Could Trump replicate his Carrier deal to help other factory workers, too?
While the announcement could play favorably among the president-elect's political base, economic experts say it should not be seen as a viable fix for larger-scale problems.
Seemingly making good on his campaign promise to fight for the American factory worker, US President-elect Donald Trump announced late Tuesday that he had persuaded air conditioning manufacturer Carrier Corp. to keep jobs in Indiana, instead of moving them to Mexico as previously planned.
Details on the deal – which Mr. Trump is expected to unveil Thursday in Indianapolis, alongside company officials and Vice President-elect Mike Pence – remain unclear. And while the announcement could play favorably among Trump's political base of supporters, economic experts say this sort of case-by-case bargaining to save American jobs should not be seen as a viable fix for problems caused by larger-scale market forces.
"This is a spot solution," Mohan Tatikonda, a professor at Indiana University's Kelley School of Business, told The New York Times. "If it goes through it helps some Carrier employees for a period of time, but it doesn’t address the loss of manufacturing jobs to technological change, which will continue."
Carrier confirmed in a tweet that a deal had been reached, but it did not disclose precisely how Trump managed to negotiate the terms. Multiple news outlets have reported that state-level tax incentives were involved, with Mr. Pence (who remains governor of Indiana until Jan. 20) helping to finalize the details. Even the workers helped by Trump's dealing remain in the dark.
"I'm optimistic, but I don't know what the situation is. I guess it's a good sign," Chuck Jones, president of the United Steelworkers Local 1999 union which represents Carrier workers, told The Associated Press. "You would think they would keep us in the loop. But we know nothing."
Politico's Cogan Schneier and Timothy Noah wrote that Trump's victory on the Carrier deal "is largely a symbolic one," since the United States loses more than 300,000 manufacturing jobs to competition overseas each year, according to the Economic Policy Institute, a Washington think tank that focuses on labor issues.
In February, Carrier announced it would close its Indianapolis plant that employs 1,400 people and move manufacturing operations to Mexico. Cellphone video of the workers being told they would be laid off over three years, beginning in 2017, went viral online, drawing denunciations both from Trump and Democratic presidential nominee Hillary Clinton's campaign.
"So many hundreds and hundreds of companies are doing this," Trump said of Carrier's plans during a debate with Mrs. Clinton in September. "We have to stop our jobs from being stolen from us. We have to stop our companies from leaving the United States."
Last week, Trump said in a tweet that he was working hard "even on Thanksgiving" to keep Carrier stateside. In a follow-up tweet Tuesday night, he said his work had paid off.
After confirming on Thanksgiving Day that negotiations were underway, Carrier confirmed in a tweet Tuesday night that Trump and Pence had persuaded them to keep 1,000 jobs in Indiana. The company said more details would be forthcoming.
Robert Reich, a prominent liberal Democrat and former labor secretary, said the allure of cheap labor will remain difficult for manufacturing companies to resist, especially less-prominent firms over the long term, despite Trump's deal with Carrier.
"Memories are short but the economic fundamentals remain the same," Mr. Reich told The New York Times. "Wall Street is breathing down companies' necks to cut costs, and the labor savings in Mexico is too great."
Even so, there's reason to admire Trump's actions in this case, according to Jared Bernstein, a liberal economist who advised the Obama administration.
"If I weren’t so scared of the damage a Trump administration might do, I’d find it refreshing to see an administration fighting for factory jobs like this," Mr. Bernstein told the Times. "That said, no one should confuse what Trump is doing here with sustainable economic policy."
And for Justin Wolfers, an economist at the University of Michigan, the Carrier deal is an invitation for businesses nationwide to ask the US government for more incentives to keep their operations domestic.
"Every savvy CEO will now threaten to ship jobs to Mexico, and demand a payment to stay," Mr. Wolfers said in a tweet Tuesday night. "Great economic policy."
Carrier and United Technologies Electronic Controls (UTEC) are both units of United Technologies Corp., a firm based in Hartford, Conn., that also owns Pratt & Whitney, which supplies fighter jet engines and benefits from US military contracts.
The fact that United Technologies received $6 billion in federal contracts last year could be relevant, Politico noted, especially since US Sen. Bernie Sanders (I) of Vermont threatened to introduce legislation that would halt federal contracts to companies that move American jobs overseas.
This report includes material from the Associated Press.