NEW YORK — How did Donald Trump save 1,000 jobs at a Carrier plant in Indianapolis?
That question was answered Thursday as the president-elect flew to Indianapolis Thursday to take a victory lap about the company’s decision to no longer move a plant to Mexico.
Carrier spokesman Seth Martin said $7 million in state “incentives” from Indiana were a key to its decision to stay put. That money will be paid out over 10 years, with the company getting $500,000 per year in state income tax refunds as long as it keeps at least 1,069 manufacturing jobs in the state.
“The incentives offered by the state were an important consideration,” the company said Wednesday. It also talked about promises from Trump to “create an improved, more competitive U.S. business climate.”
However, that remains a fraction of the $65 million a year the company would have saved had it moved the plant to Mexico, suggesting the incentives were not the only factor in its decision to stay put.
Carrier parent company United Technologies, which is based in Connecticut, is a major defense contractor, with $5.6 billion in revenue from federal government contracts, or 10 percent of its total revenue. The government also pays for $1.5 billion of its research and development costs. It’s not yet clear what role if any the government business played in the talks between Trump and United Technologies.
Though about 1,100 jobs will be saved, hundreds more are still expected to lose their jobs–initially 1,400 were going to lose their jobs in the move to Mexico. It’s unclear if that will be accomplished through attrition or layoffs.
The Associated Press previously reported the deal would involve keeping about 800 union positions in Indianapolis that were to be outsourced, but since Trump did not address the people still set to lose his jobs it’s unclear where the discrepancy in numbers is from.
During his speech Trump said he didn’t mean it when he first vowed to stop the air conditioning company from shipping jobs to Mexico. He said the campaign promise was initially only a symbol for the other manufacturing jobs he would save if elected, thinking it was too late to change the company’s plans.
Trump explained that it wasn’t until a week ago that he took his promise seriously, after watching a report about the Indiana company on the nightly news. Then he called an executive to negotiate the deal.
But based off that revelation, Trump went on to say in the future companies are not going to leave the United States “without consequences. It’s not going to happen.” He says that companies leaving will be “taxed very heavily” at the U.S. border.
To encourage companies to say, Trump said in the press conference Thursday that he planned to lower the business tax from 35 percent to 15 percent, and that treating U.S. companies better was part of his strategy for keeping jobs in the U.S.
“I just want to let all of the other companies know that we’re going to do great things for business,” Trump said. “There’s no reason for them to leave anymore. Because your taxes are going to be at the very, very low end. And your unnecessary regulations are going to be gone. We need regulations for safety and environment and things. But most of the regulations are nonsense.”
Any changes to the tax code would need to be approved by Congress.
The deal has received criticism from some officials on both the right and the left. Sen. Bernie Sanders wrote in an op-ed in the Washington Post that U.S. workers’ jobs are less secure because of the deal, since companies can simply threaten to move to Mexico in order to get tax breaks from the government.
“In essence, United Technologies took Trump hostage and won. And that should send a shock wave of fear through all workers across the country,” Sanders wrote Thursday.
But even some conservatives said they didn’t like the idea of an incoming administration becoming this involved in negotiations to save one company, especially one with such a minimal impact on the overall economy. They say it smacks of government interference in the marketplace, which they think is a bad idea.
“It makes sense for a president and his team to change a tax code, change the regulatory environment to help businesses,” said Douglas Holtz-Eakin, president of the American Action Forum, a conservative Washington think tank, told CNN. “I’m not a big fan of this kind of negotiation. I think the more limited it is the better.”
With reporting by CNN and the Associated Press