Carrier Move to Mexico Sparks Discussion

Written by John Packard

On Sunday Steel Market Update published an article about the Carrier announcement that they would be moving their manufacturing and distribution facilities from Indianapolis, Indiana to Mexico. The announcement got the attention of Donald Trump who mentioned it during the debates on Saturday. Our article and the news also got the attention of a number of our readers who penned their opinions on the subject.

We heard from Nick Dubyk of Mid-America Steel who told us, “It’s sad to hear this, NAFTA pays for multinational corporations not the American people. The TPP and TPIP are NAFTA on steroids. I’m suspicious of any negotiations done on my behalf (as an American) in secret. Like the old saying “if you are not invited to the dinner table then you are on the menu”.  The trade dispute mechanism ISDS is especially bad to sovergn law of the countries in this treaty. From the NAFTA treaty we get – TransCanada is suing the US taxpayers $8 billion for lost profits because their pipeline was blocked. What else are the multinationals planning?? It has to stop otherwise we’ll have just a few very rich individuals and many very poor – no middle class (who btw drives 75% of the economy, maybe what we are seeing today in stocks and economies around the world is the lack of wages needed to support business/economies).”
We also heard from Peter Brebach, CEO of Iron Angels of Colorado:

“This is indeed an important and complicated subject.
I am not sure why the move by Carrier has created this much public outcry. As much as I feel sorry for the 1400 people and their families who lost their jobs, this has been going on for years and years and years. And in the end, it makes no difference whether an American company moves their production abroad and then sends their product back to the US, or whether we simply buy the same product from a foreign company, which produces it in Mexico, in China or in Timbuktu.
Walmart deserves a good portion of the blame, as they were the first ones to buy in China in large quantities  –  first mainly knick-knacks, and then clothing and eventually Coffee makers and electronics equipment, and it took us a long time to catch on. Walmart was still waving the American flag, while laughing all the way to the bank. I remember taking my wife to the ladies’ department in a Nordstrom store 5 or 6 years ago, and we could not find ANYTHING not made in China. To add insult to injury, the sales people we talked to either had no idea or no problem with it. A US maker of exercise equipment, whom I was selling steel tubing to, would go berserk when confronted with a price increase. They would tell us “if we try to pass this on to Walmart (one of their main customers), they’ll just say “China, China, China””.
And in the end, how is this different from a service center in Chicago, Houston or Los Angeles buying imported steel instead of domestic? There simply does not seem a good solution to this situation, one that would make everybody happy. Using imported steel as a scapegoat for all their ills has become a common complaint by the US industry. Most Chinese products are already subject to dumping duties, and the articles not yet covered are being worked on. Nevertheless, whenever US Steel, Nucor et al publish their quarterly results, we keep hearing about cheap and subsidized imports, like it applies to all of them. Cheap maybe, but subsidized certainly not.
China of course is responsible for a major portion of today’s overcapacity in steel, and thus the main culprit for the imbalances that impact today’s trade picture. And if they cannot ship it to the US, they will ship it somewhere else, and whoever was dominating those markets, will have to find new ones elsewhere, including in the US. It used to be European and South American steel mills that were subsidized by their governments, but today, China is by far the biggest violator, in spite of their professions to the contrary.  And since none of our current global institutions have the answers to this, it leaves a lot of us very, very frustrated. Boycotts usually do not solve anything, but neither do the comments made by some of the current presidential candidates. They should know that the US cannot slap duties on Carrier products or others made in Mexico, without violating WTO rules and inviting retaliation.
And then, there is Prolamsa. This Mexican-owned producer of pipe and tubing, who has its main factory in Monterrey, Mexico, has opened additional plants in Laredo and Bryan, Texas, and in doing so, they are clearly swimming against the tide. But it’s certainly good to know that this does not seem to be a one-way street.”
Peter Brebach

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