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Large Minnesota companies have difficult decision to make when it comes to Russia - Dailyforextrading

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Large Minnesota companies have difficult decision to make when it comes to Russia - Dailyforextrading

A lot of people, groups, and companies are now breaking ties with Russia over the invasion. For big multi-national companies, however, it's not that easy. Many larger companies here in Minnesota will have to make some tough decisions in the days ahead.


"The conversations that are going on in board rooms around the Twin Cities are not the typical conversations you would expect,” University of Minnesota business and law professor Paul Vaaler says. From a nationwide perspective, the U.S. and Russia aren’t very strong trade partners.

Vaaler says Russia usually ranks around 26th on the list of most important trade partners for the U.S. However, when you look at things from a state perspective, he says there is a much deeper connection between Russia and Minnesota.

"Two things Russia is known for its exports of oil and exports of agricultural commodities. And we have big agricultural commodity players here,” Vaaler explains. Cargill, General Mills, and ADM to name a few.

These companies and many others are now trying to balance profits and public perception."It's a lot like a trapeze act without a net right now,” Vaaler explains. And many of these companies also do business in Ukraine.

Vaaler says one example is Toro, which has a small irrigation equipment company in Ukraine, and a billion-dollar golf course equipment company in Russia.

"Cargill has substantial investments in both countries. They have a state-of-the-art terminal for the export of grain in the port city of Odessa.

They're the majority owner. They also have a multi-million dollar business doing what they do best, which is grain marketing and processing, in Russia, and they've had it since, well, the days of the USSR,” Vaaler explains.

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And Cargill recently made news when one of its ships carrying grain was shot at by the Russians. Shot at by a country you do billions of dollars in business with.

"Nobody wants to be known as the company that helped Russia continue economically so they could fight an invasion,” Vaaler says.

"It's reminiscent of IBM in the 1930s and early 1940s when IBM was selling punch cards and equipment to Nazi Germany, and helping them with their ghoulish activities," Vaaler says. "Nobody wants to be remembered that way."

For some companies, severing ties with Russia is as simple as canceling an order or two, or not selling products to one or two clients. But or big multi-national companies, with thousands of employees, hundreds of locations, and long-term contracts, it's more complicated.

"Multinationals are some of the most bindings of those connections, and so they're the hardest, but they're not impossible to break, or at least suspend," Vaaler says. "I think that's what we're going to be seeing over the next month if this invasion carries on,”

Professor Vaaler says a lot of big companies do business with Ukraine and Russia because they are emerging markets. Their economies aren't that big, but there's a lot of room to grow and make a lot of money down the road.


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But if this invasion carries on, he expects more companies will cut ties with Russia because the public pressure will get to be too much to ignore. Source: Kare11.

 

 

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