Cogito Ergo Non Serviam

Trump Saves Jobs at Carrier Corporation

President-Elect Trump and Vice-President-Elect Mike Pence have cut a deal with Carrier Corporation, manufacturer of air conditioners, to stop 1,400 jobs from moving to Mexico from Indiana (where Mr. Pence is still governor). The details suggest a lot of subsidies are coming Carrier's way, and the people whose jobs are saved couldn't care less. It's a win-win, except that it can't be replicated on a national scale. All it will do is encourage other firms to threaten moving jobs to see what the best bribe they can extort is.

The Indianapolis Star reported, "Carrier in February announced that it would begin layoffs next year and shutter its Indianapolis factory in three waves through 2019 as part of a larger reorganization that also includes the closing of Huntington-based United Technologies Electronic Controls. The company did not say whether any additional jobs would be saved in Huntington. Carrier had been planning to shift all of its Indianapolis jobs to Monterrey, Mexico, where workers would earn $3 an hour. The highest-paid Indianapolis employees make $26 an hour and can earn more than $70,000 a year with overtime." Estimates are that the company stood to save $65 million a year.

The paper also printed this paragraph,"Everyone thought he wasn't serious about running for president. Then no one thought he could get the nomination for the Republican party. He couldn't get support from his own party. All the media outlets predicted he had no chance of winning the election," read a late Tuesday Facebook post from Paul Roell, a longtime Carrier employee who spoke to the New York Times about why he supported Trump earlier this month. "Then everyone said he couldn't make Carrier stay. (Three) weeks after being elected and Carrier is staying. Thank you Donald Trump for saving my job."

Anyone who has stood in an unemployment line or deposited a severance check knows all too well what the loss of a job means. So, this journal is just as happy as Mr. Roell that he will continue to work at Carrier. May he and his co-workers prosper.

The problem with this arrangement is that it is merely a band-aid on a gunshot wound. The US loses 300,000 manufacturing jobs a year to overseas competition. Replacing those jobs so that the talent pool available in a place like Indiana can do them is almost impossible. Preventing their departure is expensive, as the details of this arrangement will likely show when released to the public.

It is becoming apparent that Carrier's parent company, United Technologies Corp., was under some pressure to do something. It has revenues of $56 billion, of which 10% is from government contracts. It is unclear how much UTC actually got its arm twisted, but it is doubtful that much had to be done given that arithmetic. It is difficult to see how the administration could replicate this on a sufficient scale to protect more than a few highly visible jobs.

As Fortune reported, "Some 1,300 Carrier jobs will still go to Mexico. The company has plans in place to offer displaced workers employment and relocation in UTC's aerospace business, or to provide funding for reeducation." If the NAFTA experience is anything by which to go, the relocation will adversely affect the communities from which people are being relocated, and the reeducation offer will not result in a replacement job of similar compensation.

Tactically, it is hard to fault this. Mr. Roelle keeps his job. However, it was done in such a way that suggests a piecemeal strategy, and that cannot work in an economy the size of America's. The president would have to make one such deal six days a week just to keep what the country has.

Tactical efficacy is no substitute for strategic vision, and Mr. Trump has never exhibited the latter.

© Copyright 2016 by The Kensington Review, Jeff Myhre, PhD, Editor. No part of this publication may be reproduced without written consent. Produced using Ubuntu Linux.



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