Trump seeks jobs advice from some firms that offshore U.S. work

Reuters News
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Posted: Feb 22, 2017 1:39 PM

By Andy Sullivan

WASHINGTON (Reuters) - President Donald Trump, who has vowed to stop U.S. manufacturing from disappearing overseas, is seeking job-creation advice from at least six companies that are laying off thousands of workers as they shift production abroad.

Caterpillar Inc.<CAT.N>, United Technologies Corp.<UTX.N>, Dana Inc.<DAN.N>, 3M Co.<MMM.N>, Timken Co.<TKR.N> and General Electric Co.<GE.N>, are offshoring work to Mexico, China, India and other countries, according to a Reuters review of U.S. Labor Department records. (Graphic: http://tmsnrt.rs/2lk9N5W)

The six firms are part of the Manufacturing Jobs Initiative, a White House advisory council created to help Trump deliver on his promise to increase factory employment. Trump is expected to meet with several manufacturing executives on Thursday, but it is not clear whether they are part of the group.

About 2,400 U.S. workers at these six companies stand to lose their jobs within the next two years as a result of the offshoring, according to the Labor Department's Trade Adjustment Assistance Program, which provides retraining benefits to workers displaced by global trade. Reuters obtained the information through a Freedom of Information Act request.

The six companies confirmed the planned job cuts to Reuters. It is not clear whether the other 19 companies on the council are currently offshoring work, as the TAA program does not cover all workers who lose their jobs due to global trade.

The lost jobs amount to a small fraction of the hundreds of thousands of U.S. workers employed by the council's 25 corporate members. General Electric, for example, employs 125,000 U.S. workers, financial filings show.

On the campaign trail and in the White House, Trump has painted globalization as a zero-sum game that has enriched low-wage countries while leaving the United States littered with abandoned factories and underemployed workers, and he has threatened to tax companies that offshore U.S. jobs.

The experience of companies on Trump's jobs council, however, shows the reality is more complex in a world where they are serving customers across the globe. Several said they were creating many new U.S. factory jobs even as they move work to other countries.

It's not clear whether Trump will opt for the carrot or the stick when he meets with the manufacturing executives on Thursday.

Trump plans to meet business leaders to hear their reasons for "why they're going offshore," said a White House aide who spoke on condition of anonymity.

Blue-collar workers who share Trump's skepticism of global trade say they will be watching closely to see if he will try to save their jobs. "I don't think he's a typical politician, so there is hope alive for middle-class families that he will do something," said Scott Schmidt, one of 222 workers at a GE engine plant in Waukesha, Wisconsin who are due to lose their jobs later this year when the company shifts production to Canada.

General Electric says it is closing its Waukesha plant because Congress has hobbled the U.S. Export-Import Bank's ability to finance large export orders while most other industrialized nations still offer such financial support. The company says it laid off 225 workers last year at a Houston factory for the same reason, shifting production to France, the United Kingdom and Hungary. GE says it is also closing an Ohio factory and laying off 180 workers because consumers are buying fewer of the florescent and incandescent light bulbs they make there. What production remains will be handled by a factory in Hungary.

OFFSHORING AND ONSHORING U.S. manufacturers shed millions of jobs over the past several decades as they shifted production to low-wage countries like China, but they have added a net 900,000 jobs since 2010, according to the U.S. Bureau of Labor Statistics.

Multinational companies say labor costs now are only one factor they consider when deciding where to manufacture. An auto maker, for example, may decide to build a particular model in the country where sales are strongest, prompting parts suppliers to set up there as well so they can turn around orders quickly.

The offshoring picture is also more complex than official statistics indicate as a shuttered factory in the United States does not always mean a new factory abroad.

When auto-parts maker Dana Corp. closes a factory later this year in Glasgow, Kentucky that is operating at 20 percent of capacity, one of its plants in Ohio will pick up the work, along with other factories in Mexico, India and China.

The company plans to hire nearly 700 U.S. workers over the next three years as the company expands factories in four U.S. states, spokesman Jeff Cole said.

That is little comfort to the 223 people in Kentucky who will lose their jobs. "It seems like all these CEOs and companies have turned their backs on the American worker," said Dana employee Tim Wells, one of those who will be laid off.

GIVING TRUMP A CHANCE Assembled with the help of Dow Chemical Co.<DOW.N> Chief Executive Andrew Liveris, Trump's council is tasked with "identifying new and creative policies that can spur U.S. manufacturing and create factory jobs," a Dow spokeswoman said.

Dow has also offshored jobs. It laid off 178 technology workers in Michigan last year and moved their work to India, according to the Labor Department records. Dow confirmed the figure.

The jobs council includes labor groups like the AFL-CIO.

"People are giving president Trump a chance to demonstrate that he means what he said on the campaign trail and that he can deliver. We'll see," said AFL-CIO deputy chief of staff Thea Lee, who is on the council.

The council also includes United Technologies Corp., which Trump criticized for planning to close an Indianapolis plant and move the work to Mexico. The company struck a deal with the incoming president in November to preserve roughly 700 jobs in exchange for $7 million in tax breaks.

United Technologies says it still plans to lay off 786 workers at a separate Indiana plant and move production to Mexico this year. The company is also moving work from a facility in Arden Hills, Minnesota to Poland and other U.S. locations, resulting in a loss of 72 jobs. Some of those workers will be offered positions elsewhere, spokeswoman Bethany Sherman said.

The company is adding more than 1,000 new jobs in the United States, Sherman said.

Other panel participants engaged in offshoring include:

- Caterpillar, which is laying off 712 workers in the American South and Midwest and moving the work to China, Mexico, Italy, France and Germany as it weathers the largest sales slump in its history;

- 3M, which is eliminating 130 jobs in suburban Cincinnati and moving production to Mexico;

- Timken Co., which is laying off 120 people at a ball-bearing plant in Tennessee due to declining demand and moving the work to other plants in the United States and abroad.

"To stay strong and grow jobs in the United States, we must be able to compete and win where our customers need us today and in the future," Timken spokeswoman Nicole DiSalvo said.

A Caterpillar spokesman said it was simultaneously creating 400 new manufacturing jobs elsewhere in the United States. 3M said it had added more than 2,000 U.S. manufacturing jobs over the last five years.

(Reporting by Andy Sullivan; Editing by Kevin Drawbaugh and Ross Colvin)