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Carrier deal done, Trump to dial up more companies on jobs

President-elect Donald Trump and Vice President-elect Mike Pence toured a Carrier plant in Indianapolis Thursday.Doug Mills/The New York Times

So this is what a dealmaker-in-chief looks like.

President-elect Donald Trump took to a stage Thursday at a Carrier Corp. furnace factory in Indiana, triumphant over the deal he cut to keep the plant open and save about 1,100 good-paying jobs from moving to Mexico.

Before a room full of cheering workers, he recounted his phone calls with the chief executive of Carrier parent United Technologies Corp. and promised more personal intervention with executives of other companies who might ship work overseas, part of a carrot-and-stick approach toward corporate America that he said will preserve and grow American jobs.

“Companies are not going to leave the United States any more without consequences,” Trump said. “It’s not going to happen.”


What those consequences might be, however, are still not clear. Trump did not say whether he threatened United Technologies had it gone forward with its Mexico plans, as he had promised on the campaign trail. But the conglomerate, which has its headquarters in Connecticut, had a lot at stake in its negotiations with Trump; it owns defense companies that have about $5.6 billion in contracts with the federal government, for example.

While Carrier will receive tax breaks from Indiana worth $7 million over the next 10 years, a state economic development official earlier this week suggested United Technologies’ defense contracts played a part in its decision to stay put.

“You’re talking here about a company that is trying to be competitive and also wants to keep their business with the government,” John Mutz, a former Indiana lieutenant governor who sits on the state board that will award the incentives, told the Indianapolis Business Journal.

Whatever United Technologies’ motivation, the hands-on approach Trump took to an individual economic development deal — shaming Carrier in public on the campaign trail, jawboning them in private after he won — is highly unusual. And the circumstances of a high-profile move from a state where Trump’s vice president-elect is the sitting governor will be hard to replicate, said Jared Bernstein, a former economic adviser to the Obama administration.


“It’s extremely smart politics,” he said. “But it’s not at all sustainable.”

Governors and mayors routinely craft incentive packages to woo particular companies, as Massachusetts and Boston officials did to persuade General Electric to move its headquarters here. But presidents have typically stayed above that fray.

“Presidents don’t tend to think about these problems in such a retail way,” said Bernstein, who now heads the Center for Budget and Policy Priorities, a left-leaning economic think tank. “It’s far more common for a president to talk with policy advisers about a systematic approach to dealing with cost-structure challenges in manufacturing, versus cutting a deal with a particular company over 1,000 jobs.”

Still, past presidential administrations have provided industry-specific aid, such as President Obama’s automaker bailout and incentives for solar manufacturers. And they routinely help negotiate trade deals for companies and provide low-cost financing through the Export-Import Bank that helps exporters such as Boeing Co. and GE. Meanwhile, Obama has used federal contracts to push other policy goals, signing executive orders that require a higher minimum wage of companies that do business with the government.

What Trump is doing with Carrier basically combines those two ideas, using the leverage of the federal government to influence a specific company, said Aaron Renn, a senior fellow at the Manhattan Institute, a free-market think tank in New York. And he’s doing so with far more tangible results.


“He’s taking the same sorts of tools,” Renn said. “But instead of using them to subsidize corporate profits, he’s saying, ‘We’re going to use them to help workers.’ ”

It sends a message to companies considering moving jobs overseas, Renn said, that the most powerful man in the world is watching.

But even 1,100 jobs is tiny in an economy that added 161,000 in October, Renn and other experts agreed. And this company-by-company approach won’t do much in the long-term to broadly boost manufacturing jobs. Indeed, while Carrier will keep 1,100 jobs in Indianapolis, it still intends to move 600 others from Indianapolis to Mexico, as well as shutter a plant in the state where 700 more people work.

Moreover, if Trump carries out his plans to toughen trade deals, he risks hurting exports by US manufacturers. And if his other economic policies result in a stronger dollar, that, too, will make American products less competitive and drive more factories overseas, said Lee Branstetter, a fellow at the Peterson Institute for International Economics.

“We are probably looking at a tidal wave of manufacturing job losses,” Branstetter said. “Does he seriously think that by trying to publicly strongarm a private company that he’s going to make up for that?”

Better, Branstetter said, to let companies move where they want and make the United States more competitive. In his speech Thursday, Trump briefly outlined his plan to help do that: lowering corporate income taxes from 35 percent to 15 percent and eliminating “unnecessary regulations.”


That will take cooperation from Congress, and time. Meanwhile, there’s nothing stopping Trump from picking up the phone and calling a CEO to cut a deal. Indeed, he said Thursday, he plans to do more of that.

“They say it’s not presidential to call up these massive leaders of business. I think it’s very presidential,” Trump said. “And if it’s not presidential That’s OK. That’s OK. Because I actually like doing it.”

Tim Logan can be reached at tim.logan@globe.com.