The joint announcement today by President-Elect Donald Trump and company officials that air conditioner manufacturer Carrier would reverse course and retain at least 1,100 jobs at its Indiana plant Carrier had previously said would be lost to Mexico was a bit of watershed moment for economic development in the U.S. Whether the moment is an encouraging sign that there is a political solution which has heretofore been undiscovered by American policymakers to the ongoing decline in aggregate jobs in American manufacturing, or a blunt conclusion to a very public hostage situation remains to be seen. It is a debate the country’s economic development community- all of a sudden- has been forced into having out.
Carrier announced in February that it would move all of its 1,400 Indianapolis jobs to Monterrey, Mexico, where workers would earn $3 an hour. The highest-paid employees at the Indianapolis plant in question make $26 an hour and can earn more than $70,000 a year with overtime, according to the Indianapolis Star. Trump made the company’s Mexico intentions a signature campaign issue undergirding his hardline stance on trade.
Government intervention to prevent the off-shoring of US jobs is not at all unique. States and municipalities have for decades negotiated with companies considering eliminating or reducing their US workforce in favor of cheaper labor across the border or overseas, often using packages of state and local incentives awarded to the company to prevent jobs losses. What makes the Trump/Carrier affair extraordinary is the very public intervention of a presidential administration in waiting in a local economic development matter.
While the tools which ultimately secured the Carrier deal for Indianapolis are not unusual- the company accepted a state tax credits package worth about $7 million from the state of Indiana to secure the jobs- the intervention of Trump into the deal signals, perhaps dubiously, that there is a simple political solution to the ongoing decline in American manufacturing jobs numbers. While manufacturing has never been more productive and profitable in this country, manufacturing jobs continue to disappear thanks not to a failure on the part of politicians and bureaucrats to deftly negotiate them into existence, but due to a vexing assortment of factors including technology, global consumer patterns and workforce availability. I have argued before: trade is not the boogeyman it’s been made out to be by the Sanders wing of Democrats and the Trump wing of the GOP. For every 1 manufacturing job lost to trade in this country, 3 are lost to automation.
The news for Indiana and the 1,100 workers who will not lose their jobs after all is profoundly important and officials including Trump should be lauded for whatever role they played in retaining the jobs, but the message to the public that any official- even the President-Elect of the United States- can personally make this kind of thing happen with the right words and a Twitter account is a dangerous one for communities and economic developers around the country. It suggests that personal style, power and salesmanship alone can overcome market forces and renew industries to a past glory that is no longer realistic. The future for American manufacturing is incredibly bright, but to ignore the paces of change the sector is undergoing is a gigantic missed opportunity which unchecked will only lead to more disappointment, confusion and anger on the part of those displaced from their jobs in the future.
What America sorely needs from the Trump Administration after a nothingburger of a last 8 years of economic development policy is a muscular and structural approach to economic development focused on competing in the digital 21st century, not the promise of one-off negotiated deals which focus on clinging to 20th century analog jobs. The President of United States does not have time to create jobs 1,000 at a time. We need him to capitalize on the unique and awesome opportunity a new holder of the office of the presidency has and deliver us a national jobs strategy within the first 100 days.
Instead of a master class in negotiation, what we saw play out in Indiana instead was akin to a hostage situation with two people with gun to each other’s head which de-escalates to a handshake. Trump deserves credit for manipulating the situation with a hefty carrot- $7 million in tax credits- and massive stick: the $5 billion in federal defense contracts Carrier’s parent, United Technologies, currently enjoys.
The Trump/Carrier rescue is for now only a sugar rush of good news. Economic developers and community leaders everywhere should be asking the incoming administration to translate the burst of goodwill and unusual national attention trained on an economic development matter the affair has created into a national economic development policy priority.