As workers celebrated Donald Trump's successful effort to prevent air-conditioning manufacturer Carrier from shuttering a plant in Indianapolis and shifting production to Mexico, others were wondering: at what cost?
Carrier, a subsidiary of Connecticut-based United Technologies, said Thursday that the state of Indiana had offered the company $7 million in tax breaks over 10 years to keep the plant open. The deal would save about 1,000 jobs. At least 400 will still be moved out of the country.
A spokeswoman for the Indiana Economic Development Corp., the state agency that helped broker the deal, said the agreement has not been finalized. “Nothing has been accepted or approved,” Abby Gras said.
Critics say Trump’s approach — making deals plant by plant — meddles too much in the free market and won’t be enough to curb the outflow of manufacturing jobs from the country, a shift driven by global economic dynamics.
In an op-ed for The Washington Post on Thursday, Sen. Bernie Sanders (I-Vt.) — who, like Trump, had criticized the plan to close the Carrier plant during the presidential campaign — also noted that hundreds of workers there will still be laid off. According to Thursday's statement from Carrier, the deal is contingent on how many workers the company continues to employ at the plant and how much money it invests to keep it open, although the company did not offer details.
Meanwhile, a factory about a mile away that employs about 300 people is scheduled to close as the owner, Rexnord, shifts manufacturing to Mexico. And some 700 employees at another United Technologies facility nearby in Huntington, Ind., will still be put out of work.
These examples show that making deals plant by plant will not be enough to achieve Trump's goals of substantially increasing manufacturing employment, said Timothy Bartik, an economist at the nonpartisan W.E. Upjohn Institute for Employment Research in Kalamazoo, Mich.
“He obviously can’t go around and cut deals with every manufacturing plant that threatens to close,” Bartik said. “I don’t see how he would have time.”
Bartik said that Trump has not yet made clear what his strategy will be for improving conditions in the manufacturing sector overall. “At some point you need to move beyond deals to thinking through what the policies are,” he said.
Economists warned that Trump’s intervention — a departure from unofficial presidential protocol — could encourage companies to put lobbying and political favors for the new administration ahead of investment and innovation. This approach rewards political connections rather than productivity and efficiency, they said, and could make the economy less dynamic and competitive.
“It favors people with connections rather than favoring the country as whole,” said Luigi Zingales, an economist at the University of Chicago. “Rather than the idea of draining the swamp, this is like flooding the swamp.”
Those concerns have been echoed on social media by Rep. Justin Amash (R-Mich.), who wrote on Twitter that Trump was “meddling” in the free market.
In his Post op-ed, Sanders said that Trump was rewarding United Technologies for putting workers’ livelihoods at risk.
“In essence, United Technologies took Trump hostage and won,” the senator wrote. “That should send a shock wave of fear through all workers across the country.”