Disney Stock (DIS) in Jeopardy?
Donald Trump has taken shots at several public companies in the last few months, one of which is Walt Disney Co (NYSE:DIS). The President-elect criticized Disney stock (DIS) for replacing American IT workers at its theme parks with foreign replacements.
The employee shuffle at Disney was chronicled by the The New York Times last year. 250 workers who maintained the parks’ data systems were laid off in October 2014. As if to add insult to injury, they were forced to train their replacements over the next three months.
Who were these replacements? According to the report, they were foreign workers brought in through an outsourcing firm and willing to work at lower wages.
The story resurfaced during the presidential race as part of a larger conversation on H1B visas and skilled immigration. (Source: “Pink Slips at Disney. But First, Training Foreign Replacements.,” The New York Times, June 3, 2015.)
“The H-1B program is neither high-skilled nor immigration: these are temporary foreign workers, imported from abroad, for the explicit purpose of substituting for American workers at lower pay,” Trump said in a statement. “I remain totally committed to eliminating rampant, widespread H-1B abuse and ending outrageous practices such as those that occurred at Disney in Florida when Americans were forced to train their foreign replacements.” (Source: “Donald Trump Zeroes in on Disney Layoffs in Bashing Guest Worker Visas,” Variety, March 4, 2016.)
Companies like Disney use H1B visas to slash their labor costs. It is supposed to help widen their margins and fatten their bottom lines, which in turn would drive a higher price for Disney stock (DIS). There is a clear incentive for them to take advantage of such programs.
However, Trump wants to shatter that paradigm by either cracking down on the use of H1B visas or else penalizing companies that don’t prioritize American workers.
While those ambitions were hollow when confined to the campaign trail, Trump’s elevation to President makes them very serious. Two of the affected workers at Disney have launched class action lawsuits against the company, meaning this issue is bound to resurface.
When it does, there is a real possibility that President Trump could make an example of Disney.