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The Carrier Deal | Myths vs Facts

by Penguin Air on December 9, 2016

carrier deal - where hvac units come fromWith the recent presence of Carrier in the news, we’ve been receiving a lot of questions about our HVAC units and where they come from. We’re here to clear up any confusion and help you make the best decision for you and the country.

As an American small business and a long time Day & Night® provider, we stand by our Carrier® products and want to be there for our customers.

What is Carrier?

Willis Carrier, Carrier’s founder, invented the basics of modern air conditioning in 1902 to fix a moisture problem at Sackett-Wilhelms Lithographing and Publishing Company in Brooklyn, New York. In 1915, Willis Carrier founded the Carrier Engineering Company.

Since then, Carrier has led the world in HVAC technologies and innovations. This genius invention gave the company a huge competitive advantage. With the sale of the first modern air conditioner in 1907, the global HVAC industry was launched.

Carrier’s entrepreneurial spirit increased worker productivity, improved global health, created whole new industries, and helped hundreds of industries thrive, including theaters, churches, restaurants, schools, transportation, and public facilities.

Watch this video to learn more about Willis Carrier and the birth of air conditioning:

Read more about Carrier’s history here.

United Technologies Corporation

In July 1979, the United Technologies Corporation (UTC), a large American multinational conglomerate, acquired Carrier. Joining forces with the parent company of Pratt & Whitney Aircraft and Otis Elevator Company allowed Carrier to expand its reach and resources, building on the Carrier legacy. 

In 2016, UTC was recognized as 19th of the World’s Most Respected Companies (2016 List, Barron’s) and the 19th largest U.S. manufacturer (2016 List, Industry Week). We are mentioning Carrier’s parent company because ultimately the decision and the deal were made by UTC and not by anyone at the Indianapolis facility.

What is Day & Night?

Day & Night, along with Tempstar, Comfortmaker, Airquest, and other brands, are operated under the International Comfort Products (ICP) company. Carrier acquired ICP in 1990, bringing it under the umbrella of UTC Climate, Controls & Security, a wholly owned subsidiary of United Technologies Corporation.

ICP products are made in manufacturing complexes in the United State, Mexico, and Canada, with sales and support around the world, including Shanghai, Brazil, Romania, and Bucharest.

The Carrier Deal

When UTC announced that its subsidiary, Carrier, would begin moving its manufacturing to Monterrey, Mexico, no one quite predicted the backlash it would receive. Due to a viral video showing Indianapolis Carrier workers learning of the news, Carrier has been the focus of the national debate on jobs, trade, and globalism.

Following the virality of the video and political and social pressure, Carrier announced that they, “will continue to manufacture gas furnaces in Indianapolis, in addition to retaining engineering and headquarters staff, preserving more than 1,000 jobs… the incentives offered by the state were an important consideration.”

The announcement ends with this statement:

“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.”

Later, in a CNBC interview with Jim Cramer, Greg Hayes, CEO of United Technologies said that many jobs would inevitably be lost to automation.

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 of 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.

Read the full transcript here.

CARRIER DEAL | MYTHS VS FACTS

MYTH: Indianapolis Carrier workers immediately lost their jobs on February 10, 2016.

FACT: “Carrier announced plans on February 10, 2016, to relocate its Indianapolis, Indiana, manufacturing operations to a location near existing Carrier manufacturing facilities in Monterrey, Mexico, over the course of an estimated three-year period.

The plan anticipates no immediate impact on jobs as the relocation would occur in phases, with work movement expected to begin in 2017 and estimated project completion in 2019.”

Source: Carrier Fact Sheet

MYTH: All Indianapolis Carrier workers would be laid off.

FACT: “Carrier’s residential HVAC headquarters and engineering organization, with approximately 300 employees, will remain in Indianapolis.”

Source: Carrier Fact Sheet

MYTH: Carrier accepted over $5 million in tax credits despite the announcement to relocate.

FACT: “In 2013, we were awarded a $5.1 million Advanced Energy Project Credit, which we would have been eligible to claim in 2016. We have not received and will not claim this federal tax credit. We are evaluating other grants and credits that have been awarded and will not retain or claim any credits for obligations that have not been met.”

Source: Carrier Fact Sheet

MYTH: Carrier doesn’t care about its workers.

FACT: “Carrier and the United Steelworkers (USW) have reached an agreement that provides clarity and security for our Indianapolis employees for the duration of the facility’s operation.

Employees who are separated as a result of the relocation will receive:

  • A one-time payment
  • Severance pay
  • Six months of medical insurance continuation beyond separation
  • Continued access to the company’s Employee Scholar Program for four years after their separation date
  • In addition to reimbursing traditional education costs, we will also reimburse technical training costs for those employees who prefer to pursue a vocational technical certification program
  • Employees will also be eligible to accrue a monthly performance bonus up until their separation date

In addition, we agreed to an extension of the labor contract through the duration of the facility’s operation. As a result, employees are eligible for an immediate lump sum payment, as well as wage increases, pension improvements and other benefits.

Carrier recognizes the impact on employees, their families and the community. We appreciate their hard work and are pleased to have worked with the USW to provide certainty through a comprehensive benefits package designed to help ease the transition.”

Source: Carrier Statement Regarding Agreement with United Steel Workers

MYTH: The chief motivation behind the decision was greed and access to cheap labor.

FACT: “This plan is intended to address the challenges we continue to face in a rapidly changing HVAC industry, with the continued migration of the HVAC industry to Mexico, including our suppliers and competitors, and ongoing cost and pricing pressures driven, in part, by new regulatory requirements; as well as imports from Asia. It will allow us to remain competitive and protect the business for the long-term.

Relocating our operations to a region where we have existing infrastructure will allow us to operate more cost effectively, so that we can continue to produce high-quality HVAC products that are competitively positioned and meet customer needs.

Additionally, evolving regulatory requirements and standards continue to create pressure to provide a more advanced, more costly product, in an extremely price-sensitive marketplace. It will allow us, and our partners, to remain competitive and protect the business for the long-term.”

Source: Carrier Fact Sheet

MYTH: Quality and service will be sacrificed.

FACT: “Our global manufacturing facilities are held to the same high standards regardless of location. In Mexico specifically, Carrier has an existing, proven manufacturing footprint in Monterrey with a skilled and experienced workforce

Carrier has a long track record of producing high-quality gas furnaces and fan coils, and during the transition, will continue to follow the rigid quality processes for which the company has become known.

All Carrier manufacturing facilities have robust checkpoints throughout the entire manufacturing process to ensure each unit meets high quality standards.

Quality is a core value and Carrier will continue to monitor the manufacturing checkpoints, as well as audits that have enabled the delivery of quality products to the field.

We will continue delivering the same high-quality products and service to meet your needs, introducing new products with the latest in technology and innovation.”

Source: Carrier Fact Sheet

MYTH: Carrier is one of the only HVAC companies that manufactures their product in Mexico.

FACT: “Currently, the HVAC manufacturing landscape has a large footprint in Mexico which has been amplified in recent years. Carrier has had a presence in Monterrey, Mexico since 1969, with a long history of high-quality products produced by a very proud and engaged workforce.”

Source: Carrier Fact Sheet

 

Carrier has had a presence in Monterrey, Mexico since 1969.

Nearly every HVAC manufacturer has some production in Mexico.

Here are some recent stories of HVAC production moving from the USA to Mexico:

Carrier’s parent company, UTC Climate, Controls & Security, “operates 51 factories and 39 research & design centers worldwide with more than 50,000 employees serving customers in more than 180 countries” (Carrier Fact Sheet).

In the graphic below, from left to right, we see the major HVAC companies, where they are headquartered, a breakdown of their products, and in the last column, the location in Mexico where those products are manufactured.

carrier-facts
Source: Carrier Fact Sheet

While Carrier has its headquarters in Farmington, CT, other HVAC companies have headquarters in other countries to avoid high U.S. tax rates and gain from unrepatriated foreign profits. Sometimes this is done through acquisitions and “inversion” deals.

Carrier and its parent company have a presence in more than 180 countries. Not every product is produced in Mexico, but some are in order for these companies to remain competitively positioned and reduce costs for the American consumer. Even if jobs remain the United States, investments in automation would be needed to keep prices competitive.

The reality of the current industry is that most every HVAC manufacturer in business today does at least some of its production in Mexico.

Carrier’s HVAC residential headquarters and engineering organization are solidly based in the USA. Other companies choose to be headquartered overseas where their corporate taxes and profits do not benefit the USA.

Carrier’s plant in Indianapolis has been highlighted due to recent events, but there is a broader story about the HVAC manufacturing landscape, technology, and globalism that both consumers and industry leaders should recognize as we look toward the future.

As always, Penguin Air has no plans to offer anything less than the highest quality HVAC products to our Phoenix customers.

We are proud to sell Day & Night® HVAC products from parent company, Carrier®. We also offer select Trane units.

Penguin Air technicians are highly skilled and can repair and maintain any make or model you might have, regardless of when or where it was manufactured.

For additional information on Carrier, their presence in Mexico & their employee practices, please see the links below:

If you have any questions, don’t hesitate to contact us.


Your comfort is our concern. Call Penguin Air and Plumbing at 480-747-6803 or schedule service online.

For more information indoor air pollution, visit our indoor air quality page.

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