Donald Trump spoke at the Carrier plant in Indianapolis on Thursday, formally announcing his agreement with the company to keep the plant open and reportedly saving some 1,000 jobs from moving to Mexico. Time
Donald Trump’s vow to stop jobs from heading across the Mexican border might sound good, but it’s not the grand plan to save jobs that some hope.
The number of companies shifting production from the U.S. to Mexico is far from the epidemic implied by the president-elect. Just six U.S. companies out of a universe of thousands trading on a major exchange, including United Technologies (UTX), medical technology firm Becton, Dickinson (BDX) and motion control parts maker Rexnord (RXN) have indicated over the past 12 months plans to shift production from the U.S. to Mexico, according to a USA TODAY analysis of S&P Global Market Intelligence, which compiles a database of discontinued operations. Trump has already targeted two of these firms: United Technologies’ Carrier unit and Rexnord. No companies have announced plans to move plants to China during that same period, according to the S&P Global database.
It’s not a complete list, as many companies don’t go out of their way to broadcast plans to relocate south of the border. But a review of company conference call transcripts, earnings reports and news reports show the trend to move jobs to Mexico isn’t growing, but one that happened years ago largely in the automotive sector. U.S. consumers and businesses are now reaping the benefits of these past moves.
At the same time, skilled workers with the ability to work in highly automated plants are retained or even see expanded opportunity in the U.S.
About 65,000 U.S. factory jobs were offshored to all foreign countries in 2014 and 2015, each. Those lost jobs were offset by a roughly equal number created in the U.S as American manufacturers moved production back home or foreign firms built plants here to tap the U.S. market, says Harry Moser, head of the Reshoring Initiative. The group serves as a consultant for companies looking to “reshore,” or bring factories back to the U.S.
Some companies that are moving jobs to Mexico are boosting jobs requiring more skill in the U.S. Take Merit Medical. Bernard Birkett, chief financial officer at the company said in September it is “focusing on moving high-volume, labor-intensive products to our Mexico facility where we can benefit from lower cost environment.” But here’s the important offset: “Then in turn, filling that capacity that’s been created in our U.S. facilities, with products coming through from (research and development) and also through acquiring new products.”
Trump, though, continues to pressure the few U.S. companies considering a move with threats of tariffs and other vows of protectionism, perhaps threatening higher paid jobs. “Companies are not going to leave the United States anymore without consequences. It’s not gonna happen,” Trump announced as he celebrated the decision of United Technologies, a large government contractor, to partially halt plans to move production of its Carrier air conditioning and refrigeration unit to Mexico, where labor costs are lower.
NO SIGN OF AN EXODUS
Just how many companies are actually moving production south is a challenging question to answer. The Alliance for American Manufacturing says there have been 1,600 incidents of parties making Trade Adjustment Assistance claims to the Department of Labor since 2015. These are claims where workers are shown to suffer financial hardship due to production being outsourced overseas or competition from imports. But these aren’t just companies making claims, but also individuals, unions or state agencies so there could be overlap. The Alliance says it doesn’t have a list of companies that have moved. There isn’t a central repository for companies to file their plans to move production to Mexico. Relocation plans aren’t recorded in financial statements, either, making generating a list difficult.
But evidence is scant there’s an exodus. Just seven companies in the broad Standard & Poor’s 1500 discussed plans to move to Mexico in conference calls and investment conferences, according to S&P Global data, including Merit Medical (MMSI) and Standard Motor (SMP). There have been additional moves by companies such as Ford (F), which plans to move some of its small car production to Mexico and casket maker Hillenbrand (HI), which plans to close a U.S. plant that makes wooden caskets and move production to an existing plant south of the border.
Oreo cookie maker Mondelez (MDLZ) cut 600 positions from its Chicago bakery after a July 2015 investment in more automated production lines in Mexico. Much of the job loss was due to technology, says Laurie Guzzinati, spokeswoman at Mondelez. Even if the investments were made in Chicago, 300 positions would have still been lost, she said.
