INDIANAPOLIS (WTHR) - 13 Investigates has confirmed Carrier will get some big perks from the state of Indiana for not sending about 1,100 jobs overseas.
The Indiana Economic Development Corporation is now working to formalize the details, even as a senior state official admits he is stunned to hear Carrier is staying in Indianapolis.
“I did not expect this. I really didn't,” said IEDC Board member John Mutz, who met with WTHR Wednesday afternoon. “Once a company announces it’s leaving, they seldom ever change their minds.”
Mutz would know. As a former lieutenant governor, he negotiated some massive economic development deals for the state. He also tried to convince departing companies not to leave – usually without success. He learned about Carrier’s change of heart in a phone call that came a few hours before word leaked to the public.
“Yesterday afternoon I got a call late in the afternoon from the IEDC. He said, ‘This is a jaw dropper. Hold onto your socks.’ Then he said an agreement had been worked out, and the deal is one we feel really good about. It really surprised me,” he told 13 Investigates.
What is the deal?
According to Mutz, about 1,100 Carrier workers will keep their jobs in Indianapolis. A few hundred current workers will still be laid off. IEDC is offering considerable incentives, according to IEDC insiders who spoke to WTHR. They would not disclose the final details which, according to Indiana Commerce Secretary Victor Smith, are still part of “active conversations” with the company. But Mutz gave some insight into what is being offered.
“It’s a package very similar to the kinds of packages we normally provide when we’re trying to save jobs for an existing company,” he said.
WTHR analyzed nearly 4,400 IEDC incentive contracts offered to Indiana companies since 2006. The vast majority of those economic development incentives (96%) are offered to companies that promise to add jobs and/or make a significant investment in their facilities.
But more than 200 of the contracts posted on the IEDC’s public portal involve companies that promised no new jobs at all. They simply agreed not to move their workers out of state. In return, they were offered more than $33 million in state incentives, including tax breaks and employee training grants. (Adding in about a dozen additional contracts for companies that created no new jobs but increased their capital investment, the state’s total incentive offers top $91 million.) Mutz says Carrier – which is actually cutting hundreds of jobs -- will get the same type of deal.
“Yes, training money will definitely be a part of this, I think, and rightfully so. If this company is to be competitive with the labor rates in the U.S. versus what their competitors pay in Mexico, they will have to improve their efficiency,” he explained. “That’s my biggest concern: how long will this last? Their competitors are already operating at a lower cost location.”
Mutz and other members of the IEDC Board of Directors will review the final incentive package at their December 13 board meeting in downtown Indianapolis, where the proposal is expected to receive unanimous approval.
But should a company receive state tax breaks and grant money in exchange for not moving jobs overseas – or is that a form of corporate extortion?
“I've been asked, ‘How do you know somebody else won't do this?’” Mutz responded. “I said, ‘Well they might, but we'll take each one of those deals on a case by case basis.’ I don’t think there’s a gamble in this … not to any great extent because the deal we’re going to make here will assure they’re going to be here long enough for the state to get paid off.”
Mutz took a big gamble in the 1980s when he offered economic development incentives to attract a then-controversial Subaru automotive plant to Indiana. It took seven years for the gamble to pay off and for Indiana to recoup its investment. The Subaru plant near Lafayette now employs more than 3,500 Hoosiers and has helped attract thousands of other jobs to the area.
Carrier released the following statement late Wednesday:
Carrier has had very productive conversations in recent days with President-elect Trump and Vice President-elect Pence. We have negotiated an agreement with the incoming administration that we believe benefits our workers, the state of Indiana and our company.
We are announcing today that Carrier will continue to manufacture gas furnaces in Indianapolis, in addition to retaining engineering and headquarters staff, preserving more than 1,000 jobs.
Carrier will also designate its Indianapolis manufacturing facility as a Center of Excellence for gas furnace production, with a commitment to making significant investments to continue to maintain a world-class furnace factory.
Today’s announcement is possible because the incoming Trump-Pence administration has emphasized to us its commitment to support the business community and create an improved, more competitive U.S. business climate. The incentives offered by the state were an important consideration.
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.
President-elect Donald Trump and Vice President-elect Mike Pence are expected to provide more details on the deal at an event in Indianapolis Thursday. No exact time for that event has been provided.
"It's amazing how things can unfold. They're excited. We're excited. It's huge news. We're in active conversations with them," Indiana Commerce Secretary Victor Smith told WTHR Wednesday.
One thing to remember: it's not a done deal. The IEDC must still approve the incentive package. They will review that next week.
Companies across the state were offered a total of more than $33 million in economic development incentives from the State of Indiana, without committing to add any new jobs or promising to make capital investments in their facilities.
