Trade Secret: Carrier, Mexico, and Japan

You’ve seen the video by now: A suit tells a crowd of factory workers the company is shipping off their jobs to Mexico (“strictly a business decision”). Captured in February at Carrier’s Indianapolis HVAC plant, it quickly went viral—nearly 4 million YouTube views and counting—as did the media coverage.

Voters saw red. Politicians spied opportunity. The Carrier layoffs became a potent symbol of how global free trade (read: NAFTA) cleared the road for American jobs to haul ass to Mexico. Bernie Sanders accused Carrier’s parent company of having “no shame.” Donald Trump said, “Jobs are being ripped out of our states … like candy from a baby.” And so on.

But overlooked in the indignation over job exportation—which thrashed between sincere and synthetic—was the Hoosier State’s steadily growing reliance on job importation.

“The Carrier announcement was a ham-handed production by executives with their eye on the bottom line,” says John Ketzenberger of the Indiana Fiscal Policy Institute. “Participating in the global marketplace means a lot of people who otherwise would be employed in Indiana manufacturing aren’t. But the Carrier layoffs alone aren’t a completely accurate picture.”

After Indiana’s primary, Japanese firms pledged about 400 new jobs. With more than 260 operations, we have the nation’s largest relative concentration of investment from the Pacific nation.

“Economists tend to be more sanguine about the long-run effects of international trade,” says Michael Hicks of Ball State’s Center for Business and Economic Research. Yes, 1,400 Carrier jobs will make a run for the border. But instead of crying Mexico!, maybe candidates should cheer for Japan.

YOU SAY GOODBYE, WE SAY KONNICHIWA

“Carrier is the exception, not the rule,” says Secretary of Commerce Victor Smith. According to a report from IU’s Kelley School, foreign companies announced 13,300 jobs here from 2012 to 2014, mostly in manufacturing. And Japanese companies play an outsized role, currently employing close to 54,000 Hoosiers.

Foreign companies’ share of Indiana manufacturing jobs*
64%

Japan’s share of job announcements by foreign companies*
38%

DOWNSIDE UP

Indiana’s manufacturing employment cratered in 2009. But it’s rebounding at a healthy pace. The value of goods made here hit a new high in 2014, and the state’s percentage of manufacturing jobs ranks first in the U.S.

Growth in Hoosier manufacturing employment, 2009–2015*
14%

Manufacturing’s share of overall employment in Indiana*
17%

BAYH LOW

Senate candidate Todd Young has given Japan a bow, touring Subaru’s 5,000-worker Lafayette plant with former Lt. Gov. John Mutz. Young’s opponent, Evan Bayh, dinged Mutz in ’88 for the Subaru deal, based on what Mutz now calls “anti-Japanese sentiment” held over from WWII.

NO PARTY FOR 1999

United Steelworkers Local 1999, which reps Indy’s Carrier workers, sent three of them to lobby Congress. “It was very important that these leaders heard our personal stories,” TJ Bray wrote home to fellow union members. “We’re not just a statistic.”

*Sources: U.S. Bureau of Labor Statistics, Center for Manufacturing Research, Indiana Business Research Center