It turns out that the Carrier deal to keep 1,000 jobs in Indiana may actually lead to automation and fewer jobs, says Greg Hayes, CEO of United Technologies, the parent company of Carrier.
Speaking in an interview with CNBC, Hayes explained that President-Elect Donald Trump’s corporate welfare bribe to keep Carrier in the United States may ultimately backfire in the end. He warned that by not relocating to Mexico to save approximately $65 million, Carrier may need to implement more automation, which will result in fewer jobs down the line.
“The result of keeping the plant in Indiana open is a $16 million investment to drive down the cost of production, so as to reduce the cost gap with operating in Mexico,” said Hayes.
“We’re going to make a $16 million investment in that factory in Indianapolis to automate to drive the cost down so that we can continue to be competitive. Now is it as cheap as moving to Mexico with lower cost of labor? No. But we will make that plant competitive just because we’ll make the capital investments there.”
Hayes also defended the company’s initial measure to transfer operations to Mexico. He stated that the company has a tremendous workforce in Mexico, and the wages are about 80 percent lower. With absenteeism at about one percent and a turnover rate at roughly two percent – both of which are much higher in the U.S. – the Mexican workforce is “very, very dedicated.”
Moreover, he did say that the Trump-Carrier move was “a good deal for UTC,” adding that the president-elect did not issue any threats regarding the plant’s future.
“I was born at night but not last night. I also know that about 10 percent of our revenue comes from the U.S. government. And I know that a better regulatory environment, a lower tax rate can eventually help UTC over the long run. And so we weighed all of things in making the decision with the board,” Hayes said.
“We keep the plant open, we keep 1,100 people employed in Indianapolis. We still get to do the preponderance of the restructuring, which we were going to do anyways.”
The news comes as Carrier announced that it was going to raise prices by five percent in 2017 (SEE: Thanks, Donald Trump, Carrier to raises prices by 5% in 2017).
Indeed, this is going to be the trend over the next four years. If you thought the Fight for $15 crowd led to heightened automation efforts across the fast-food industry then Trump forbidding companies from relocating operations to other low-wage nations is going to accelerate automation initiatives in nearly every other industry. If corporations want to prevent being taxed 35 percent for relocating offshore then they will just automate.
This is what happens when governments and politicians interfere into the forces of the free market.
Fool me once shame on you, fool me twice shame on me. The CEO of UTC is not fooling anyone, they have been looking at automation for years, anything to cut jobs, saves them money ling term. They are just joining the blame Trump train for cover.
Automation has been changing the job market since the industrial revolution, nothing has changed. Less people putting A/Cs together, more people fixing the machines that put A/Cs together.