What Trump’s trade plan could mean for Indiana manufacturing

INDIANAPOLIS, Ind. -- It’s been a rough week for manufacturing workers in central Indiana.

In Kokomo, GM is laying off more than 150 workers.

And earlier this week, Rexnord officially announced 400 Hoosiers would lose their jobs as they move to Mexico.

“We just can’t compete with three dollar an hour wages,” said Local 1999 Steelworkers Union president Chuck Jones.

President-elect Donald Trump’s plans for his first 100 days include taking steps to try to prevent more manufacturing job losses, starting with eliminating some free trade agreements.

That’s an idea Jones supports, but business experts believe won’t provide quick relief to workers.

“Immediate changes to NAFTA will not help with immediate increases in employment here,” said Mohan Tatikonda, an IU Kelley School of Business professor.

Tatikonda says that’s because the treaty, which took several years to create and ratify, would be just as complicated to unravel.

“Actually repealing or negotiating NAFTA is very difficult, perhaps not practically possible,” said Tatikonda. “It’s hard enough to get everyone in the United States to agree on something, much less three different countries with disparate objectives.”

The U.S., Canada and Mexico would all have to agree upon the changes to NAFTA and then ratify it through their respective countries’ governments. That could take years to complete, if ever.

Tatikonda believes Trump’s other strategy—higher import tariffs for products made by companies who leave America for cheaper workers—would also be complicated.

“They can place retaliatory tariffs, they can disallow sales of our goods and services in their country and so forth and we would fully expect them to do that,” said Tatikonda.

Although it may not push companies who have already moved to come back, he says it could change incentives for companies that were considering a move.

Tatikonda believes manufacturers would be better served by changing their products, not the cost of its workers. That option, he believes, would allow them to retain much of their American workforce.

“There are two key issues: innovation and responsiveness,” said Tatikonda about problems with manufacturers who have left or are making plans to leave. “Carrier stayed with its current product line. It was almost inevitable that at some point, they would move to a lower-cost operating structure to Mexico and elsewhere. If they’d moved to creating more innovative products and providing more responsive customer service, then they might’ve been able to retain some of those jobs here.”

Whatever the solution, Jones says he and his coworkers will keep pressuring lawmakers, hoping they’ll join Trump in at least paying  more attention to the industry’s problems.

“We’re going to hold president-elect Trump to what he said,” said Jones. “Do I personally believe it? Hell no. Did I believe it at the time? Hell no. But he said he’s 100 percent. Now, 100 percent is really good odds.”

Jones says they can’t give up the fight because their lives and their families’ lives are at stake.

“The west side’s gonna be devastated,” said Jones. “Take a picture of the homes, you know they’re middle class homes, people try to keep them up. Then go back through there in two-and-a-half to three years. You’re going to see foreclosures, you’re going to see boarded up houses and crime is going to rise.”

That’s the kind of generational poverty he hopes to not see strike manufacturing workers.

Rexnord and Carrier won’t actually move to Mexico until spring of 2017. Jones says that gives Trump a few months to make good on his campaign promise.

At the same time, he says decades of employment losses in the industry have conditioned him to not get his hopes up.

“We’re not giving up the fight, but I’m not optimistic anything will change,” said Jones.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s