Donald Trump said during his campaign that he would, if elected president, convince the air-conditioner manufacturer Carrier not to shutter a plant in Indiana and move over 2,000 jobs to Mexico.
Trump was elected, and he has evidently made good on that pledge. Or at least some of the pledge.
Carrier said late Tuesday that it would keep more than 1,000 jobs across two locations in Indiana. (Besides the Carrier plant, a facility operated by parent United Technologies was also facing cuts.)
This Trump deal follows a negotiation he reportedly had with Ford about what the president-elect erroneously thought was a plant relocation to Mexico. It was really just an altered plan by Ford to keep manufacturing a Lincoln vehicle at a Louisville, Kentucky, plant where the automaker wanted to increase production of a similar SUV badged as a Ford.
Ford wasn’t considering the production move until 2019, when the current United Auto Workers contract is up. And no jobs would have been lost as a result of the move, according to Ford.
These are wins of a sort for Trump, but a pattern is emerging.
The art of the deal
Some of the Carrier and United Technologies jobs are being saved. Some of the Lincoln production — around 2,000 vehicles per month — is staying put in Kentucky.
It should be fairly clear what’s going on here. United Technologies said that it could save $65 million a year by moving, but it has $56 billion in annual revenue, according to The New York Times. Indiana will provide $700,000 in tax incentives, but adding the whole thing up is a rounding error in terms of United Technologies’ overall business.
Trump wants to make a deal because that what he does — he’s a deal guy. His vice president is Mike Pence, the governor of Indiana. United Technologies keeps some workers in Indiana. Everybody gets to look good.
But, of course, a whole bunch of jobs are still going to Mexico: 1,300, Fortune reported. The outsourcing trend remains intact.
Ford didn’t even have to worry about juggling jobs. All it had to do was not move production of a vehicle it wasn’t planning to move for three years anyway. The Lincoln production could also be discontinued at the Louisville plant, replaced with production of the vehicle that Ford had wanted to build, the Ford Escape. It’s basically the same car.
There isn’t much that changes in terms of Ford’s long-term thinking about sending unprofitable vehicle production to Mexico. Ford has, after all, been operating plants in Mexico since the 1960s.
We’re talking about only two announcements here, so it may be a stretch to call it a pattern. But if this is the way things are going to go, Trump is going to be spending a decent amount of time and energy negotiating deals that tweet well, but that aren’t really what you’d call needle-moving in the grand scheme of things.
Maybe as president he’ll up the stakes. Then again, companies that have planned to use NAFTA to their financial advantages will learn what works with Trump — give away something, but keep the master plan intact.