INDIANAPOLIS — By the time the Rust Belt turned red on election night, Carrier had to know the call was coming.
After all, Donald Trump had been vowing for months on the campaign trail to call the head of Carrier from the Oval Office and hit the company with huge tariffs if it followed through on its decision to close two Indiana factories and move more than 2,000 jobs to Mexico.
“This is so easy,” he told cheering crowds last spring. “It’s not presidential when the president calls up the head of a damn air-conditioning company, but it’s so much fun for me.”
In the end, it was not that easy. The deal with Carrier that Trump came here Thursday to claim credit for will save at least 1,100 jobs, and Carrier will receive multiyear state economic incentives worth a total of $7 million, which were negotiated by Mike Pence, Indiana’s governor and soon to be vice president.
“It sets a great tone,” Trump said in an interview Thursday as he toured the Carrier factory here as the first stage of a planned victory tour through the Midwestern industrial states that gave him an Electoral College majority. “What they’ve done is great for America.”
Since the deal was disclosed Tuesday, critics have pounced on Carrier’s receipt of $700,000 a year in incentives from the state of Indiana — just the kind of corporate giveaways Trump knocked as he slammed Carrier on the campaign trail last spring.
“He has signaled to every corporation in America that they can threaten to offshore jobs in exchange for business-friendly tax benefits and incentives,” Sen. Bernie Sanders of Vermont wrote in an op-ed on Thursday for The Washington Post.
Trump, while offering a carrot through the state incentives, also held an implicit stick: the threat of pulling $5 billion to $6 billion in federal contracts from Carrier’s parent, United Technologies. Trump and his team were well aware that the amount United Technologies stood to lose in those contracts dwarfed the estimated $65 million Carrier sought to save by moving to Monterrey from Indiana.
While the decline in manufacturing jobs has diminished in recent years, millions of blue-collar industrial jobs have disappeared in recent years in the United States. They were lost not just because of outsourcing to other countries but also because of the relentless quest to remain competitive by improving efficiency and productivity through automation.
But after Trump sent a Twitter post on Thanksgiving about negotiating with Carrier, disclosed a deal Tuesday and took a victory lap Thursday, Trump insisted that the agreement was a real accomplishment, not just a combination of political showmanship and tax breaks. And others suggested that Trump’s appeal could lead to a more fundamental shift in the way Washington approaches dealing with corporate decisions on where to locate jobs.
“Contrary to early reactions from the left and the right, the Carrier deal opens the door to a new approach to U.S. economic growth policy that is sorely needed,” the Information Technology and Innovation Foundation, a research and advocacy group, said in a statement.
“It sets the precedent that growing, attracting and retaining globally traded, innovation-based industries that are both high-value and pay high wages is central to U.S. economic growth.
“But to achieve that, we must go beyond individual deals and focus on creating an overall economic ecosystem that incentivizes these companies to call the United States home.”
Before the speeches, Trump and Pence toured the factory and sat down with Carrier and United Technologies executives at a small picnic table near clanging machines. At one point, Trump departed from the planned itinerary and walked over to a group of cheering workers and thanked them for their support.
Trump placed his first call to Carrier not long after winning the election. After that call, Pence worked with Indiana officials, as well as executives at Carrier and United Technologies, to negotiate the details of the agreement to keep 1,000 jobs.
Initially, Pence was quieter than other Indiana politicians, like Sen. Joe Donnelly, a Democrat, let alone Trump, after Carrier’s initial decision to move a substantial portion of its operations in February.
While the standoff loomed large in the lives of its employees in Indiana, for United Technologies, the forgone savings were tiny — equivalent to about 2 cents a share in earnings.
“Every penny counts, but if we step back and I’m looking at earnings of $6.60 per share this year, 2 cents is an easy concession if the president-elect listens to some of the company’s bigger concerns,” said Howard Rubel, a senior equity analyst with Jefferies, an investment banking firm in New York.
When Carrier announced the two Indiana factories would close, it did offer benefits to employees facing layoffs, including paying for them to go back to school and retrain for other careers. Even with that, however, once the layoffs were to begin in mid-2017, most of the workers would have had a hard time finding jobs that paid anywhere near the $20 to $25 an hour that veteran line workers earn.
Carrier is best known for its air-conditioners, but it also sells a variety of other heating and cooling equipment for homes and businesses, like the gas furnaces and fan coils for electric furnaces made at the Indianapolis factory.
The jobs in Indiana that Trump has referred to are in two separate sites: the Carrier plant in Indianapolis, with 1,400 employees, and a United Technologies factory in Huntington, with 700.