Posted on 12/03/2016 9:13:43 AM PST by rhett october
This past Friday, Donald Trump focused on a second U.S. manufacturing plant that plans to move jobs from Indiana to Mexico due to the NAFTA trade imbalance and the highest-in-the-world corporate taxes of the United States at 35%. Paying the highest business taxes in the world makes it exceptionally difficult to do business in the United States compared to many other parts of the world such as Ireland where the corporate/business tax rate is 11%. Business has thrived in Ireland since the corporate tax rate was lowered to that percentage, resulting in large numbers of new jobs as businesses grew, had more profit, and relocated to Ireland.
President-elect Trump, citing Ireland as an example, has said that he will attack the issue from both ends in that he will lower taxes for U.S. businesses to a more manageable, competitive rate of 15% and if businesses move production of their products to other countries and then attempt to sell them back into the United States, Trump’s plan calls for a tariff (tax) to be added to those products which would mean that the manufacturer would have to to increase their prices in order to pay for the tariff. Such a price increase would make them less attractive to potential buyers. Trump’s proposal is the polar opposite of what it happening now in that due to the business tax rate being the highest in the world at 35%, businesses are having to have higher prices than the rest of the world in order to pay the tax. This has made them less competitive internationally and has sent many businesses to other countries with less predatory tax rates.
Mr. Trump wrote at 10:06 p.m. on Twitter: "Rexnord of Indiana is moving to Mexico and rather viciously firing all of its 300 workers. This is happening all over our country. No more!"
On Thursday at the Carrier plant, also of Indiana, president-elect Trump and vice president-elect Mike Pence, announced a deal with the company to keep roughly 1,000 jobs in the state.
According to a spokesperson for president-elect Trump, in exchange for keeping the factory running in Indianapolis, Mr. Trump and Mr. Pence are expected to reiterate their campaign pledges to be friendlier to businesses by easing regulations and lowering the corporate tax code to be something more competitive to the rest of the world along with being more realistic to the challenges businesses face.
Rexnord, whose products include ball bearings, industrial chains, and gears, is based in Milwaukee and intends to relocate production of industrial bearings from Indianapolis to Monterrey, Mexico, according to the employee union. The move, expected by the middle of 2017, would eliminate about 300 jobs. Shares of Rexnord have fallen more than 10% from Wednesday’s close, presumably due to the relocation news.
The Wall Street Journal notes that the steelworkers union said Rexnord rejected the union’s proposals for wage freezes and other concessions to lower costs. The union said that wages at the plant, which currently range from $18.82 to $30.81 would have to drop below the minimum wage of the United States in order to match the cost savings to the company of moving to Mexico. This is based on the current corporate tax rate of the United States and the NAFTA disadvantage to American manufactures. Enter Trump who has, even before taking office, convinced Carrier to stay based on his new, economy-friendly tax and trade plans. The eyes of the nation will watch to see if President-elect Trump can convince Rexnord to stay as well. Twitter embed at source.
My little area of rural Va. was once dotted with furniture ,clothing and shoe manufactures. Then came the unions and we now have a few prisons and a sawmill or two and collect lots of welfare.
All that “union organizing” really helped the local working man didn’t it?
Just imagine 4 years of Trumps hands on laser focus relentless energetic drive to correct course. He may very well be the Presidential tsunami we have needed. He breaks all the molds. There is no one else who do what he seems to be prepared to accomplish.
It's all about profit here. That's the deal. Always has been; always will be.
The full details haven’t been released. But I read that deregulation, retooling or exiting NAFTA and lowering the corporate tax were all on the list of reasons for them to stay. Might not be the only reasons.
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