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  1. #1
    MW
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    The CEO of United Technologies just let slip an unintended consequence of the Trump-C

    The CEO of United Technologies just let slip an unintended consequence of the Trump-Carrier jobs deal (UTX)

    MATT TURNER
    Dec 6th 2016 9:21AM

    Greg Hayes, the CEO of United Technologies, the parent company of air-conditioner manufacturer Carrier, just let slip a consequence of a deal struck to keep jobs in Indiana.

    And American workers aren't going to like it.

    Carrier said last month that it would keep more than 1,000 jobs across two locations in Indiana, following pressure from president-elect Donald Trump. The decision was touted as a win for the incoming president, who had pledged keep the jobs from moving to Mexico.

    In a wide-ranging interview with CNBC's Mad Money with Jim Cramer aired December 5, Hayes set out the comparative advantages of moving to jobs to Mexico, the motivation behind his decision to keep those jobs in Indiana, and the ultimate outcome of the deal: there will be fewer manufacturing jobs in Indiana.

    Before we get to that


    First, Hayes was asked what's so good about Mexico. Quite a lot, it turns out. From the transcript (emphasis added):

    JIM CRAMER: What's good about Mexico? What's good about going there? And obviously what's good about staying here?

    GREG HAYES: So what's good about Mexico? We have a very talented workforce in Mexico. Wages are obviously significantly lower. About 80% lower on average. But absenteeism runs about 1%. Turnover runs about 2%. Very, very dedicated workforce.

    JIM CRAMER: Versus America?

    GREG HAYES: Much higher.

    JIM CRAMER: Much higher.

    GREG HAYES: Much higher. And I think that's just part of these-- the jobs, again, are not jobs on assembly line that people really find all that attractive over the long term. Now I've got some very long service employees who do a wonderful job for us. And we like the fact that they're dedicated to UTC, but I would tell you the key here, Jim, is not to be trained for the job today. Our focus is how do you train people for the jobs of tomorrow?

    So Mexico has cheaper labor with a much more dedicated workforce, and these are the kinds of low-skilled jobs most people don't find that attractive. Elsewhere in the interview, he made clear that United Technologies intends to keep engineering jobs in the US, and that these higher-skilled jobs are not at risk of being moved overseas.

    "The assembly lines in Indiana-- I mean, great people. Great, great people. But the skill set to do those jobs very different than what it takes to assemble a jet engine," he said.

    Hayes was then asked why he decided to cancel the move to Mexico. From the transcript (emphasis added):

    GREG HAYES: So-- there was a cost as we thought about keeping the Indiana plant open. At the same time, and I'll tell you this because you and I, we know each other, but I was born at night but not last night. I also know that about 10% of our revenue comes from the US government. And I know that a better regulatory environment, a lower tax rate can eventually help UTC of the long run.
    But here's the kicker


    The result of keeping the plant in Indiana open is a $16 million investment to drive down the cost of production, so as to reduce the cost gap with operating in Mexico.

    What does that mean? Automation. What does that mean? Fewer jobs, Hayes acknowledged.
    From the transcript (emphasis added):

    GREG HAYES: Right. Well, and again, if you think about what we talked about last week we're going to make a $16 million investment in that factory in Indianapolis to automate to drive the cost down so that we can continue to be competitive. Now is it as cheap as moving to Mexico with lower cost labor? No. But we will make that plant competitive just because we'll make the capital investments there.

    JIM CRAMER: Right.

    GREG HAYES: But what that ultimately means is there will be fewer jobs.

    The general theme here is something we've been writing about a lot at Business Insider. Yes, low-skilled jobs are being lost to other countries, but they're also being lost to technology.

    Everyone from liberal, Nobel-winning economist Paul Krugman toRepublican Senator Ben Sasse have noted that technological developments are a bigger threat to American workers than trade. Viktor Shvets, a strategist at Macquarie, has called it the "third industrial revolution."
    Hayes said in the same interview that United Technologies is focused on how to "train people for the jobs of tomorrow."

    In the same breath, he seems to be suggesting the jobs it is keeping in Indiana are the jobs of yesterday.

    http://www.aol.com/article/finance/2016/12/06/the-ceo-of-united-technologies-just-let-slip-an-unintended-conse/21621640/?icid=maing-grid7%7Cmain5%7Cdl37%7Csec1_lnk2%26pLid%3D-1853845624_htmlws-main-bb

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    Senior Member Judy's Avatar
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    Yeah, that seemed pretty obvious from the $16 million investment they announced and the $1 million job training to learn how to operate the new equipment. That's probably the difference between the 1,100 and 1,400 hundreds we heard about. That is inevitable and no one will be upset about that. What Americans will continue to be upset about with Carrier is that they still moved operations to Mexico raving about how "dedicated" they are and how they have lower "absenteeism."

    Hayes is one of these jerks who truly doesn't understand why there is a United Technologies that pays him whatever big salary he earns. That huge profitable company wasn't built by Mexicans, it was built by Americans. United Technologies didn't build Carrier either, they bought it. So I would say happy days in Mexico, I hope the "dedicated" Mexicans earning 80% of US wages buy all the UT products they can afford, because those products aren't coming here without a 35% tariff. And really, I don't think I want any equipment with Mexican made control systems. They can keep them in Mexico.

    I hope he was listening to the news today and heard what Trump said about Boeing. UT has a lot of defense contracts, I think their margins just got shrunked.
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    Automation is coming - there's no getting around it. PE Trump didn't invent it and can't stop it. He can do what he can -

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    Senior Member Judy's Avatar
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    There's nothing at all wrong with automation. We need to automate our farming and send these illegal aliens and migrants who work the field back to their home countries, let our machines do it, and we'll manufacture the machines.
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    Yes, there are a lot of innovations that would make manual labor less needed - but farmers don't want that.

    As one vineyard owner in CA put it, when asked if he would use a mechanical grape picker - 'No, I like having my people here working'.

    That's the El Jefe syndrome.

  6. #6
    Senior Member Judy's Avatar
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    Well, that's up to him so long as they're American Workers. If he wants to keep his illegal aliens, then he better learn how to operate a machine made by Americans. I'm personally fed up with hearing what farmers want because all you hear is they want illegal aliens and subsidies from the government.
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    Make no mistake, he was talking about illegals.

    You know a huge supply of manual labor would seem to keep a country from moving forward. If innovations are not needed - or used - they won't be designed and built.

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