Owning our realities

We’re borrowing the above phrase from HCA Healthcare CEO Sam Hazen, who was asked on the hospital giant’s recent earnings call how his team will protect margins should patient volumes fall if health insurance tax credits expire at year’s end. Hazen said it’s too early to get into details since it’s not clear yet that those credits will actually go away. Then he added: “I will tell you this: We have a pattern of owning our realities, whatever they happen to be, and finding pathways forward.” In short: No wishin’ and hopin’ for circumstances to change; only pushing ahead.

—Geert De Lombaerde
 

• Optimism surfaces from several corners of the industrial world

• Trucking CEO says ‘confidence is coming back’ thanks to the OBBBA
 

Managing past the big mishmash

So what are some of the realities we should be owning? That hiring has stalled, an entirely logical response to head-spinning policy twists and turns. That capex is increasingly centered around data centers and related infrastructure. And that tariff-driven goods inflation is cutting into profits and showing up in statistics. But also: That demand for “stuff” is generally OK and in some cases even improving. It’s a mishmash of factors testing leadership teams keeping an eye beyond the next tariff announcement.

• How to show up as a leader during uncertainty

• Manufacturers aren’t ready for the work coming back to the U.S.
 

"These tariffs feel [...] kind of long-term
for us. Are they big enough to radically
change the footprint at this point
in time? It doesn't look like it."

Another case of owning reality from Ford CEO Jim Farley
on his team’s Q2 call. Responding to a question
about the potential stickiness of tariffs, his response also
touched on “how, fundamentally, everything seems to be 
changing in the car business” and how today’s
tariffs are likely to help regionalize to the industry.

• Ford adds $500 million to 2025’s expected tariff tab
 

Inflationary infiltrations

Tariffs were mentioned more than 50 times on Caterpillar’s Q2 call Tuesday morning. The first was CEO Joe Creed saying that they came in near the top of his team’s expectations for Q2 and are “likely to be a more significant headwind to profitability in the second half of 2025.” Other executive teams have said similar things lately and it feels like it’s time to seriously consider the idea that tariffs aren’t going away and may not even retreat much over the next few years.

• Alcoa CEO says lasting tariffs are required to boost U.S. production

• Three months later, how are tariffs affecting your business?
 

$100 million

Capex cuts that leaders of Diamondback Energy, Expand Energy and Devon Energy each announced recently 

Notable: In addition to trimming their ’25 spending plans by about 3%, the Diamondback and Expand teams also said they’re still investing in projects they can switch on in 2026 if/when commodity prices improve. Owning today’s reality while prepping for tomorrow’s.
 

What we'll be watching

Three weeks ago, our focus was on what leaders had to say about inflationary pressures in the goods sector. The verdict: If they’re not here yet in force, they’re coming. In the wake of Friday’s jobs thud, the next few weeks look to be about confirmation of trends in the BLS’ report and what that says about the consumer. In the other corner, will business investment follow through on the signs of hope from Q2 calls?