What Does the Carrier Deal Mean for American Manufacturers?

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No sooner than when Indiana-based manufacturing company United Technologies announced 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.”

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

factory manufacturing

Isn’t it time to remind companies about the benefits of keeping manufacturing jobs in the U.S.? Source: Adobe Stock/Anastasia Usoltceva.

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.

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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.

Comment (1)

  1. Burl Finkelstein says:

    Harry is right!

    Carrier keeping their production in the US is a great example of what needs to be happening as the norm instead of the exception. Manufacturing operation have been proven to support R and D and local economies more than any other factor. Americans need jobs that can afford them the sought after but shrinking middle class lifestyle. We have had a foolish notion that the US economy can be an economy of consumption but there was no need to produce what we consumed. Finally after decade of growing debit and failed trade policy we are realizing that for a sustainable economy and society we need to balance trade and produce more of what we consume. Amen.

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