As Trump touts Indiana jobs deal, U.S. factory work seeps overseas

By Nick Carey and Andy Sullivan

ELKHART, Ind./WASHINGTON (Reuters) - As President-elect Donald Trump received a warm welcome in Indianapolis on Thursday for helping to preserve 1,000 manufacturing jobs, embattled workers elsewhere in the state said that his work had just begun.

United Technologies Corp's (UTX.N) decision to keep half of the 2,100 Indiana jobs it was to shift to Mexico allowed Republican Trump to claim credit after he promised to revive the industrial base of the United States in his populist election campaign.

But the author of "The Art of the Deal" will have a lot more dealmaking to do if he wants to stop the steady erosion of manufacturing jobs from the country because of automation and lower costs abroad.

"Now that they've saved jobs at one plant, we want to see it happen here and elsewhere. If Trump doesn't make that happen then people are going to be very disappointed in him," said Susan Haines, a production coordinator at auto-parts maker CTS Corp (CTS.N), which plans to eliminate 230 Indiana jobs by 2018 as it ships production overseas.

Across Indiana, manufacturers are eliminating at least 5,000 jobs this year under pressure from global competition, according to a Reuters analysis of Labor Department filings. At least 4,060 jobs are disappearing because employers are shifting work to Mexico or other countries, the filings showed.

And 960 workers employed by five companies in Indiana are losing their jobs because their U.S. employers are not able to compete with cheaper imported goods.

Some of those facing job cuts said they did not expect Trump to intervene on their behalf, but they will expect him to take broader steps to protect factory work.

"If in four years it's the same old crap that's going on we'll give another candidate a shot," said Michael Mobley, whose employer, Aurora Casket, eliminated 35 jobs in September and plans to cut another 35 jobs next year as it shifts work to Mexico from Aurora, Indiana.

FACTORY WORK LAGS ECONOMIC RECOVERY

As elsewhere in the United States, factory work in Indiana lags as the broader economy has recovered from the 2008-2009 recession. Manufacturing employment is down 7.4 percent from January 2007 levels even as total employment in the state has risen 3 percent since then, according to the U.S. Bureau of Labor Statistics.

Nationwide, manufacturing employment is down 12.5 percent since 2007, according to the bureau, even as overall employment has risen 8.8 percent since then.

United Technologies' subsidiary, Carrier Corp, faced harsh scrutiny after it announced in February that it was eliminating 1,400 jobs at an Indianapolis plant that makes heating and air conditioning units, and 700 jobs at a United Technologies factory in Huntington, Indiana.

On the campaign trail, Trump turned the Carrier layoffs into a symbol of working-class frustration, promising that he would rebuild a manufacturing base that has been eroded over the past three decades.

Trump and his vice president-elect, Indiana Governor Mike Pence, worked out an agreement with United Technologies CEO Gregory Hayes that gives the company $7 million in financial incentives from the state, along with a promise to improve the U.S. business climate.

The deal has drawn criticism from across the political spectrum. U.S. Democratic Senator Bernie Sanders said it will encourage other companies to threaten to eliminate jobs in return for tax breaks, while some corporate advisers said it smacked of coercion.

"The fact that he is strong-arming a company to potentially stay and do work here is not pro-business," said Alex Major, a partner at McCarter & English who counsels companies on regulatory issues.

The deal also does nothing to prevent other employers from shipping work out of state.

In Elkhart, a small city 160 miles north of Indianapolis, auto-parts maker CTS is not the only company to pull up stakes. Electronics maker Harman International (HAR.N) also plans to eliminate 125 jobs by January as it shifts work to Tijuana, Mexico. The two companies got subsidies from the state totalling $750,000 in 2014.

Still, Trump's willingness to provide tax breaks and other incentives for employers is an encouraging sign, civic leaders said.

"If we have to wait for President Trump to come to Elkhart it may take a while. But if he says here are some tools, we can figure out how to use them," said Kyle Hannon, president of the Greater Elkhart Chamber of Commerce.

Others are counting on Trump to take greater steps. Employers will continue to shift work overseas until he rewrites trade agreements, raises tariffs and adds other protections, labour leaders said.

"We're going to need to hold Trump to his word to save American workers' jobs across the country," said Wayne Dayle, who as regional director for the United Steelworkers union in Indianapolis represents employees at the Carrier plant.

(Reporting by Nick Carey in Elkhart, Indiana and Andy Sullivan in Washington, additional reporting by Mike Stone in Washington; editing by Soyoung Kim and Grant McCool)