Trump Delivers: Uses America’s Leverage to Save Indiana Plant
President-elect convinces Carrier to cancel Mexico move in sign of what's to come
Donald Trump took a brief moment this Thanksgiving to remind the country that one of his main priorities as president will be to save American jobs.
“I am working hard, even on Thanksgiving, trying to get Carrier A.C. Company to stay in the U.S. (Indiana),” Trump tweeted. “MAKING PROGRESS — Will know soon!”
The American people didn’t vote for Trump so he could give them platitudes about the free market — they voted for Trump because he promised to fight for American jobs.
The president-elect delivered less than one week later. “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 tweeted Tuesday evening.
“I will be going to Indiana on Thursday to make a major announcement concerning Carrier A.C. staying in Indianapolis. Great deal for workers!” Trump confirmed a few hours later, also via Twitter.
Of course, Carrier’s decision to keep production in the U.S. was ultimately made by United Technologies Corp — Carrier’s parent company. And if the president-elect had been unable to convince UTC to keep the Indiana Carrier plant in the nation with words alone, there are a number of paths he could have taken to ensure UTC kept its Carrier operation on U.S. soil.
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In addition to making air conditioners, UTC is also in the business of designing aerospace systems and aircraft engines. UTC has some incredibly lucrative contracts with the Pentagon — including the contract on the F-135 engine — and Trump could have potentially leveraged these contracts in order to convince UTC to keep its Carrier plant in Indiana.
This is the strategy that was favored by Vermont Sen. Bernie Sanders. “I call on Mr. Trump to make it clear to the CEO of United Technologies that if his firm wants to receive another defense contract from the taxpayers of this country, it must not move these plants to Mexico,” Sanders said in a statement posted on his website on Saturday.
Using the leverage available to the U.S. government to convince companies considering outsourcing jobs is likely to become a staple tool of the Trump administration, one that has not been deployed by recent administrations — regardless of party.
That pragmatic intervention in pursuit of saving American jobs is set to be the first, and most immediate, aspect of a three-pronged effort to transform the nation’s business climate.
The second element Trump has promised is a course of deregulation. The overwhelming number of overbearing regulations ushered in by the Obama administration were a main impetus for Carrier’s initial decision to move production to Mexico.
“Most of our competitors in the air conditioning business had already moved production to Mexico. Most of our supply chain had also moved to Mexico,” United Technologies CEO Gregory Hayes said on Nov. 1 during a talk at the Council on Foreign Relations.
“One of the driving forces of that has been regulation, where we’ve seen more than 200 new regulations introduced around efficiency standards for air condition[er]s, which have been driving the cost of the air conditioning systems up for the consumers. And the only way to be competitive in the marketplace was to reduce labor costs,” he explained.
The third avenue Trump has indicated his administration will pursue in order to save American jobs is a rewrite of the tax code.
Like many U.S.-based multinationals, UTC keeps a considerable amount of its revenue out of the country and far from the prying reaches of the IRS. In the final quarter of 2015, the company reported that over 85 percent of its $7 billion-plus in operating income was held by its overseas subsidiaries.
If the administration is successful in moving forward on all three points, the nation and American workers can expect many more wins like the Carrier plant in coming years.
Of course, pragmatic economic intervention of the kind that likely convinced UTC’s board is out of step with the laissez-faire approach the Establishment GOP has taken toward business in recent years.
It is likely that whatever steps Trump took to influence UTC to change its decision to offshore its Carrier production will be unpopular with doctrinaire free-market congressional Republicans like House Speaker Paul Ryan. However, the American people didn’t vote for Trump so he could give them platitudes about the free market — they voted for Trump because he promised to fight for American jobs.