Later today, P/E Trump and Carrier will announce that 50% of the 2,000 jobs set to be outsourced to Mexico will be retained. There are no details available yet, but there appears to be a defense-budget stick used on United Technologies, the corporate parent, and some Hoosier carrots, delivered by Indiana. VP/E Pence remains the Governor. Kudos to Trump for saving these jobs.
There are special factors at play here: the defense contract tie-in, Pence’s ties to the state, and the fact that keeping the jobs will mean only $.02 on Carrier’s profits of $6.50, less than half of 1%. In other words, the Carrier “deal” is a one-off.
The jobs saved are high-paying, with hourly rates in excess of $20.00. Even with high-paying labor costs, Carrier shares are earning $6.50. Carrier is profitable without moving any of the jobs.
So why the impetus to move? Wall Street earnings, competition, the lack of effective collective bargaining. All but forgotten is the fact that disappearing jobs mean disappearing consumers. But that is beyond the horizon of the next quarterly earnings forecast. No need for this manufacturer to think about it.