After securing a deal to save 1,100 jobs at a Carrier plant in Indiana from being exported to Mexico, Trump is set to kick off his Midwest “Thank You Tour” with a speech there which is expected to get started around 2pm EST.
As we pointed out earlier this morning, Trump’s deal reached with Carrier keeps 1,100 jobs in the U.S. in return for $700,000 in annual tax breaks for a period of 10 years. Per the Wall Street Journal, the heating and air conditioning company will also invest about $16 million into a furnace plant in Indianapolis that it had previously planned to close and move to Mexico.
As Fortune reports, citing a source close to the company, Trump called Greg Hayes, CEO of Carrier’s parent company United Technologies, two weeks ago and asked him to rethink the decision to close the Carrier plant in Indiana. Hayes explained that the jobs were lower-wage and had high turnover, and the move was necessary to keep the plant competitive, according to the source. He said the plan would save the company $65 million a year.
Trump then replied that those savings would be dwarfed by the savings UTC would enjoy from corporate tax-rate reductions he planned to put in place. During the recent campaign, Trump threatened to slap tariffs on Carrier imports from Mexico.
So what were the “incentives”? In the end, UTC agreed to retain approximately 800 manufacturing jobs at the Indiana plant that had been slated to move to Mexico, as well as another 300 engineering and headquarters jobs. In return, the company will get roughly $700,000 a year for a period of years in state tax incentives. Still, some 1,300 jobs will still go to Mexico, which includes 600 Carrier employees, plus 700 workers from UTEC Controls in Huntington, Ind.
In summary, the “math” works out to $636 per year per job saved in tax savings: hardly an egregious sum, and one which could likely be extended to other companies (unless, of course, those other companies decide to hold Trump hostage and demand escalating pay schedules) if and when Trump’s fiscal stimulus package is implemented. It remains to be seen if the popular response, outside of conservative groups, will interpret this trade off as taxpayer funded “moral hazard.”
Look forward to going to Indiana tomorrow in order to be with the great workers of Carrier. They will sell many air conditioners!
— Donald J. Trump (@realDonaldTrump) December 1, 2016
After the speech at Carrier, Trump is expected to make several more stops across the Midwest beginning with a rally later tonight as the U.S. Bank Arena in Cincinnati, OH scheduled to begin at 7pm EST.
— Donald J. Trump (@realDonaldTrump) November 30, 2016