Carrier Plant Will Keep Jobs in U.S.A
From the earliest days of his campaign, Donald J. Trump made keeping manufacturing jobs in the United States his signature economic issue, and the decision by Carrier, the big air-conditioner company, to move over 2,000 of them from Indiana to Mexico was a tailor-made talking point for him on the stump.
On Thursday, Mr. Trump and Mike Pence, Indiana’s governor and the vice president-elect, plan to appear at Carrier’s Indianapolis factory to announce a deal with the company to keep roughly 1,000 jobs in the state, according to officials with the transition team as well as Carrier.
Mr. Trump will be hard-pressed to alter the economic forces that have hammered the Rust Belt for decades, but forcing Carrier and its parent company, United Technologies, to reverse course is a powerful tactical strike that will hearten his followers even before he takes office.
“I’m ready for him to come,” said Robin Maynard, a 24-year veteran of Carrier who builds high-efficiency furnaces and earns almost $24 an hour. “Now I can put my daughter through college without having to look for another job.”
It also signals that Mr. Trump is a different kind of Republican, willing to take on big business, at least in individual cases.
Big day on Thursday for Indiana and the great workers of that wonderful state.We will keep our companies and jobs in the U.S. Thanks Carrier
— Donald J. Trump (@realDonaldTrump) November 30, 2016
And just as only a confirmed anti-Communist like Richard Nixon could go to China, so only a businessman like Mr. Trump could take on corporate America without being called a Bernie Sanders-style socialist. If Barack Obama had tried the same maneuver, he’d probably have drawn criticism for intervening in the free market.
In exchange for keeping the factory running in Indianapolis, Mr. Trump and Mr. Pence are expected to reiterate their campaign pledges to be friendlier to businesses by easing regulations and overhauling the corporate tax code, according to a spokeswoman for Mr. Trump.
The state of Indiana also plans to give economic incentives to Carrier as part of the deal to stay, according to local officials.
The message from Mr. Trump that captivated the Carrier workers — keeping manufacturing jobs in the United States after decades of losses to overseas factories and automation — resonated throughout the Rust Belt. That promise, plus his opposition to pacts like the North American Free Trade Agreement, were key reasons he was able to edge out Hillary Clinton in states like Pennsylvania, Michigan and Wisconsin.
We are pleased to have reached a deal with President-elect Trump & VP-elect Pence to keep close to 1,000 jobs in Indy. More details soon.
— Carrier (@Carrier) November 30, 2016
Political symbolism aside, saving 1,000 Carrier jobs doesn’t loom so large in an economy that’s created an average of 181,000 jobs a month this year, noted Jared Bernstein, a liberal economist who served as adviser in the Obama administration from 2009 to 2011.
Still, he confessed a grudging admiration for Mr. Trump’s political jujitsu. “If I weren’t so scared of the damage a Trump administration might do, I’d find it refreshing to see an administration fighting for factory jobs like this,” he said. “That said, no one should confuse what Trump is doing here with sustainable economic policy.”
Over the long term, and for less prominent firms, the temptation to move to cheaper locales for manufacturing will stay great, said Robert Reich, a prominent liberal Democrat who served as secretary of labor in the Clinton administration.
“Memories are short but the economic fundamentals remain the same,” he said. “Wall Street is breathing down companies’ necks to cut costs, and the labor savings in Mexico is too great.”
Mr. Trump first announced he was talking to Carrier on Thanksgiving Day via Twitter, which the company quickly confirmed. The discussions have continued this week, and with a tentative deal in hand on Tuesday, transition officials scheduled Mr. Trump’s and Mr. Pence’s visit to Indianapolis.
“I didn’t think it would be this quick,” Mr. Maynard said.
While the standoff loomed large in the lives of its employees in Indiana, for United Technologies the forgone savings is tiny — equivalent to about 2 cents per share in earnings.
“Every penny counts, but if we step back and I’m looking at earnings of $6.60 per share this year, 2 cents is an easy concession if the president-elect listens to some of the company’s bigger concerns,” said Howard Rubel, a senior equity analyst with Jefferies, an investment banking firm in New York.
When Carrier announced in February that the two Indiana factories would be closing, it did offer benefits to employees facing layoffs, including paying for them to go back to school and retrain for other careers. Even with that, however, once the layoffs were to begin in mid-2017, most of the workers would have had a hard time finding jobs that paid anywhere near the $20 to $25 an hour that veteran line workers earn.
Carrier is best known for its air-conditioners, but it also sells a variety of other heating and cooling equipment for homes and businesses, like the gas furnaces and fan coils for electric furnaces made at the Indianapolis factory. The jobs in Indiana Mr. Trump has referred to are in two separate sites — the Carrier plant in Indianapolis, with 1,400 employees, and a United Technologies factory in Huntington, Ind., with 700.
While Carrier will forfeit some $65 million a year in savings the move was supposed to generate, that’s a small price to pay to avoid the public relations damage from moving the jobs as well as a possible threat to United Technologies’ far-larger military contracting business.
Roughly 10 percent of United Technologies’ $56 billion in revenue comes from the federal government; the Pentagon is its single largest customer. With $4 billion in profit last year, the company has the flexibility to find the savings elsewhere.
Members of Congress have been pressing to punish big military contractors if they move jobs outside the United States.
Many industrial companies face intense pressure from Wall Street to increase profits, even when the economy grows slowly — a major reason United Technologies decided to move.
That won’t change after Mr. Trump takes office — especially when hourly pay in the Indianapolis plant is equivalent to what workers in Mexico make in a day.
“This is a spot solution,” said Mohan Tatikonda, a professor at the Kelley School of Business at Indiana University. “If it goes through it helps some Carrier employees for a period of time, but it doesn’t address the loss of manufacturing jobs to technological change, which will continue.”
SOURCE: NYTimes
I read a large part of the deal, 1200 production jobs are going to Mexico, Carrier gets $7 million package to keep here what they were keeping already, research and development will stay, Carrier is a $24 billion a year company, and money is given for what?
These worker’s here make $25 a hour and now they are going to a country for $4 dollars a hour, nice work, now If Trump will just make his product in the USA
How many jobs are really staying in the U.S.? I’ve heard varying numbers, some as low as 800. And for HOW MUCH in tax payer paid incentives? I doubt Americans are going to benefit much (if at all) from this rather inept businessman’s deal. Herr Drumpf is not a successful good ol’ boy and champion of the American worker. He’s a plutocrat who routinely refuses to pay suppliers and employees–and is proud of it.
For starters, the populist appeal of the deal far outweighs its practical effect. Carrier still intends to send 1,300 jobs to Mexico (Mr. Trump said Thursday that more than 1,100 jobs will be saved, but that includes 300 positions that never were scheduled to leave the country). Over all, factory employment in Indiana is down by more than 20 percent since 2000; nationwide, it is down by nearly 30 percent. Stopping the outsourcing of jobs is a worthy goal, but it does not address the underlying trends in technology and public policy that are behind the demise of blue-collar jobs.
It would be naïve to believe that United Technologies — which had estimated it would save $65 million a year by moving the Carrier jobs to Mexico — would give in to Mr. Trump without an expectation of something in return. The State of Indiana has reportedly offered the company $7 million in tax breaks over 10 years to keep the jobs in the state. In addition, Mr. Trump is expected to ease up on his campaign pledge to slap a 35 percent tariff on Carrier air-conditioners imported from Mexico, a nice concession, given that Carrier will still be outsourcing more jobs than it is retaining in the deal.
I say we cautiously observe and see what really shakes out. I am more than willing to give Mr. Trump a chance. He can in no way be any worse than Obama. No matter how hard anyone tries, jobs will continue to be replaced. But now, instead of offshoring, it will be mechanical. New machines/robotics are being developed at a rapid pace. This is just economic evolution, and has been on the march since the steam-shovel. Get well versed in machinery, and you will have a job for as long as you want it.
Some deal. Those Carrier workers who kept their jobs can thank the taxpayers of Indiana who are signing their paychecks. Every corporation in the U.S. will sign on for this one. Subsidizing multibillion dollar companies does not make America great, it makes it poor.