President-Elect Donald Trump has not even taken office yet but has already added one major achievement to his slate of feats: saving more than 1,000 jobs at the air conditioner manufacturer Carrier in Indiana. Carrier, the company that invented air conditioning, had announced major plans to move much of its manufacturing to Mexico due to high American labor costs and an unfavorable competitive landscape.
Without intervention, Carrier would have been just one more U.S. industrial manufacturer to take advantage of pacts like the North American Free Trade Agreement (NAFTA) to reduce labor costs by producing their products outside U.S. borders.
In the wake of NAFTA’s signing by President Bill Clinton in 1992, nearly one-third of all U.S. manufacturing has been lost to overseas moves and downsizing, leaving yawning chasms of unemployment and economic havoc in communities where large plants and assembly lines once employed hundreds or thousands of people.
Carrier was just one of several companies that made announcements to move much of their labor south of the U.S. border during the presidential campaign season. When Trump heard the news about Carrier, he vowed that his plans to enact trade tariffs and inhibit future free-trade agreements would reverse the trend of American companies — including Carrier — transferring their manufacturing operations outside the country.
Trump predicted that when faced with a possible 35 percent tariff on their goods made outside the U.S. and then imported into it, many firms would choose to keep their plants and production lines inside the nation’s borders.
After his presidential victory, it was one of Trump’s first acts — even prior to his inauguration — to fly to Indiana to meet with Carrier officials to find out if they understood his plans and to hear other specific grievances the company had. After talking to and meeting with Carrier management, Trump announced that of the anticipated 1,500 jobs that had been expected to go to Mexico, a little more than 1,000 will end up staying in Indianapolis at Carrier’s production facilities there.
President-Elect Donald Trump took to Twitter to thank Carrier for their decision, tweeting, “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.”
Employees at Carrier were overjoyed with the news. “I just couldn’t believe that this guy, all this stuff he said the whole campaign — he’s not even president yet, and he worked on this deal with the company,” said 14-year veteran Carrier worker T.J. Bray. “I’m just in shock. A lot of the workers are in shock. We can’t believe something good finally happened to us. It felt like a victory for the little people.”
Chuck Jones, the president of the United Steelworkers Union Local 1999 Chapter, said “I, for one, took it as a campaign ploy. We kept on hammering on Trump to uphold his campaign promises, and he got involved, and the man did what he promised he would do… I’m shocked. I’ve been through about eight or 10 plant closures, and this was a complete shock.”
Jones said he hadn’t supported Trump during his campaign and wouldn’t label himself a Trump supporter. “He was able to save 1,000 jobs, so the man is deserving of some gratitude in order to get done what he got done.”
Immediately after Trump and Vice President-Elect Mike Pence issued statements about the Carrier deal to the press, liberal politicians such as Vermont Senator Bernie Sanders and Democratic Senator Joe Donnelly of Indiana dug into Trump’s announcements, claiming that the deal had really been put together through a combination of regulatory incentives and tax breaks.
There was talk that it might set a bad precedent and that now other companies seeking similar deals could claim they also had plans to move to Mexico to receive the same benefits. There were fingers pointed at United Technologies, the parent company of Carrier, with skeptics claiming that the company had reversed its decision in order to remain in the good graces of the Trump administration.
United Technologies is one of the larger national defense contractors in America; approximately $1.5 billion of the firm’s annual research and development budget and 10 percent of the company’s $5.6 billion in annual revenue comes courtesy of the U.S. government.
Much of the anti-Trump media made a huge fuss over $7 million in incentives that was promised to Carrier in exchange for the company’s investing $16 million in renewing its Indianapolis facilities. But these protestations were mostly hype over not a great amount of money; if one calculates the approximate salaries and benefits of the workers whose jobs have been saved by Trump, the figure stands at close to $100 million per year.
Left out of much of the criticism is that no American president since perhaps Franklin Delano Roosevelt had made such a commitment to American jobs, and certainly, none has attempted a negotiation like this in the period before their inauguration.
In the last eight years, President Barack Obama has had ample time to negotiate similar arrangements with American firms but instead chose to emphasize globalism and the promotion of free-trade agreements like the Transpacific Partnership (TPP) that would have accelerated the transition of American jobs to nations outside our country’s borders.
A jealous Obama administration is attempting to downplay the announcement even as other Indiana manufacturers such as Rexnord and CTS Corp. have issued statements about similar impending labor transitions. Since 2015, more than 1,600 layoffs and plant closures have been OKed by the Department of Labor under the Obama administration. In November alone, U.S. manufacturing lost 10,000 jobs, according to payroll company ADP.
For Trump, the challenge now is to not just celebrate one reinvested company, but to start a wave of many more.
Regards,
Ethan Warrick
Editor
Wealth Authority
