacturing come back to his country at some point. I think it would provide jobs for people who could then go out and shop. Jobs will trigger the economy.”
Andrew Rosen, ceo of Theory:
“The first thing Obama should focus on is bipartisan politics. He needs to bring the parties together to work on resolving the issues of our economy and our country. I think there are two things that are important in helping our industry. One is to lower or eliminate duty rates on imported fabrics, so that companies would be incentivized to manufacture clothing in the USA. Secondly, I think that he should make it easier to obtain visas for tourists from China and Brazil so they can travel to America to shop and get more exposed to American fashion.”
Kevin Burke, president and ceo of the American Apparel & Footwear Association:
“His first priority should be taking care of the fiscal situation…and getting a deal cut with Congress. The President ought to take a strong leadership role and bring the House and Senate leaders together before Congress convenes; take them to Camp David and reach a deal. All of them will be hurt come January if they don’t do something to deal with the tax cut issues and spending cuts. I believe the economists who say the economy will slip back into a recession if they don’t do something. From a clothing and footwear industry perspective, the more confidence there is in the economy, the more we will be able to sell.…But the worse the economy is, the worse our sales will be.”
Matthew Shay, president and ceo of the National Retail Federation:
“The U.S. needs public policy that encourages economic growth and removes barriers to job creation. We want to see health-care reform that actually reduces costs instead of imposing mandates, tax reform that makes U.S. businesses more competitive, sales tax fairness that puts Main Street and online retailers on a level playing field, neutral labor policy that doesn’t favor either employers or unions over the other, credit and debit card swipe fees based on transparency and competition rather than monopolies and removal of trade barriers that drive up consumer prices.”
Kenneth Cole, designer, founder and ceo of Kenneth Cole Productions Inc.:
“He campaigned hard and should take a moment to revel in his reelection triumph. After doing that, he needs to focus on creating a unified government and finding a way for both sides to work together.”
“I think he should focus on leaving a legacy of limiting how much money can be spent on campaigns and the amount of time that campaigning should take place….Manufacturing, for the most part, is not a key part of our industry as a country. We’ve gone off into service and other areas, and technology is obviously a very important factor for the future. I work with a technology company [on a new project] that is helping heads of governments create industries. There’s a company that’s connecting with Brazil to train all the students, especially the poor, underprivileged students, to do back-end coding….I think there are measures like that we should look at for this country.”
“First is to bring the nation together to repair whatever damage was done during the election. He should also be boosting the economy and giving relief to people who got hit by Hurricane Sandy. I believe that the fashion industry is not an American industry, but an international industry. He has to remove all borders between countries to be able to trade with each other and remove all duties, taxes and red tape.”
E. Scott Beattie, chairman, president and ceo of Elizabeth Arden Inc. and chairman of the Personal Care Products Council:
“People elected him in 2008 and to some degree last night because they believe he can implement real change. His first really bold action should be to embrace a nonpartisan framework like Simpson-Bowles to help change the economic and fiscal predicament we’re in. Whether you’re a Democrat or a Republican, people are anxious for bold change and a solution moving forward. If we have the political strength and boldness to trust that the American people are willing to make sacrifices — and make adjustments — we could put the United States on an incredible track for the next 50 years.”
Vince Camuto, ceo and chief creative officer of Camuto Group:
“You have to fix the economy and build jobs but first you have to pull Americans together, because Americans together can do anything. I would spend $1 trillion on infrastructure, but not on special interests. You should say to the American people, ‘In five years you will see the difference,’ and put everyone to work. I’m embarrassed when you see the airports here. And the roads are horrible in this country.”
Bud Konheim, president and ceo of Nicole Miller:
“If he is a serious leader, he has nothing to lose by olive-branching the other side. During the election, both sides were using hate and it had been ratcheted up so much that I don’t see how anyone could work with anyone. He can make it really good to be in business — any business, not just fashion — by supporting people who run the businesses and work in businesses, the unions — everyone. Fairness is the one standard we don’t have. It’s not just our industry, it’s every industry.”
Jeffrey Lubell, chairman, ceo and chief merchant of True Religion Apparel Inc:
“We will, of course, always create the fashion that people want, but our customers need to feel confident about the economy for us to be successful. Fashion is generally discretionary, which makes economic uncertainty challenging for our business. As long as we can maintain economic momentum moving forward, the fashion industry will continue to thrive.”
Julia Hughes, president of the U.S. Association of Importers of Textiles & Apparel:
“The first thing is obviously jobs and the economy, and moving forward on the Trans-Pacific Partnership talks [that aim to lower trade barriers among 11 countries]. The Trans-Pacific Partnership is a critical negotiation and one that we think the administration needs to take a fresh look at…and negotiate a 21st century agreement that supports the business of U.S. manufacturers as well as American brands and retailers….Let’s look at those products that are made in the U.S. that need a more restrictive rule of origin in order to survive, and otherwise let’s craft an agreement that is going to be in place permanently that will allow companies to grow and be competitive on a global scale.”
John Howard, ceo, Irving Place Capital:
“He’s got to focus on the economy. The American consumer — that’s the generator that keeps the whole world going and we need to get our economy in better shape. The fashion business is all bound up with the general economy and the American consumer. Nothing works when people are uncertain about their futures and uncertain about the world they live in, so they clam up and they don’t spend.
“We desperately need him to put a comprehensive plan into action to deal with the grave issues and effects we are seeing and experiencing with climate change. Hurricane Sandy is only one example. There is a serious toll being taken on people, property and the economy as a whole. The longer we ignore these issues, the more it will cost us with lives, devastation, as well as financial strain.
“For the fashion industry specifically, he needs to keep or build domestic manufacturing to incentivize brands. Bringing this infrastructure back is a great way to bolster the economy as well as create jobs for many Americans. Almost all of my company’s production occurs domestically and I have largely seen the benefits in quality, shipping times and flexibility, as well as positively impacting the environment through using less fossil fuels by not importing production goods from other countries.”
Mark Lee, president and ceo, Barneys New York:
“I am more than thrilled the President won reelection. Considering the division on national ideology will persist, it is critical that the President reach across the aisle to build consensus and compromise on dealing with job creation and the fiscal cliff, or what is really a fiscal ‘hill.’
“What I mention above will best serve all industries and prevent us from slipping further backward or stagnating the recovery. Specifically for our industry, I believe that one support would be to relax and reform visa restrictions into the USA, enabling us to attract the sophisticated international tourists including Mainland China.”
“The first priority is getting the economy up and running and strong. I’m really hoping we can have an open dialogue with the White House in an even bigger way, and not just on the smaller community level. We were getting some push-back that [domestic manufacturing] is a local issue, but it isn’t really. I would love for the Obama administration to embrace the fashion industry as a more national issue, and not local. We have had meetings and interactions, but more with different members of Congress and Senate. I’d love to have a working relationship with the White House on how to keep American manufacturing for clothing here.”
David Jaffe, president and ceo of Ascena Retail Group Inc., parent of Dressbarn, Maurices and Justice:
“There’s really been no movement on the national debt, and we have to come up with a plan to attack that. This feeds right into the nation’s ability to restore consumer confidence. If we get consumer confidence up, that’s good for retail, and what is good for retail is good for the country. Everybody is concerned about health care. That is a big issue because it affects every retailer. It would be nice to have a little more clarity on that to help us as retailers.”
Bill Hughes, senior vice president for government relations at the Retail Industry Leaders Association:
“I believe that he should communicate with Congress on how he wants to solve the fiscal cliff issues and provide leadership on that matter. There is little that is more important to our economy right now than dealing with all the expiring tax provisions, the debt limit…and particularly for retail. He ought to work with the government and be supportive of getting federal e-fairness legislation [the collection of Internet sales tax] enacted. He should continue to work for a successful conclusion of the TPP talks, which will set the model for other trade talks to allow trade to work to the benefit of this country. He can follow through on fundamental tax reform to lower the rates and broaden the base….On health care, it is clear the Affordable Care Act will remain the law of the land and the effective date for employer insurance provisions is Jan. 1, 2014. We need regulations to implement those requirements as soon as possible so businesses can prepare to continue to provide health insurance for their employees.”
Sandeep Mathrani, ceo of General Growth Properties Inc.:
“I hope the President will put his support behind the Main Street Fairness Act. As it stands, online retailers have an unfair tax advantage over traditional brick-and-mortar retailers. Brick-and-mortar retailers are required to collect sales tax from shoppers at the point-of-sale. Online retailers do not have to collect sales tax at the point of sale unless they have a physical presence in the state where the shopper lives; but at the same time, the consumer is still required to pay sales tax. Where’s the fairness when one retailer is required to collect sales tax and another, selling the same exact item, is not? Communities and cities depend on sales taxes collected to pay for life-safety services such as law enforcement, firefighters and other governmental-civic services. These sales taxes make our communities better places to live. There are so many cities and municipalities across the country that are suffering because of budget and tax shortfalls; residents are left with higher taxes and other burdens. Main Street Fairness would put dollars back in city and civic budgets.”
Adam Bernhard, ceo of HauteLook:
“The federal government needs to come in and make all Internet businesses collect and pay sales tax no matter where your company is based and no matter where the purchase is made. That will not only level the playing field for all Internet businesses no matter where their offices are situated, but will also increase the tax dollars that the states will be able to use because currently individuals are not remitting their sales taxes….There is an unfair advantage to certain companies who are negotiating state by state for their own tax rules.”
Max Azria, designer and ceo of BCBG Max Azria Group:
“President Obama needs to work to open up the markets globally — U.S. export and import — and work on our relations with China. More generally, he needs to create jobs so people can buy fashion.”
Efraim Grinberg, chairman and ceo of Movado Group Inc.:
“Coming out of this election, I would love to see leadership from President Obama with a greater focus on a pragmatic approach to growing the economy and removing the uncertainty. There is always a lot of posturing in Washington and appealing to different constituencies with very little focus on growth and building consumer confidence. It’s time to end the campaigning on all sides and get on with running the country.”
Doug Ewert, ceo of The Men’s Wearhouse Inc.:
“Number one: Job growth.”
Lisa Harper, chairman and ceo of Hot Topic Inc.:
“They have to remove the uncertainty [of the fiscal cliff]. They cannot play politics with this….It is hurting consumers. It is hurting companies….Companies are hesitating to make investments because of the level of uncertainty. Continued improvement in the economy is the number-one objective. We can’t risk falling back into another recession or having growth slow. It is already at a very slow rate. [He should do] anything he can do to restore the confidence and comfort of the middle class that the country has a strong future ahead of it. That means dealing with entitlement programs. It means dealing with taxes. It means having a pro-business stance.”
Noel Beasley, president of Workers United:
“The first thing he should focus on is how to deal with the lame-duck Congress and the cliff we are coming up against. I think he needs to focus on the message that the election sent…the idea that lower taxes for the wealthy creates good jobs for the economy was resoundingly rejected by the electorate. It is going to take a very, very focused and disciplined approach to make cuts where they are necessary and appropriate but it doesn’t mean taking a meat ax to programs that working people depend upon. [U.S. manufacturing] is what drove the successful economy in the Sixties and Seventies, before trade policies in the Eighties and Nineties took so much manufacturing offshore. That undercut the viability of the middle class and the working class.”
Gela Nash Taylor, co-owner of Skaist-Taylor:
“When I think on what really put him in office it was the Latino vote. Anybody who manufactures in Los Angeles understands that the people who work in sewing factories are Latino [immigrants]. Those sewers are integral to manufacturing in America and I love that community; it’s our industry. They should be treated as citizens and not criminals. The amazing people who work here should be allowed to stay here legally, pay taxes here and go home [to their native countries] if they need to….I think that the Amnesty Act in California could make a big difference.”
Pamela Skaist-Levy, co-owner of Skaist-Taylor:
“The reform I’d like to see is to help entrepreneurs access capital and borrow money from the banks. There can’t be such tight restrictions. That’s got to ease up. Obama did so much to help bail banks out. Now they need to do something for the American people and start loaning money back.”
Daniella Clarke, designer and ceo, Frankie B.:
“I’ve always thought that the regulations on small business owners make it exceptionally difficult to be in business. I think creating incentives and easing up on all the regulations might really help. The requirements from both [California] and federal agencies for registrations, licenses, permits and insurance can be daunting to any new business owner, and even for an established business owner it requires a designated person to maintain all those requirements. It’s not just about making payroll but also small businesses have to contend with employment taxes and employment benefit packages all while trying to stay competitive with companies that import.”
Steve Birkhold, ceo of Lacoste licensee Devanlay US:
“First and foremost, President Obama needs to focus on reuniting the country. This election has created a huge divide that must be narrowed for the nation to move forward in a positive way. President Obama should also concentrate efforts on helping small business succeed and start hiring again. There are certainly trade issues to address in order to reduce the amount of anxiety in foreign markets. Most urgent for the industry, however, is to drive consumer spending and create confidence in the economy.”
“I would love to see a real workable plan to bring the clothing manufacturing business back to life in America. I’m from Rochester, N.Y., and the thought of the Hickey Freeman factory there being in danger of closing really concerns me — I know how much that community needs those jobs and how proud they are there to be one of the last remaining manufacturers of tailored clothing in America. The other real bee in my bonnet is someone needs to seriously negotiate with China over their trademark piracy laws, or lack of them.”
Tom Florio, ceo of Advanstar Fashion Group:
“The President should continue his work with the Commerce Department’s Made in the Americas program — undersecretary [Francisco] Sánchez is doing a good job — and with trade agreements to offer tax incentives to buy materials from American manufacturers.”
Gary Wassner, co-ceo of factoring firm Hilldun Corp.:
“The first thing is jobs. What’s disincentivizing to our industry is the high cost of running a small factory. Small businesses are superimportant to our economy and our industry is comprised of small businesses. What he can do for our industry is provide incentives for small businesses to hire on the manufacturing end so they can increase their employee base. He can do that through tax incentives, such as removing duties on imported fabrics for the manufacturing of garments or other credits to business to help lower the cost of manufacturing here.”
David J. Freschman, ceo, FashInvest:
“On a national level, the first thing Obama should do is focus on the fiscal cliff. With the holidays, there’s only a 30-day window to fix everything….He needs to get to work. That’s the sign of a leader. He should also focus on the jobs issue simultaneously. The economy has a lot of cottage industry businesses, small businesses looking to survive and not necessarily to build into a big business. You can see that in the fashion industry….He can also reassure the small business market that he’s there for them, such as some R&D investment credit. In the fashion industry, innovation credits can be an interesting idea.
James Schaye, ceo of Eaton Hudson Inc.:
“The fiscal cliff is the first thing the President needs to resolve. That is imperative because it is connected to so many unanswered questions involving taxes and employment….In our industry, speed to market is a big issue, especially with apparel manufacturing coming back to our shores, such as on the West Coast where the cost of labor is lower. The President can help with that by providing tax incentives and working with various groups to stimulate manufacturing here.”