The eyes of the political world were on the HVACR industry as Carrier and President-elect Donald Trump announced on Dec. 1 an agreement to preserve 1,100 jobs at the Indianapolis factory.
The agreement will see Carrier receive $7 million in tax breaks over 10 years in exchange for the manufacturer investing $16 million into the plant. While the move benefits many Indianapolis workers, Carrier still intends to send some jobs to Mexico.
“I want to thank Greg Hayes [CEO] of United Technologies because when I called him he was right there,” Trump said. “I wish I could have made the call when they were doing their original decision.”
Trump toured the factory before the press conference with the leadership of Carrier and its parent company United Technologies Corp.
“I would like to thank our Carrier workers for their continued focus during a very difficult year here in Indianapolis,” Hayes said. “Tax reform and a more thoughtful approach to regulation have given us a renewed confidence in manufacturing in the U.S. We’ve decided to keep Carrier jobs in Indianapolis. We’ll designate this facility as a center of excellence for gas furnace production, and we intend to invest more than $16 million over the next two years to ensure this remains a world-class manufacturing facility with the ability to compete globally.”
Trump is excited about the investment and was quick to point out that the $16 million figure was the floor and not the ceiling.
Another key part of the deal was Trump convincing Carrier that unnecessary regulations would be eliminated. Many in the HVACR industry have been complaining for years about the number of regulations being implemented and how they make it tougher to do business in the U.S.
“In just the last six years, 260 new federal regulations have passed. Of those, 53 affect this plant. That is unbelievably expensive,” Trump said.
In February, Carrier Corp. announced plans to relocate its Indianapolis manufacturing operations to a location near existing Carrier manufacturing facilities in Monterrey, Mexico. The move would have occurred over the course of an estimated three-year period and would have cost 1,400 American workers their jobs.
At the time, Chris Nelson, president, HVAC systems and services, North America, said, “This move is intended to address the challenges we continue to face in a rapidly changing HVAC industry. The continued migration of the HVAC industry to Mexico, including our suppliers and competitors and ongoing cost and pricing pressures, is driven in part by new regulatory requirements. Relocating our operations to a region where we have existing infrastructure and a strong supplier base will allow us to operate more cost-effectively, so we can continue to produce high-quality HVAC products that are competitively positioned while continuing to meet customer needs.”
During both the primary and general election campaigns, Trump made keeping manufacturing jobs in the U.S. a central issue. In numerous debates and speeches, he often referenced the Carrier move. Trump went so far during the campaign to threaten a 35 percent tariff on Carrier products made in Mexico.
Carrier’s decision to retain its Indianapolis manufacturing operation helped change his tone, as he had nothing but praise for Carrier during the event.
“I told them of the goodwill they’ve engendered by doing this within our country. You watch how fast they are going to make it up. So many people are going to be buying Carrier air conditioners,” Trump said. “United Technologies is one of the top 50 companies in the U.S.
A LONG JOURNEY
On Thanksgiving, Trump announced he was working hard to get Carrier to stay in Indiana and that he was making progress. That same day, Carrier announced it “had discussions with the incoming administration and that its leadership is looking forward to working together. Nothing to announce at this time.”
That changed on Nov. 29 when Carrier tweeted, “We’re pleased to have reached a deal with President-elect Trump & vice president-elect Pence to keep close to 1,000 jobs in Indy. More details soon.”
Carrier was quick to point out that the announcement was possible because the incoming administration had emphasized its commitment to support and improve the business community and, in turn, make the U.S. business climate more competitive.
“The incentives offered by the state were an important consideration,” Carrier reps said. “This agreement in no way diminishes our belief in the benefits of free trade and that the forces of globalization will continue to require solutions for the long-term competitiveness of the U.S. and of American workers moving forward.”
At the press conference, Trump discussed lowering the country’s business tax from 35 percent to 15 percent. He stated companies are not going to leave the U.S. anymore without consequences.
In addition to Trump and Carrier, Pence also played a pivotal role in the negotiations. Being the sitting governor of Indiana, Pence had a first-hand look at how the Carrier situation played out over the last 10 months.
“That day, Feb. 10, when Carrier made the difficult decision to close this facility and move jobs to Mexico, was a heartbreaking day,” Pence said. “The simple truth was that policies coming out of the nation’s capital were driving jobs out of this country. We were missing leadership. The American people voted for change, and, even before taking office, our president-elect provided real leadership that made a difference. Trump did exactly what he said he would. He picked up the phone and talked from one American to another and discussed our plans to make America more competitive, reduce taxes, roll back regulations, and put American workers first again. He made the case for America and Carrier elected to bet on a brighter future for the American people. We are grateful from the bottom of our hearts.”
Publication date: 12/12/2016