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CEOs faced tough choice in whether to leave Trump's manufacturing council

When Merck CEO Kenneth Frazier became the first member of President Donald Trump's American Manufacturing Council to resign in the wake of the president's equivocal response to the weekend's violent Unite the Right rally in Charlottesville, Va., he stood alone among his fellow titans of industry.

With the council since disbanded amid mounting CEO defections, Frazier's move Monday stands as a potentially pivotal moment in a divisive presidency: the day big business decided the price of proximity to the businessman president was too high.

"Nobody has resigned from the president's evangelical council," said Steve Schmidt, a longtime Republican strategist and vocal Trump critic. "The first group that has exhibited unambiguous moral leadership, though not all equally and not all proportionally, are America's leading CEOs."

Facing social media pressure, boycott threats and potential damage to their own reputations, several CEOs followed Frazier out the door. A number of companies issued statements condemning bigotry but kept their seats at the council table. Others, including Illinois companies Boeing and Caterpillar, were essentially silent.

When a trickle of resignations threatened to become a flood Wednesday, Trump pulled the plug on the manufacturing council, making the decision for the remaining CEOs.

"They had some tough choices to make, and some came down faster than others in terms of making those choices," said John Paluszek, a former senior counsel at the New York-based public relations firm Ketchum and founder of Business in Society, a website focused on corporate social responsibility.

Paluszek said the CEOs made overlapping personal and business calculations, weighing their own values, culture and experience against their company's history, brand and stakeholders, prompting Frazier, the sole African-American CEO on the panel, to "step forward with courage" to lead the charge.

The conundrum unfolded in days and likely led to some sleepless nights for the CEOs.

On Monday afternoon, Trump belatedly blamed white supremacist groups by name for the Charlottesville violence that led to three deaths, a delayed response that did little to assuage critics. Under Armour's Kevin Plank and Intel's Brian Krzanich followed Frazier's lead and resigned Monday night.

On Tuesday, Trump called CEO defectors "grandstanders" and tweeted that he had "many to take their place." Scott Paul, head of the Alliance for American Manufacturing, quit the council minutes later.

Trump's decision to double down Tuesday afternoon on his initial statement ascribing equal blame to the white supremacists as those protesting racism proved the corporate tipping point, with AFL-CIO President Richard Trumka posting his resignation on Twitter.

After Campbell Soup CEO Denise Morrison and 3M CEO Inge Thulin announced their resignations Wednesday, Trump tweeted that he was disbanding the manufacturing council and the Strategic and Policy Forum, "rather than putting pressure" on the remaining CEOs.

Formed in January, the manufacturing council initially consisted of 28 CEOs brought together by Trump to "promote job growth and get Americans back to work again."

Illinois participants included Dennis Muilenburg of Chicago-based Boeing and Doug Oberhelman, who retired this year from Peoria-based Caterpillar. Until the council's dissolution, Boeing would say only that Muilenburg planned to continue his membership, while Caterpillar remained silent.

Each company issued a statement after Trump shut down the group.

"Boeing fully supported the purpose and mission of the manufacturing council, and we will continue to advocate for government policies and actions that support U.S. manufacturing jobs, improve America's global competitiveness, and spur economic growth and prosperity for the country," the company said in a statement late Wednesday afternoon. "We also remain firmly committed to the core values upon which our company and country were built, including equality and respect for all people."

Earlier in the day, Caterpillar issued the following statement: "At Caterpillar, there is nothing more important than our values — at their core we embrace the diversity and inclusion of all of our people. We appreciate and celebrate our differences. Our values stand in stark contrast to the senseless acts of violence in Virginia. At Caterpillar there is no room for hatred, racism or intolerance."

The speed of events this week provided cover to CEOs who acted slowly, Schmidt said, but likely burnished the reputations of those who stood up early.

Tesla CEO Elon Musk resigned from the council in June after Trump announced that the United States would exit the Paris climate agreement. Other CEOs expressed disappointment in the president's decision but did not resign.

Schmidt, a top political strategist for President George W. Bush's 2004 re-election campaign who now serves as vice chairman of public affairs at New York-based public relations firm Edelman, said the CEOs had a lot to lose by leaving the president's council.

"Many of them have business before the federal government; many of them have consumer-facing brands," Schmidt said.

Trump's defiant assertion that there were some "very fine people" among the crowd of torch-carrying white supremacists marching in Charlottesville ultimately proved to be a deal-breaker for the CEOs.

"This is a real market indicator of where Trump stands in the country," Schmidt said. "Even though his policies as theoretically described would be in the material interests of most of these businesses, these businesses are walking away from him because of his toxicity."

Chicago Tribune's Ally Marotti contributed.

rchannick@chicagotribune.com

Twitter @RobertChannick

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