November 30, 2016

Here’s What You Really Need to Know About Trump’s Carrier Deal

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Back in February, United Technologies announced it would be moving a couple of Indianapolis factories to Mexico. One was a Carrier air-conditioning plant that employed 1,400 people, and the other was an electronic controls plant that employed 700.

Donald Trump went ballistic. “I will call the head of Carrier and I will say, ‘I hope you enjoy your new building,'” Trump said. “‘I hope you enjoy Mexico. Here’s the story, folks: Every single air-conditioning unit that you build and send across our border—you’re going to pay a 35 percent tax on that unit.'”

Then, a few days ago, the world was treated to this odd tweet:

What was that all about? Today we found out: Indiana Gov. Mike Pence has been negotiating with Carrier and has offered them a bunch of new incentives to stay where they are. On Thursday, he and Trump will appear triumphantly in Indianapolis to announce that Carrier has agreed to keep 1,000 jobs in the United States. The other 1,100 jobs, apparently, will still be lost to Mexico. There are several things to say about this:

  • From a PR perspective, this is genius. If you want to demonstrate you care about blue-collar workers, what better way than a big televised announcement surrounded by actual blue-collar workers who will be keeping their jobs?
     
  • We don’t know yet what incentives Pence has promised, but it’s worth noting that this is really nothing new. State and local governments offer financial inducements to keep companies from moving all the time. Trump is following a wheezy old playbook here, but even at that he can only do this because of the lucky coincidence that his vice president happens to still be governor of Indiana for a few weeks longer.
     
  • Compared to Carrier’s 1,000 jobs, Obama’s auto bailout saved something like 250,000 jobs at General Motors and Chrysler, and 1 million to 2 million total jobs throughout the entire automotive supply chain. Just sayin’.
     
  • Needless to say, showering incentives on manufacturing companies to stay in America is not a sustainable national manufacturing strategy. And anyway, aren’t Republicans opposed to the government picking winners and losers?
     
  • Carrier is a big company, but it’s owned by United Technologies, a gigantic defense contractor that does a lot of business with the federal government—soon to be headed by one Donald J. Trump. Would Trump stoop to sabotaging UT’s government business if it didn’t play ball on the Carrier plant? Maybe. Hell, even Bernie Sanders thinks Trump should promise that UT will never get another government contract if it moves any jobs to Mexico. This would be a massive abuse of power, of course, but who wants to take a chance that Trump cares? Probably not UT.
     
  • Just for the record, the biggest supplier of working-class and middle-class jobs in Indianapolis is not Carrier—or any other heavy manufacturing company. The top 10 are Eli Lilly, Indiana University, Purdue University, St. Vincent Hospital, St. Francis Hospital, CNA Financial Group, Methodist Hospital, the Peyton Manning Children’s Hospital, Roche Diagnostics, and FedEx.
     
  • All that said, this is, once again, a genius PR move. Donald promised he’d keep those Carrier jobs in Indianapolis, and by God, he delivered.

What to pay attention to next: the exact terms of the deal that Carrier got. Just how big a bribe did Pence have to pay them to save those 1,000 jobs? After all, Trump was probably pretty eager to have this chance to show off, and he’s got a long history of giving away the store when he really wants something.

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