Steel Markets

Carrier Moving Indiana Operations to Mexico

Written by Sandy Williams

Carrier, a leading manufacturer of heating, ventilating and air conditioning products, announced on February 10 plans to relocate its Indiana manufacturing operations to Monterrey, Mexico. The move will affect about 1,400 employees and will occur in phases from 2017 through 2019.

Chris Nelson, President, HVAC Systems and Services North America, said, “This move is intended to address the challenges we continue to face in a rapidly changing HVAC industry, with the continued migration of the HVAC industry to Mexico, including our suppliers and competitors, and ongoing cost and pricing pressures driven, in part, by new regulatory requirements. Relocating our operations to a region where we have existing infrastructure and a strong supplier base will allow us to operate more cost effectively so that we can continue to produce high-quality HVAC products that are competitively positioned while continuing to meet customer needs.”

The announcement took workers at USW Local 1999 by surprise and was caught on cell phone video and posted on YouTube.

USW Subdivision Director Wayne Dale said the announcement was a shock. “It was devastating to hear, and it was not anticipated at all,” he said. “It’s a total disappointment for the employees and their families.”

Nelson said the decision was difficult and recognizes the impact on workers. “We are committed to ensuring that our employees are treated respectfully and to working closely with their representatives through this transition.”

“Today’s surprise announcement was without warning and incredibly disappointing,” said Indianapolis Mayor Joe Hogsett.

Indiana Govern Mike Pence said on Friday that the closing of the Carrier Plant and a United Technologies Electronic Controls plant in Huntington was ”disappointing” and blamed the loss of U.S. manufacturing jobs on Washington.

“While our administration continues to foster an environment within the state that is attracting record investment, federal regulations continue to stymie our national economy,” Pence said in a written statement. “The fact that these companies are leaving the United States speaks broadly about the need for reform in our nation’s capital.”

Democratic U.S. Sen. Joe Donnelly said the issue was wages, $23 per hour at the Indianapolis plant versus $4.19 per day in Mexico. Donnelly said he asked Nelson to explain which regulatory requirements were problems for Carrier.

“He couldn’t tell me a single regulation that was causing him any issue,” Donnelly said Friday. “The only discrepancy so far is on the fact that the minimum wage in Mexico is $4.19 a day. It’s certainly not that they’re not making money and they’re not succeeding. What they’re trying to do is to sell heating and ventilation products to [Americans] but aren’t willing to pay those same wages to the people who build the products.”

Presidential candidate Donald Trump weighed in on the issue during the Feb. 13 Republican debate saying he would impose taxes on Carriers air conditioning units manufactured in Mexico and sold in the U.S. Trump said if he were president he would give Carrier two choices:

“I’m going to tell them, ‘Now I’m going to get consensus from Congress and we’re going to tax you,'” said Trump. “‘So stay where you are [in Mexico] or build in the United States.’ Because we are killing ourselves with trade pacts that are no good for us and no good for our workers.”

The Indiana Economic Development Corporation in 2013 agreed to provide up to $200,000 in training grants to Carrier to create and maintain jobs; about $198,000 of that has been awarded.

IEDC said in a statement, “In light of yesterday’s news, the IEDC is working to gather more details about Carrier’s plans to move jobs to Mexico. If the company closes its Indianapolis facility, or if the layoffs result in more than a 20 percent loss of workforce, the IEDC will seek to recapture those grants.”

Carrier is owned by United Technologies. Carrier’s founder Willis Carrier is recognized as designing the first modern air-conditioning system.

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