There are more problems at the US borders then cheap labor trying to sneak in. Avon, in moving their headquarters operation to the United Kingdom, has joined a growing stampede of American companies heading for the borders. As Americana as Carrier air conditioners and Oreo cookies, the 130-year-old Avon Company is bailing on the USA, or New York City to be exact. This latest rush for the border by corporate America will cost 2,500 jobs, not to mention affiliated businesses.
The Avon announcement comes on the heels of Nabisco (maker of Oreos) company’s announcement that it would move its operations to Mexico. Meanwhile, Carrier, the Indiana air-conditioning company, already announced it will do the same last month. Jobs seem to be flowing out of the country nearly as fast as unskilled labor is coming into the country through the southern border. The Avon announcement comes two weeks after the now struggling North American business was sold as a privately held company under the control of a private equity firm, Cerberus Capital Management. Avon still has a 20% stake in the private New Avon LLC.
A statement released by Avon (AVP) claims it’s motivation for exiting New York City and the US is that it has “core enterprise functions” in the U.K. with “direct connections to operations throughout the world.” New York City, where the company is based, has some of the highest corporate taxes in the nation. The slick part of the deal, at least for Avon, is that the move is not considered a tax inversion, and the company will still be traded on the New York Stock Exchange, according to spokeswoman Radina Russell.
“With the recent completion of the sale of the North American business, our commercial operations are now fully outside the United States, allowing us to dramatically rethink our operational model,” said CEO Sheri McCoy in a statement. Avon Products has operations in 70 countries, however Brazil is currently the company’s largest single market. Avon says it will significantly “reduce corporate infrastructure” in the U.S. as it relocates its headquarters in the U.K. The company will maintain facilities in Suffern and Rye, N.Y.
Heating and air-conditioning company Carrier, which has announced it will move 1,400 mostly union jobs to Mexico, received $5.1 million from the Obama administration in December 2013. Last month the company announced it would close its Indiana operations and move them to Mexico. When the company received over $5 million for clean energy tax credits, it announced the funds “would be used to expand production at its Indianapolis facility to meet increasing demand for its eco-friendly condensing gas furnace product line.” Despite receiving the taxpayer funding, the company announced last month it would move manufacturing operations to Mexico.
In another reverse rush for the border, Rosenfeld, the head of Mondolez (the food conglomerate based in Illinois that has Nabisco in its portfolio), announced that rather than invest in modernizing the plant in Chicago, where Oreos have been produced for 100 years, the company will instead move the jobs to a new factory in Mexico. The job loss includes 600 well-paying and community-sustaining jobs on Chicago’s Southwest Side and all affiliated employees.
Republican presidential candidate and corporate mogul Donald Trump has run a successful campaign largely on job creation and “making America great again.” Analyst and pundits point to Trump’s straight, if not always polite, talk about job creation as a reason he is leading the other three Republican front runners. As more companies elbow their way to the border in order to relocate their companies outside of the country, Mr. Trump has tapped into an artery of support flowing from the slowest economic recovery in modern American history.