EDITORIAL: Companies should make good on hiring pledges

In the past year, corporate America, including some of Indiana’s top executives, has implored Congress to give it a tax cut—a move businesses said would translate into more U.S. jobs and investment.

Companies are starting to deliver on those promises, now that Congress has handed them what they wanted: business-friendly tax reform, including a reduction in the corporate tax rate from 35 percent to 21 percent.

The biggest headlines, to no surprise, have been generated by the behemoth Apple Inc., which is expected to bring an estimated $245 billion stashed overseas back to its home country, capital that will help fund a new corporate campus and the hiring of 20,000 U.S. workers.

Here’s hoping Indiana companies follow the same path.

There is plenty of reason for optimism. In a column in IBJ last April, Eli Lilly and Co. CEO David Ricks said “we clearly believe Indiana and the United States are great places to do business. But Lilly would be investing even more here if the U.S. House Republican blueprint for tax reform were already in place.”

Cummins Inc. CEO Tom Linebarger struck a similar tone in a statement issued in September, declaring that “comprehensive tax reform is critical and urgent. It will drive growth in our company and other U.S. companies, big and small, allowing us to add new jobs and strengthen our communities.”

Lilly, Cummins and other Indiana companies will have more to say in the coming weeks, when they report fourth-quarter results to investors and hold conference calls with Wall Street analysts. But Lilly Chief Financial Officer Josh Smiley told Business Insider his company has $9 billion in cash overseas that it will repatriate over the next few years. It expects to pay $3.5 billion in taxes, using much of the remainder to build up treatments in targeted therapeutic areas.

Exactly how the companies use repatriated funds will have a big effect on how much of an economic boost Indiana and the rest of the country get from the tax cut.

What’s already clear is that not all the funds will go toward building factories and hiring American workers. In his interview with Business Insider, Smiley said: “We’d love to use the cash to buy and partner to expand our pipeline.” And at the J.P. Morgan Healthcare Conference in San Francisco on Jan. 9, Ricks said: “We’re really focused on building the pipeline in our core therapeutic areas, and then we’ll return everything else to shareholders,” a goal it could accomplish through dividends or share buybacks.

Every company is different, of course, and CEOs need to deploy capital in ways that make the most sense for each business’s particular circumstances and its shareholders. But investing in people and facilities must be part of that equation. Corporate America promised that would happen. Now, it’s time to deliver.•

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