Carrier Corp. was motivated to retain 1,000 manufacturing jobs in Indianapolis by an incentive package that will be offered by the Indiana Economic Development Corp. and the possibility of losing a “favorable relationship with federal contractors,” according to a prominent IEDC board member.
Carrier said Tuesday night that it had reached a deal with President-elect Donald Trump and Vice President-elect Mike Pence to keep its manufacturing operations open in Indianapolis—about 10 months after announcing it was moving 1,400 local jobs to Mexico.
Former Indiana Lt. Gov. John Mutz, chairman of the IEDC board’s public policy committee—which reviews the incentive packages offered to companies by the economic development organization—said he was briefed Tuesday on the deal, which will have to be approved by IEDC board members. Vice President-elect Mike Pence is still technically chairman of the IEDC’s board as Indiana governor.
“I can tell you there will be an incentive package,” Mutz told IBJ on Wednesday. “I don’t know … exactly the amount of money involved. We will apply our formula on the rate of return to this situation. It will be judged in the same way we provide to other companies.”
But Mutz said he doesn’t believe the impending incentive package “really is the major reason for the decision.”
That, he said, is likely because of Carrier Corp. parent company United Technologies Corp's desire to keep its hefty federal contracts. United Technologies and its subsidiaries collect about $6 billion annually from U.S. government contracts, making up about 10 percent of its overall revenue, according to CNN Money.
Comparatively, the company expects to save about $65 million per year by moving its local plant, IBJ reported earlier this year.
“United Technologies is a gigantic international company with many different divisions and subsidiaries, many of which do substantial amounts of business with the U.S. government,” Mutz said. “The dynamics are considerably different than they were even before the election. You’re talking here about a company that is trying to be competitive and also wants to keep their business with the government.”
Chuck Jones, president of United Steelworkers Local 1999, which represents Carrier workers, said he still didn’t have information about the deal struck between President-elect Trump and Carrier. But, he said, any changes to employee compensation “couldn’t arbitrarily change” unless the union members agree to the changes.
“We would have to bargain on anything that would change a binding labor agreement,” Jones said.
As for other companies that have recently announced that they will ship jobs to Mexico, such as Indianapolis’ 350-worker Rexnord plant, Mutz said “their moves could be on the table” as well.
“But that’s up to them,” Mutz said. “They’ve got to step forward to say we’re willing to talk about it.”
Mutz said he is concerned about whether the jobs can be retained long-term.
“Most of the people who make the kinds of equipment that Carrier sells operate outside the U.S.,” Mutz said. “The problem is they’ve got to be competitive.”
Carrier and Trump are scheduled to formally make the announcement about their deal Thursday in Indianapolis.
Mutz, a Republican, served as lieutenant governor under Gov. Robert Orr from 1980 to 1988. He is former president of PSI Energy, a predecessor to Duke Energy Corp., and president of Lilly Endowment.