Although the move by Carrier to keep nearly 1000 manufacturing jobs at its AC plant in Indianapolis will boost the local economy, the economics of such a decision needs to be studied since this could lead to significant price rise of U.S. manufactured goods. While aggressive posturing has given Trump his signature style, the economics of such posturing have costs attached.
In a positive development which underscores Donald Trump’s effect on U.S. companies and the local economy, United Technologies Corp has reached a deal with the President-elect and Vice President-elect Mike Pence, to keep nearly 1,000 jobs at Carrier Corp’s air conditioner plant in Indianapolis, thus almost halving the number of planned U.S. jobs which were set to move to Mexico.
The deal is a victory for Trump, who had campaigned hard to keep U.S. jobs in the country and had specifically come down hard to Carrier for shipping jobs overseas. His message had appealed to blue-collar workers in the U.S. Midwest.
“I will be going to Indiana on Thursday to make a major announcement concerning Carrier A.C. staying in Indianapolis,” tweeted Trump late on Tuesday. “Great deal for workers!”
As per a source familiar with the matter at hand, Carrier along with Trump and Pence will officially announce the terms of the deal on Thursday.
United Technologies, Carrier’s parent, has strong incentive to maintain good relations with the incoming administration given that it could generate as much as $57 billion from U.S. military contracts at its Pratt & Whitney and UTC Aerospace Systems units.
In the campaign trail, Trump had promised to keep U.S. jobs from moving overseas by either withdrawing from trade agreements, renegotiating and imposing tariffs on foreign-made goods. However, it is to be seen how he can reverse broader trends which has resulted in the loss of more than 5 million U.S. manufacturing jobs since 2000.
Although Democratic Indiana Senator Joe Donnelly praised the announcement, he further stated that “there are at least two other companies currently planning to move Hoosier (Indiana) jobs out of the country. We need to change our laws to encourage companies to grow here at home.”
Carrier is just one of many U.S. companies planning on moving jobs to Mexico.
Earlier this month, Ford Motor Co. decided to keep the production of its Lincoln sport utility vehicle in Kentucky. Trump had quickly claimed it as a victory for keeping the plant in the country even though Ford had never had plans to shift the entire workforce to Mexico.
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