Did you listen closely when he told them they had to maintain quality until the move so the company didn’t suffer in the marketplace? It appears that some of the workers aren’t team players as to that. No thinking person is going to want to buy a Carrier AC unit for at least 5 years.
Yes, I did hear that. I thought the same thing. What an absurd business decision....to announce like this....and expect to maintain anything!!!
But you see, that’s the problem. In a public company like UTX the executives who make these decisions are paid millions of dollars a year and they DO NOT want that to stop. So they are under enormous pressure (self-induced to be sure) to show improvements in profit and revenue growth quarter over quarter. After a while you’ve acquired all the competitors that are available, you’ve squeezed all the cost out you can, and there are just so many air conditioners to be bought. So they start looking at things that can produce smaller improvements, and where the risk is higher.
One risk in any move like this is impact on quality. However the MBAs who work up the integration plans have never actually worked in a factory, they’ve just gone to business school where they learned that a “headcount is a headcount”, and when they look at “high cost regions” like Indiana, the cost per employee is much greater than it is in Mexico. So they realize this move is riskier, but it’s the best play they’ve got or they’re at risk of losing THEIR “phoney-baloney jobs”.
More quantification of wage offsets here: http://www.zerohedge.com/news/2016-02-12/welcome-obamas-recovery-carrier-moving-1400-jobs-mexico
My post above shows how simple jawboning, e.g. Trump convincing the UTX CEO that he needs to find another way to satisfy his shareholders and analysts is literally 10 minutes work for a President who is willing to do it. And I’ve been around enough deals like this to know for sure that the crap would start coming downhill after such a call, at light-speed!