Carrier lays off first 300 employees on 6-month anniversary of Trump's presidency

INDIANAPOLIS (INDY STAR) -- Carrier Corp. plans to eliminate 338 jobs at its Indianapolis furnace factory Thursday — and the timing is likely to raise some eyebrows.

The previously announced layoffs coincide, to the day, with the six-month anniversary of Donald Trump's presidency. They are part of a deal Trump struck with the company in December to prevent deeper job cuts at the plant.

The terminations are the first wave of about 630 planned before the end of the year as the company shifts work to Mexico. Carrier's parent company, United Technologies Corp., also plans to lay off another 700 workers at a factory in Huntington near Fort Wayne.

Carrier in a statement said it "continues to honor its 2016 commitment to employ approximately 1,100 associates in Indianapolis. As announced in November, this includes headquarters and engineering jobs and more than 800 employees supporting our world-class gas furnace manufacturing center."

The statement noted that more than 30 of the affected employees have taken advantage of a company benefit that reimburses them for pursuing degree programs.

Carrier last year announced plans to move all of its Indianapolis operations to Monterrey, Mexico, and close the west-side factory. The pending layoffs became a flashpoint during the presidential election when United Technologies announced it would cut 2,100 jobs in Indiana. Trump slammed the decision on the campaign trail and threatened to "tax the hell" out of Carrier's products.

An agreement brokered after the election by Trump and then-Gov. Mike Pence resulted in a commitment from Carrier to keep the plant open for 10 years. Despite the agreement, Carrier is still moving its fan coil production from Indianapolis to Mexico.

Most of the positions being cut Thursday are related to that fan coil outsourcing, said Robert James, the president of United Steelworkers Local 1999, which represents Carrier workers. About 140 of the workers who are leaving Thursday requested voluntary separation, James said.

Carrier granted the separations to some of the most experienced employees, which James said might allow some younger workers to keep their jobs. All employees whose jobs are being eliminated will receive one week of severance pay for every year they spent with Carrier, plus six months of insurance. The jobs pay an average of about $22 an hour.

Although Trump and Pence have been credited with saving Carrier's Indianapolis factory, James said employees don't feel much security.

"They just don't have any faith in this plant staying in Indianapolis," he said. "There's just too much uncertainty."

James, who recently succeeded retired union leader Chuck Jones, said he expects Carrier to eventually close the plant. Mohan Tatikonda, an operations management professor for the Indiana University Kelley School of Business who has visited the Carrier plant, said it's a valid fear.

"This deal is a temporary support, or enablement, of these jobs," Tatikonda said. "But it's not a long-term support. I would expect the furnace production would move to Mexico or some other lower-cost labor environment, barring some massive international changes, in some number of years."

The only scenario Tatikonda sees that could keep Carrier's Indianapolis factory open well beyond its commitment is if the company creates an innovative line of furnaces that can't be produced more efficiently in a country with cheaper labor. Barring that, Tatikonda said, it's possible Carrier could close the factory before the end of its 10-year commitment if the cost savings justify relinquishing state incentives.

Tatikonda credited Carrier's management with finding ways to increase productivity in the Indianapolis plant and keep it open as long as it has been.

"The Carrier factory stayed active in Indianapolis for years longer than we should have expected it to," he said.

In the short term, the deal negotiated by Trump and Pence is expected to prevent more than 700 layoffs at Carrier. As part of the deal, Pence arranged for Carrier to receive up to $7 million in conditional state tax incentives and training grants — one of his final acts before leaving the governor's office.

The Indiana Economic Development Corp. in March granted initial approval to the Trump-Pence Carrier deal, but the state has yet to finalize it.

Trump and his supporters touted the deal as an early win for the incoming administration — proof that Trump's deal-making abilities could save American jobs. But critics have blasted Trump and Pence for exaggerating the number of jobs saved and for providing taxpayer subsidies to the company even as it ships most work to Mexico.

The Democratic National Committee on Wednesday issued a statement noting Carrier's layoffs are coming at a time the Trump administration has dubbed "Made in America" week, touting an agenda meant to support manufacturing in the U.S. The DNC said Pence is "responsible for the thousands of Indiana workers that will be left jobless because of broken promises about American manufacturing."

Neither Pence spokesman Marc Lotter nor a Trump administration spokesman responded to requests for comment.

While the Carrier factory continues to churn out furnace products, Milwaukee-based Rexnord Corp. is preparing to close its nearby industrial bearings factory in September. Rexnord recently postponed the plant's closing, yet has shown no signs of giving into pressure that Trump has applied to the company as recently as May to keep it open.

Aside from Trump's attacks on manufacturers in speeches and on Twitter, Tatikonda said the president has done little else to reverse job losses caused by the onslaught of automation.

"There hasn't been any policy proposal from this presidential administration that gets at retaining and growing the manufacturing workforce," he said.

IndyStar


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