President-elect Donald Trump's visit Dec. 1 to the Carrier manufacturing plant in Indiana seems to be settling into a pattern for one aspect of his policy toward manufacturing — high-profile brow-beating as a job saving strategy.
But how sustainable are these kinds of presidential deals as a government policy?
Trump made Carrier's decision to move 2,100 jobs from Indiana to Mexico a part of his presidential campaign. He opposed it and used the pulpit of a presidential campaign to denounce the company.
Carrier announced Nov. 30 that it was partially reversing course, keeping 1,000 jobs manufacturing gas furnaces in Indiana.
In a statement, the company said it had “very productive conversations” with Trump and Vice President-elect Pence (who is of course the governor of Indiana) and credited the incoming Trump government with emphasizing its commitment to a more competitive U.S. business climate. The reported $7 million in tax breaks Carrier is getting over the next 10 years to keep those 1,000 jobs in Indiana probably didn't hurt either.
This comes after Trump told The New York Times last week that he, in a phone call with Apple CEO Tim Cook, emphasized to Cook that he wanted Apple to manufacture more in the United States. In that interview, Trump said he's having similar conversations with other executives.
But listen to what Michael Hicks, director of the Center for Business and Economic Research at Ball State University in Muncie, Ind., told the news program Here & Now, about how much more is needed than these sorts of one-off announcements.
“It's hard to overstate how little the deal making that seems to dominate the media matters, so if the Trump administration does this every day for the next four years, that's equivalent to about six months of jobs gains,” Hicks said. “So it's not a sustainable economic strategy.”
In another part of the interview, he argues that automation and changes in manufacturing are a bigger problem for saving jobs.
“Even with the trade issue overhanging all of this, the bigger issue is that somewhere between eight and nine jobs are lost to automation for every one job lost to trade,” Hicks said.
President-elect Trump is clearly signaling he wants to take manufacturing policy in a new direction. This Washington Post story says Trump's nominees are mapping out ‘Carrier-style' negotiations,' among other policies.
Just as it took diehard anti-Communist Richard Nixon to open relations with Mao's China, maybe a Republican president will have more leeway to lean on the business community.
But I wonder how much screaming about socialist government interference there would be if President Obama had leaned on Carrier the same way? In retrospect, maybe Hilary Clinton wishes he had.
We're in a period of a lot of uncertainty, as far as the U.S. government's manufacturing policy.
Some of what President-elect Trump has said about manufacturing doesn't square with facts. He told The New York Times, for example, that “we don't make anything… we're going to start making things” and that we don't “win any more. At anything,” including trade.
We have roughly 12 million manufacturing jobs in the U.S. now, compared with 18 million in 2000. That's a lot of good jobs lost.
But if you look at articles like this from the Wharton School at the University of Pennsylvania, Trump's statements about how we don't make anything in the United States aren't true. U.S. manufacturing hit an all-time high in 2015, measured by in output.
Looking at output, the U.S. makes twice what we made in 1984, with one-third fewer workers. Yes, we still have a large manufacturing sector.
The United States had the second-largest manufacturing output in the world in 2014, behind China and ahead of Japan, according to the Congressional Research Service.
I think everyone is glad for the people in Indianapolis who are keeping their jobs and supporting their families. [Well, maybe not the people in Mexico who hoped for those jobs as their ticket for a better life, but certainly a lot of people in Indiana are happy.]
We all want manufacturing to succeed, especially those of us at a magazine like Plastics News. I hope that government policy makers take all the complexities into account, including automation and globalization, and Mr. Trump can be reminded that yes, we do still make things in the United States.
