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Indy factory closures, a primary issue, will save relative peanuts

State officials in Indiana were told the closure of two heating and air conditioning plants, with the jobs being shipped to Mexico, will save the company $65 million a year, or just over 0.1 percent of annual revenues.

The announced closure of the two United Technologies Corps. plants, in Indianapolis and Huntington, has become a central part of political stump speeches ahead of Tuesday’s presidential primaries, with all candidates weighing in, for different reasons, to condemn their shuttering.

At the same time, it emerged that the head of the state’s main economic development agency expressed surprise at how little savings the company was making by relocating its operations to Monterrey in Mexico, which will lead to the loss of 2,100 jobs in Indiana.

“They’re going to move and take the hit they’re taking and do what they’re doing to Americans because of $65 million,” Indiana Economic Development Corporation president Jim Schellinger told the Indianapolis Business Journal in an interview published at the end of March, but behind an Internet firewall and not circulated widely. 

“It doesn’t seem like a logical step … I was kind of taken aback by those numbers.”

The $65 million is less than 1 percent of the company’s total annual revenue in the heating and air conditioning section of its business, which is about $18 billion, the development corporation told the magazine. Total annual revenue in 2015 for the entire company was $56 billion.

But executives told Schellinger that 53 federal regulations affecting the heating and air conditioning business factored into their decision to leave.

Schellinger said the company mentioned new energy efficiency rules, but didn’t specify other regulations they were unhappy with.

United Technologies Wednesday announced its first-quarter results, including sales of $13.3 billion.

“We are off to a solid start in 2016," said chief executive Gregory Hayes in a statement. "UTC delivered strong operational performance in the first quarter with organic sales growth of 2 percent. We are also making progress on our strategic priorities, particularly our ability to invest in innovation as we continue to focus on structural cost reduction.”

The closure of the two factories, Carrier and United Technologies Electronic Controls, is part of what chief executive Hayes described in December as “a $1.5-billion multi-year restructuring plan focused on structural cost reductions in high-cost locations.”

The stock market has reacted favorably, with the company’s share price rising by over 20 percent in the past three months.

Presidential candidate Donald Trump has hammered away at the company since the announced closure of the Carrier plant in February. He continued to do so Wednesday, pledging to impose a 35-percent tariff on products the company makes in Mexico.

“They’re going to call me and say, ‘Mr. President, Carrier has decided to stay in Indiana,’ ” he told a crowd gathered 20 minutes away from the factory gates.

“This is nothing new, this political campaign and this kind of populist rhetoric,” Hayes told the Wall Street Journal in response.

Hayes added that some employees were given as much as three years’ notice before losing their jobs, and would be eligible for college-tuition assistance and severance pay.

But the protests at the shuttering of the plants continued Friday, with a rally outside the Indiana Statehouse in downtown Indianapolis.

And the keynote speaker was Bernie Sanders, who found the perfect stage for the message he has been delivering for months.

“This is not acceptable. This is the kind of corporate behavior that is destroying the middle class of this country — and it has got to end,” he said. “The greed of United Technologies is almost unbelievable. You can’t make this stuff up. They have no shame.”

Ted Cruz also described the closures as a bad thing, but blamed Democrats for heavy and expensive regulations placed on this company and others.

"It is responding to the disaster that is the Obama-Clinton economy,” Cruz said. “It is the federal government that has driven Carrier out of Indiana and is driving jobs away from America all across the country.”

Bill Clinton, stumping for candidate Hillary Clinton, joined the chorus, claiming the problem is that too many corporations, like Carrier, are motivated by giving money back to shareholders and executives, and not to workers.

Abby Gras, communications director for the state’s economic development corporation, said Friday the closures are disappointing.

But she added: “It’s important to remember this is one corporation. The economy and manufacturing in Indiana are continuing to do well. We are confident there’s going to be plenty of jobs ... for those folks.”