What Does the Carrier Deal Mean for American Manufacturers?

by Jeff Yoders on DECEMBER 6, 2016

No sooner than when Indiana-based manufacturing company United Technologiesannounced it would keep 1,000 jobs in the state last week — after it had initially planned to move 1,400 jobs to Mexico from its Carrier division — than 538.com almost immediately chimed in to say how it “was not the way to save U.S. jobs.”

The Washington Post warned “beware of Donald Trump’s con” and that Trump can’t “turn back the clock on decades of automation.”

We here at MetalMiner have been on the automation beat for quite some time and, while it’s true that the Carrier deal won’t end automation, we fear that some of our media colleagues may not be seeing the full picture here, either. We talked to Harry Moser, founder of the Reshoring Inititiative, for a different perspective on what this kind of deal means for American manufacturers.

He prefaced his comments by saying that most moves, including Carrier’s, ” are marginal or they would have already happened.” He went on to say that, “In effect Trump is reminding (Carrier owner United Technologies) that the company benefits immensely from U.S.: economic size and stability; military spending; legal system; etc. In most other countries, companies know these benefits and act on them. U.S. companies have done the most offshoring despite having a broad range of cost alternatives in the U.S… Most companies do not allow for all of the costs, risks and strategic factors they should consider when offshoring. The ‘nudge’ balances these off.”

Moser went on to say that Trump cannot make deals with every company and the right medium to make long-term solutions is to make the U.S. competitive, at least in our own market. Read Moser’s blog at Assemblymag.com for more on that.

Still, when it comes to the question of keeping manufacturing jobs in the U.S., why not “nudge” employers in this fashion? Why not remind them of the benefits they stand to enjoy by keeping jobs in the U.S.?

It’s always great to create an environment that’s friendly to investment in the U.S., but can’t individual incentives for companies considering leaving exist alongside newer, better regulations?

Trump later said he intends to push for a lower overall corporate tax rate, while at the same insisting that “any business that leaves our country for another country, fires its employees, [or] builds a new factory or plant in the other country, and … sell[s] its product back into the U.S.” would face a sizable 35% tariff.

Such a tariff may be impossible to enforce or even pass (it would essentially double the corporate tax rate for companies that move jobs overseas) and it will likely be walked back like so many other blusterous Trump opening statements, sure, but also, ask yourself this, could anyone even imagine such a proposal being mentioned even as a starting point for new regulations just a few weeks ago? That, alone, should tell you we’ve already come a long way in how we look at keeping manufacturing jobs in the U.S, even before Trump sets foot in office.