President-elect Donald Trump got into a high-profile Twitter spat on Wednesday with Chuck Jones, the president of the United Steelworkers local that represents the union workers at the Carrier furnace plant where Trump intervened to save jobs. Jones had criticized Trump for claiming 1,100 jobs would be kept in Indiana instead of the roughly 800 jobs that actually won't be sent to Mexico. It turns out, even those 800 jobs won't all stay in Indianapolis for long, according to the CEO of Carrier's parent company, United Technologies, and the reason is the other part of the Trump-brokered deal.
"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," United Technologies CEO Greg Hayes told CNBC's Jim Cramer this week. "Now, is it as cheap as moving to Mexico with lower-cost labor? No. But we will make that plant competitive just because we'll make the capital investments there. But what that ultimately means is there will be fewer jobs." You can watch the relevant part of the interview starting at about the 12:50 mark:
United Technologies isn't alone in building robots to replace manual labor. U.S. factories are actually producing more goods today than in the post-World War II boom — domestic factory output has risen 150 percent in the past 40 years, according to Federal Reserve data — but U.S. manufacturing jobs have contracted by more than 30 percent in the same period, thanks largely to automation, CNNMoney notes, arguing that "automation is the only way that a plant in Indiana that pays about $20 an hour can compete with Mexican plants where workers earn $3 an hour."
"You can't just blame cheap labor" in Mexico and other countries, LNS research analyst Dan Miklovic tells CNNMoney. "Certainly many of the jobs that we've lost, especially in more sophisticated industries, it's not so much that they've been offshored, but it has been automation that replaced them. We use a lot more robots to build cars."