“Companies are not going to leave the United States anymore without consequences. It’s not going to happen,” Trump told cheering Carrier employees when he visited the plant. “We’re not going to have it anymore.”
Trump advertised Carrier’s Dec. 1, 2016, announcement that it would preserve about 800 jobs in Indianapolis as a decisive break from decades of U.S. executives capitalizing on lower labor costs overseas at the expense of blue-collar workers at home.
Four years later, it has proved to be nothing of the sort.
This year alone, Indiana employers have sent more jobs to Mexico, China, India and other foreign countries than were saved at Carrier. Without headlines or presidential notice, at least 17 companies — names like Vibracoustic, Molnlycke Health Care, Allura, Altex, Stanley Black & Decker, Dometic, Johnson Controls and Horizon Terra — have closed plants or otherwise reduced employment in Indiana and moved jobs abroad, according to U.S. Department of Labor filings.
“We have many, many firms making these decisions, and Trump likes to negotiate these deals one at a time. It’s trade policy by press release, and often there’s nothing behind the press release,” said Robert Scott, senior economist with the Economic Policy Institute in D.C. “He makes a deal, smiles for the photographers, and then he walks away.”
Throughout his presidency, Trump has had little success with his highly personalized attempts to bend corporate decision-making to his will and reverse a generation-long decline in U.S. factory jobs. He has publicly assailed companies such as General Motors and Harley-Davidson for moving manufacturing abroad without causing them to unwind their plans. And he has claimed credit for investments that failed to live up to advance billing, including Foxconn’s $10 billion plan to create 13,000 jobs at a new electronics factory in Wisconsin. Just this month, state officials denied the Taiwanese company special tax credits, saying it had abandoned its original commitment, employed fewer than 520 people and spent just $300 million.
Indeed, the domestic manufacturing renaissance that the president promised has withered. After rising by 4 percent during his first two years on the job, manufacturing employment began sliding late last year even before the pandemic put the economy in a deep freeze. Today, the United States has fewer factory workers than when Trump was inaugurated and about as many as in 1941. Indiana manufacturing employment stands at a six-year low.
As the president seeks a second term, he says companies “have no more incentive to move” thanks to his corporate tax cuts and deregulation. His chief trade negotiator argues that “the era of reflexive offshoring is over.”
It’s true that many corporations, rattled by the pandemic’s impact on distant factories, are rethinking their supply lines. And Trump’s new trade deal with Mexico includes innovative labor rights provisions designed to discourage a corporate run for the border.
But Trump’s partial victory in Indianapolis illustrates the limits of his hands-on approach, which favors attention-grabbing maneuvers rather than comprehensive policy development.
While about 800 jobs that were slated to leave the Indianapolis plant stayed put, 632 others were eliminated along with an additional 738 from a second Carrier plant in Indiana that closed, according to company filings with state and federal officials. Company-wide, Carrier eliminated an additional 1,300 positions last year and David Gitlin, the chief executive, has vowed to be “brutally tenacious” in further reducing costs.
The president, meanwhile, has proved little match for the tectonic forces shaping corporate decision-making in a global economy. Defying Trump’s emphasis on keeping jobs in the United States, 75 percent of Carrier’s total manufacturing hours are in low-cost areas, executives told investors in a Feb. 10 call. The company now employs about 53,000 people worldwide.
Analysts who share the president’s goals of reversing the factory jobs decline that occurred amid an era of trade liberalization say he should have taken more forceful action on tax and currency policies and barred companies that shipped jobs abroad from receiving federal contracts — as he promised in 2016.
“The president has talked a big game and then failed to actually employ most of the tools that could have made a bigger difference in stopping jobs from leaving the United States,” said Lori Wallach, a trade attorney with Public Citizen. “There’s been a lot of rhetoric.”
The 3-minute and 32-second clip, which hit YouTube as the 2016 Republican primary intensified, quickly went viral. Filmed inside the Indianapolis plant, the video showed a Carrier manager announcing that production of the company’s gas furnaces was being moved to Monterrey, Mexico.
“This is strictly a business decision,” the manager said, as employees howled in outrage.
Torrie Bennett, 42, a night shift worker and Carrier veteran, took the news hard. Laboring alongside her co-workers, sometimes for 11 hours a day in a loud, noisome environment, she’d built valued relationships. Carrier employees attended one another’s weddings, baby showers and funerals. When the shift was over, they might head to Sully’s, a nearby bar, for a cold one.
The idea of losing all of that sent Bennett to bed for the better part of three days. Four years later, and long gone from Carrier, she still teared up when discussing the company.
“I loved Carrier, loved it,” she said. “I loved the pace of things. I knew I would retire from there.”
After the announcement, both Trump and Sen. Bernie Sanders (I-Vt.), a Democratic presidential candidate, championed the workers’ cause. For months, Bennett and her colleagues lived in limbo, working long weeks while fearing for their livelihoods.
About a week after Trump’s improbable election win, he called Greg Hayes, CEO of United Technologies, then-Carrier’s corporate parent, and asked him to reconsider. Trump promised that his tax and regulatory policies meant United Technologies would be “printing money” if he stayed put, Hayes later told CNBC. (Carrier, a maker of heating and air-conditioning systems, was spun off as a separate company on April 1.)
On Nov. 28, Hayes visited Trump Tower in New York, where he met with Vice President-elect Mike Pence, in his waning days as governor of Indiana, and reached agreement on a package of state incentives.
Three days later, Hayes joined Trump and Pence at the Carrier plant where the deal was announced. The 45-acre industrial site on Indianapolis’s west side was marooned between symbols of the postindustrial economy, warehouses belonging to retailers Target and Amazon.
The president was greeted with cheers when he stepped in front of a large blue-and-white Carrier banner to address the crowd.
In an ebullient 17-minute ramble, Trump boasted of his primary and general election victories in Indiana; complained about the press; gave a shout out to legendary basketball coach Bobby Knight; exaggerated both the number of jobs he had saved and the company’s planned investments; praised United Technologies; misidentified the furnace plant’s product as air conditioners; and vowed retribution against U.S. companies who moved jobs abroad.
Though many workers were relieved, it didn’t take long for the seams to show on Trump’s deal. In a CNBC interview, Hayes said the company would still spend $16 million to automate portions of the plant’s operation.
“What that ultimately means is there will be fewer jobs,” he said.
Workers soon noticed AGVs — automated guided vehicles — appearing on the factory floor. The squat robots, which carried completed furnaces from the end of the assembly line into the warehouse, replaced workers who previously had done that manually.
Like most of her co-workers, Bennett’s education had not lasted past high school. In her working life, the labor market had become increasingly unfriendly for people with limited skills.
General Motors’ Indianapolis stamping plant, which once employed nearly 6,000 autoworkers, closed in 2011. Six years earlier, a major Chrysler foundry shut down. By 2016, Carrier was one of the few remaining options for unskilled workers seeking a decent, factory wage.
Bennett and her three siblings had been raised by their mother, a restaurant cook who had divorced their father, a building contractor. With just a GED, Bennett saw getting hired by Carrier as her ticket to the middle class.
“I did not come from a well-to-do family. Carrier was my big break, my payoff for continuing to push forward when I could have been another Indianapolis statistic,” she said.
The president’s intervention did nothing to interrupt Carrier’s international expansion. Just four months after Carrier agreed to keep some jobs in Indianapolis, the company broke ground on a new manufacturing facility in China. The $95 million factory would produce compressors and light commercial systems for sale in China and the region.
By May, Carrier had informed Indiana officials that it was eliminating 632 jobs from the Indianapolis plant, prompting an angry president to call Hayes to complain, according to a person familiar with the matter, who was not authorized to speak with the press.
Even as Trump argued for companies to stay put, other elements of his trade policies were putting them at a disadvantage.
In 2018, the president imposed tariffs on Chinese products, intended to punish Beijing for pilfering foreign companies’ trade secrets and intellectual property. But the import taxes also raised Carrier’s production costs.
In December 2018, the company requested an exclusion from the 25 percent fee for a Chinese-made electrical motor it used in its residential gas furnaces, warning of “significant price increases for consumers.”
Qualifying a new supplier would take up to three years, the company said. In May 2019, the Office of the U.S. Trade Representative denied the request, saying that Carrier had not proved that the motor was available only from China.
Still, business was good. Carrier last year recalled more than 100 workers who had been let go and morale, which had crumbled amid the outsourcing talk, rebounded.
But by then, Bennett was gone. Unsettled by the chronic uncertainty, she began to question the wisdom of working 60-hour weeks for a company she no longer felt valued her. Her 7-year-old boy was struggling in school. Her 23-year-old son was battling substance abuse.
She accepted a job as a forklift driver for Versa-Drill, a local manufacturer of drilling rigs, at about half her Carrier salary.
“I couldn’t take the anxiety,” she said. “Everything that’s happening in that building is telling me: ‘We’re preparing to leave.’ ”
Earlier this year, she took a second job working three days a week at a local doughnut shop. But the week she started, the pandemic forced its closure.
The work that left Indiana ended up in Monterrey, Mexico’s manufacturing heartland, in a blue-and-white building Carrier calls Plant A. Both the U.S. and Mexican flags fly out front.
Just one of several local Carrier production sites, the facility in the working-class Santa Catarina neighborhood can be a refuge from the world beyond its walls. One afternoon, a young woman with blood streaming down her face stood on a street corner at the end of the block, having been attacked by two other women, as workers in faded blue shirts bearing the company logo streamed from the plant.
Carrier did not respond to emailed questions, requests for plant visits and executive interviews. This story is based on a review of company presentations, securities filings, and interviews with 30 workers, economists, executives and government officials in the United States and Mexico. Several were interviewed more than once.
When Trump first attacked Carrier in 2016, workers here got nervous about what his outburst might mean for them. But plant managers reassured them that nothing would change.
Omar Mendoza, 28, smoking a cigarette outside the plant, said he had worked for Carrier for three years as a junior quality-control specialist. He is studying English in hopes of earning a promotion.
Carrier is “above the average” for employers in Monterrey, he said. “The company treats me well and in general they give the workers many benefits, like scholarships and subsidized lunch,” he said.
In front of the plant, a rickety, donkey-drawn peddler’s cart shares the road with white air-conditioned buses, waiting to take the workers home. On the sidewalk, Jorge Monroy presides over a foam cooler, loaded with iced strawberry and lime snacks, awaiting the end-of-shift rush. Though he says business is steady, he complains his costs are rising, too.
“In the nine years I’ve been here, the economy has gotten worse for me,” he grumbled.
Above his head, large banners affixed to the plant wall advertise openings for toolmakers, press operators and quality auditors.
Mendoza shrugged at U.S. anger over outsourcing, saying Mexican workers in the country’s more developed areas were also vulnerable to low-wage competition, from migrants from southern Mexico or Central America.
“That’s the way it is,” he said.
Carrier’s labor costs here are 80 percent less than in Indiana — and show little sign of rising. From 1997 to 2016, Mexico’s hourly compensation costs — salary, social insurance and labor taxes — in the manufacturing sector held steady at about one-tenth the U.S. figure, according to a Conference Board database.
That’s drawn Carrier and most of its competitors, including Lenox, Trane, Rheem and York, to Mexico along with their suppliers. There is no precise estimate available for the number of U.S. jobs that have moved offshore in the free-trade era.
Up to 5 million U.S. manufacturing jobs disappeared between 1997 and 2018, according to Scott, the Economic Policy Institute economist. But that figure includes the effects of automation and business failures as well as trade.
The U.S. government has formally certified that 202,543 jobs have been offshored during Trump’s presidency, according to a recent Public Citizen analysis of Labor Department records that the group says represents an undercount.
The loss of U.S. jobs appears to have ebbed since the 2000s, when companies took advantage of China’s entry into the World Trade Organization and the earlier creation of a unified North American trading bloc to ship millions of jobs to lower-wage venues.
Hopes of stemming the flow of U.S. jobs to Mexico now rest with labor overhauls instituted by the government of President Andrés Manuel López Obrador as well as the terms of Trump’s replacement for the 1994 North American Free Trade Agreement.
The U.S.-Mexico-Canada Agreement is designed to tilt investment decisions toward the United States by requiring a set percentage of auto manufacturing to be performed by workers making an hourly wage of at least $16. The new accord also includes provisions to permit collective bargaining and to close loopholes allowing Mexican employers to profit by mistreating their workers.
Labor advocates say that the Trump administration deserves credit for making the USMCA more worker friendly, including by eliminating a dispute settlement system in NAFTA that allowed corporations to sidestep corrupt local courts, thus making Mexico more attractive as an investment venue.
On paper, the Mexican overhauls would allow workers to organize unions outside the company-controlled “white” unions that exist to guarantee big employers labor peace. Even before the pandemic slowed government operations, implementation was behind schedule, according to Gladys Cisneros, Mexico program director for Solidarity Center, an AFL-CIO affiliate.
“So far, on the ground, nothing is different for Mexican workers,” Cisneros said.
Robert E. Lighthizer, the president’s chief trade negotiator, told the House Ways and Means Committee in June that “labor enforcement in Mexico is going to be a problem.”
And Richard Trumka, the president of the AFL-CIO, said last month that the labor federation already is preparing a list of complaints.
Even if the overhauls are implemented, they are unlikely to have a dramatic impact. Roughly 1 of every 7 Mexican workers belongs to a union. The agreement would increase their wages by 17 percent, producing only a “modest” effect on the U.S. economy, according to the International Trade Commission.
Few in the Mexican business community anticipate a major shift of jobs back to the United States.
“What is already in Mexico will stay. I don’t see it going back,” said Armando Tamez, chief executive of Nemak, a parts supplier to global automakers.
The moribund Mexican economy also keeps a lid on wages. José Valdez, CEO of Alpek, one of the largest petrochemical producers in the Americas, said wages can increase only as fast as productivity growth. If government policy tries to force them higher, it will encourage companies to automate instead.
“Whoever tells you this is a revolution has to be a Trump supporter or a political guy,” said Valdez. “No businessman would tell you that. We don’t see anything changing in reality.”
Roberto Russildi, Nuevo León state’s secretary of economy and labor, says his sales pitch to potential investors emphasizes that “in 21 years, we’ve had no strikes or major problems” with organized labor.
That’s one of the reasons Mexico remains attractive as a production center, according to Ernesto Velarde-Danache, a prominent attorney who handles labor relations for multinational corporations.
“The reforms are forcing the existing unions to demand better pay. So little by little, things are going to improve. But I don’t think it will be at a pace that will be noticeable,” he said. “I don’t see Mexico in the next 25 years getting close to the U.S.”
Today, Carrier shows little sign of having been transformed by Trump’s intervention. More than half of the company’s annual revenue last year came from its international operations, including exports from the United States.
Investor reaction to the company’s performance during the pandemic has been mixed. Carrier shares since April 1 have risen three times as fast as the Dow Jones industrial average. But in June, as the recession ate into sales, S&P Global Ratings revised its outlook to “negative” and said Carrier’s bonds could be downgraded over the next two years.
The company is scheduled to report third-quarter earnings on Thursday.
In the Indianapolis plant, managers have spread the work of three assembly lines across four to provide for social distancing. Workers are eligible for new weekly attendance and production bonuses. And the company is investing in new equipment.
“The mood’s been a lot better than in the past. It’s just been really busy,” said Paul Roell, 39, a group leader.
Back on the campaign trail, meanwhile, the president is repeating familiar promises. In August, he told workers at an Ohio appliance factory that if reelected, he will bring home “millions of new manufacturing jobs,” making pharmaceuticals, electronics, machine tools and automobiles.
“All of those bad things that you had to suffer with, you’re not suffering anymore, because now people and companies have an incentive to stay,” the president said. “They’re not going to be leaving so fast. I want to make sure these companies aren’t leaving.”