‘Threats may not stop US jobs going offshore’
PRESIDENT-ELECT Donald Trump’s threats to retaliate against US companies planning to shift operations overseas constitute a new risk for multinationals, but might not sway those already planning to take jobs offshore.
Trump laid down the gauntlet on Thursday at a campaign-style rally after striking a deal with Carrier to keep about 1 100 jobs in Indiana in exchange for $7-million (R96.65-million) in state tax incentives over 10 years.
“Companies are not going to leave the United States any more without consequences. Not going to happen,” Trump told the cheering crowd. “They can leave from state to state, and negotiate deals with different states, but leaving the country will be very, very difficult.”
He did not offer details on how he planned to pressure companies to keep jobs in the US, but one obvious lever includes the removal of government contracts. That could make companies that work in defence, public works and public services especially vulnerable to retribution.
“Boeing, for example, would have to play ball if it wants its government contracts renewed,” said one expert who requested anonymity.
Trump coupled the threat with a promise to make the US a better place for business by cutting taxes and streamlining regulations. “There are a lot of plans already in place,” said Hal Sirkin, a manufacturing expert at the Boston Consulting Group. “CEOs are following the news closely and trying to figure out what all of this could mean for their businesses.”
Some companies said Trump’s broadside was not sufficient to compel a change in plans. Caterpillar announced in March 2015 it planned to shut a plant in Joliet, Illinois that makes oil pumps and valves, and move 230 jobs to Mexico.
Food giant Mondelez International also signalled it would proceed with plans to relocate hundreds of jobs from an Oreo cookie plant in Chicago to Mexico.
The industrial companies Rexnord, CTS Corp and Manitowoc Foodservice all plan to shift activities overseas from the Indianapolis area.
“Yesterday’s speech did not include anything specific enough for us to reconsider our plans,” a Manitowoc spokesman said.
Senator Bernie Sanders said Trump’s plans were a losing proposal, in part because Carrierwould still transfer 1 000 jobs to Mexico. Trump had failed to save all 2 100 jobs as he promised, Saunders said.
Carrier “took Trump hostage and won”, Sanders said in a Washington Post op-ed.
Trump endangered other US jobs, Sanders said, “because he has signalled to every corporation in America they can threaten to offshore jobs in exchange for business-friendly tax benefits and incentives.” — AFP