Whether one is pro-union or a right-to-work advocate, it is becoming increasingly clear that corporations are bailing on the United States in increasing numbers to escape the high costs of unionized labor. The latest example is Carrier Corporation which has announced plans to relocate its manufacturing operations from Indiana to Mexico over the next three years. The company still bears the name of Willis Haviland Carrier, the American credited with inventing modern air-conditioning. In 1906 Carrier was granted a U.S. Patent on his invention which he called an “Apparatus for Treating Air”.
The father of modern air-conditioning would likely need a fan to cool down if he knew his company was planning to relocate manufacturing operations to Mexico over the next three years. The move will result in the loss of about 1,400 local jobs, the company has announced, according to a Business Insider article published yesterday.
Carrier Corp. is a subsidiary of United Technologies Electronic Controls. The company announced on Wednesday that it will move its manufacturing operations in Huntington to a new plant in Mexico, costing the northeast Indiana city 700 jobs by 2018 and its Indianapolis facility is scheduled to complete its move to Mexico in 2019. Carrier Corp. and UTEC are both units of Hartford, Connecticut-based United Technologies Corp., a Fortune 500 company with $65 billion in revenue.
Union officials say they were caught off guard by the move. “This was not expected at all,” said Chris Jones, president of United Steelworkers Local 1999, which represents 1,300 workers at the Indianapolis plant. “At no time did we think this was a possibility. The plant had been there a long time. It was very profitable, and we had not had a lot of issues.” One of the reasons American companies are moving across the border and offshore is said to be the high cost of unionized labor. The average wage for union members at the facility is about $23 an hour, almost four times what many manufacturing jobs in Mexico pay – added to that are high costs associated with union workers’ benefits. Company officials also cite the burden of government regulations as a reason for the move.
Chris Nelson, Carrier’s president of HVAC systems and services for North America, said in a press release that “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.”
He added: “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.”
For his part, Jones said the United Steelworkers would attempt to schedule talks with the company in hopes of reversing the decision, however there is little optimism since the company has already made decisions and announced the plan of implementation.
Jones does not think the company is moving its operations to Mexico to be competitive in the industry. Instead, he blames top-level executives and says it’s all about increasing profits. “Because of corporate greed, 1,300 of our members and their families have a hell of a price to pay,” Jones said. Regardless of one’s loyalty to unions, the cost of doing business always factors into the shelf cost of products in the marketplace, regardless of industry. The more competitive the market the more likely a company like Carrier Corp. will be attracted to Mexico where it can conceivably cut its labor costs in half or more and do so with a fraction of US regulations.