Carrier Will Receive $7 Million in Tax Breaks to Save Jobs


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Indiana officials agreed to give United Technologies Corp.$7 million worth of tax breaks over 10 years to encourage the company's Carrier Corp. unit to keep about 1,000 jobs in the state, according to people familiar with the matter, a deal struck after intense criticism of Carrier by President-elect Donald Trump on the campaign trail.

The heating and air conditioning company will invest about $16 million to keep its operations in the state, including a furnace plant in Indianapolis that it had previously planned to close and shift the work to Mexico, the people said.

Mr. Trump, who toured the Carrier plant in Indianapolis Thursday with Vice President-elect Mike Pence, said companies aren't going to leave the U.S. "anymore without consequences."

The company still plans to move 600 jobs from the Carrier plant to Mexico. It also will proceed with plans to close a second plant in Huntington, Ind., that makes electronic controls, moving 700 other jobs to Mexico.

Carrier has previously said it expected to save about $65 million a year by shutting the plant and shifting its operations to Monterrey, in the state of Nuevo LeĆ³ n, where wages average about $24 a day, plus benefits. The average wage of the Indiana jobs that will be retained is $30 an hour, according to a document reviewed by the Journal.

Mr. Trump has played up the partial rescue as a sign he can deliver on campaign promises. Through the presidential primary and general election, the Republican businessman had made an example of Carrier, at one point threatening to put a 35% tariff on Carrier imports unless it reversed its decision to move the jobs to Mexico.

"This is a big win for the incoming administration but an even bigger win for the people of Indiana," transition spokesman Jason Miller said Thursday. The transition team has declined to provide details about the cost of keeping those jobs in the state.

Mr. Trump also will host an evening rally at U.S. Bank Arena in Cincinnati, a Republican stronghold. Ohio was one of six states the Republican captured after being won twice by Democratic President Barack Obama. That is the start of a broader "thank you" tour that is expected to include stops in Florida and across the Midwest.

Sen. Bernie Sanders, who during his presidential campaign had also attacked Carrier and other firms shifting work abroad, criticized the deal on Thursday, saying Mr. Trump failed to make good on his campaign pledge to save all of the jobs from moving to Mexico.

The deal also creates a bad precedent, Mr. Sanders contended, writing that Mr. Trump "has signaled to every corporation in America that they can threaten to offshore jobs in exchange for business-friendly tax benefits and incentives."

"I'm pretty happy that we're keeping jobs in America, aren't you?" House Speaker Paul Ryan (R., Wis.) said Thursday. He said he didn't know the details of the agreement, but that governors' responsibilities include working to keep jobs in their states. "Mike Pence is still the sitting governor of Indiana. This is what governors do," said Mr. Ryan.

The deal that emerged from weeks of negotiations between United Technologies brass and officials in the Trump camp led by Mr. Pence, the Indiana governor, is a relatively standard package of state incentives, according to people familiar with the agreement.

On Wednesday, Carrier said "incentives offered by the state were an important consideration," without providing further details.

"This agreement in no way diminishes our belief in the benefits of free trade and that the forces of globalization will continue to require solutions for the long-term competitiveness of the U.S. and of American workers moving forward," the company said.

In addition to Carrier, United Technologies makes Pratt & Whitney jet engines and Otis elevators. It employs about 200,000 people, about one third of them in the U.S.

People familiar with the negotiations said the company and Mr. Pence's team also discussed a wide range of priorities, including United Technologies' interest in a corporate tax overhaul, and regulations the company feels have been a burden to its business.

The federal government is also an important customer. The U.S. military accounts for about 10% of United Technologies'$56 billion in annual sales, for products like the engine for the F-35 Joint Strike Fighter.

Sen. Ron Wyden of Oregon, the top Democrat on the Finance Committee, said he would be asking more about the Carrier deal and said he would inquire whether there were promises about defense contracts.

"I want to know whether the president-elect promised special federal tax breaks for a single company," Mr. Wyden said Thursday. "I want to do everything I can to keep jobs in the United States, but there are some questions here."

For Mr. Trump, the trips to Indiana and Ohio meant there were no announced meetings on Thursday with prospective cabinet members. Those meetings will resume on Friday in New York, where Mr. Trump is scheduled to visit with Sen. David Perdue (R., Ga.), retired Adm. Jay Cohen, Florida Attorney General Pam Bondi, former United Nations Ambassador John Bolton, and Sen. Heidi Heitkamp (D., N.D.).

Michael C. Bender and Richard Rubin contributed to this article.

Write to Ted Mann at ted.mann@wsj.com

Corrections & Amplifications

This article was corrected on Dec. 6, 2016 at 6:19 p.m. ET to show that the average industrial wage in the state of Nuevo Leon, Mexico, is about $24 a day, according to the state economic ministry. The original version incorrectly said the average wage in Nuevo Leon state was $11 a day.


  (END) Dow Jones Newswires
  12-01-161155ET
  Copyright (c) 2016 Dow Jones & Company, Inc.



This article appears in: Politics
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