U.S. Companies Still Offshoring Plenty Of Jobs

It’s been over a year since President Donald Trump promised big consequences for companies that ship manufacturing jobs overseas, but factories are still saving big with foreign labor and imports. The occasion of the speech was his much-lauded negotiation with the Carrier Corporation’s furnace plant in Indianapolis, Indiana.

The deal was meant to illustrate the kind of creative business solutions to be expected from the incoming administration. Instead, it stands out as a rare (and questionable) success for American workers, more and more of whom continue to lose their jobs to foreign competition.

Carrier still laid off 500 of its 1,400 workers, and it has not been the only manufacturer to do so. Just few weeks ago, the Rexnord ball bearing plant in Indianapolis closed its doors for good; 350 workers in total have lost their jobs since the plant announced last October that it was planning to shift production to Mexico. Facing unemployment, some of the plant’s remaining employees took the extra $4 to $10 an hour Rexnord offered them to train their Mexican replacements.

In Indiana, where manufacturing jobs make up one fifth of the market and Trump received 72% of the vote, workers are feeling betrayed. “I absolutely got sucked into this message,” one Rexnord employee told TIME Magazine. Said another, “I voted for Trump based on the fact that he could save our jobs.”

At the time of the Carrier deal, when Trump was still projecting a protectionist, anti-trade policy, the then-president-elect suggested a 35% tax rate for corporations who move their manufacturing jobs to other countries. Rather than deterring the practice, however, there has been a slight increase in the number of jobs lost to foreign competition in the year since Trump’s election – 93,000 versus an average of 87,500 in the previous five years – according to Labor Department data.

Moreover, the tax reform bill currently making its way through Congress does not encourage companies to keep jobs on American soil, much less bring them back. One provision in the House version of the bill allows for a one-time (tax-free) repatriation of overseas profits. Not only are companies receiving none of the promised penalties for outsourcing; they are being rewarded for it.

Voters in Indiana, which has one of the most manufacturing-dependent economies in the United States, voted for Donald Trump because they believed he could use his clout and experience to save American jobs. In reality, his “deal” with Carrier only saved 300 of the 800 jobs the plant had originally planned to eliminate. In addition, Carrier’s parent company (United Technologies Corporation) walked away with a $7 million incentive package.

As a government contractor, UTC could have potentially lost that revenue had they not taken the deal. In that light, it seemed like the Carrier example would keep other federal contractors in line, if not all manufacturers. Not even they have slowed production moves, however, contributing 11% of the trade-related layoffs over the last year – an increase of seven percent.