Trump to seek jobs advice from firms that offshore U.S. work

[February 23, 2017]  By Andy Sullivan

WASHINGTON (Reuters) - President Donald Trump, who has vowed to stop U.S. manufacturing from disappearing overseas, will seek job-creation advice on Thursday from at least five 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> 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.

Executives from the five companies are among a group of business leaders due to meet with Trump on Thursday to discuss how to help the president deliver on his promise to increase factory employment, according to the White House.

About 2,300 U.S. workers at these five companies stand to lose their jobs within the next two years as a result of 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 companies confirmed the planned job cuts to Reuters. It is not clear whether the other 19 executives due to meet with Trump on Thursday 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 those involved in the meeting. 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 task force, 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.

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 CEO Jeffrey Immelt is among those due to meet with Trump on Thursday.

GE 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

The U.S. economy lost 6 million manufacturing jobs from 2000 to 2010, roughly one-third of its total, in part due to offshoring, but the sector has added 900,000 jobs since then, according to the U.S. Bureau of Labor Statistics.

The ticker symbol and trading information for Caterpillar is displayed on a screen on the floor of the New York Stock Exchange (NYSE) in New York City, U.S. on December 2, 2016. REUTERS/Brendan McDermid/File Photo

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. Dana CEO James Kamsickas is among those scheduled to meet with Trump on Thursday.

The company plans to hire nearly 700 U.S. workers over the next three years as it 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.

LAYOFFS STILL PLANNED

The group also includes United Technologies CEO Gregory Hayes, who took heat from Trump last year for planning to move jobs from Indianapolis 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, resulting in a loss of 72 jobs. Most of that work is staying in the United States but some is moving to Poland, spokeswoman Bethany Sherman said, and some of the affected workers will be offered positions elsewhere.

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

Other participants include Caterpillar Chairman Doug Oberhelman, who oversees a company that 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. A Caterpillar spokesman said it is simultaneously creating 1,300 new manufacturing jobs elsewhere in the United States.

Also due to participate is Inge Thulin, CEO of 3M, which is eliminating 130 jobs in suburban Cincinnati and moving production to Mexico. The company says it has added more than 2,000 U.S. manufacturing jobs over the last five years.

(Additional reporting by David Shepardson; Editing by Ross Colvin and Bill Rigby)

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