Politics & Policy

A Stimulus-Funded Manufacturing Facility Tanks

(Dmitry Rukhlenko/Dreamstime)
Carrier lays off 1,400 workers, moves to Mexico after receiving millions in tax credits to keep green jobs in the U.S.

Carrier Corp. announced this week that it plans to shutter its Indianapolis manufacturing facility, laying off 1,400 workers and moving operations to Mexico.

Yet less than three years ago, the company received a $5.1 million stimulus-funded tax credit from the Department of Energy — for the sole purpose of creating and maintaining green jobs in the United States.

“In this instance, Carrier Corp. is betraying the program’s aim of keeping green jobs in the United States,” says Philip Mattera, research director at Good Jobs First, a nonprofit tracking subsidies.

The shuttering of the Carrier facility is yet another failure in the Obama administration’s attempts to use stimulus cash to prop up domestic green manufacturing.

The $2.3 billion Advanced Manufacturing Tax Credit Program, more wonkily known as the 48C program, provided a 30 percent tax credit for companies that invested in green manufacturing facilities in the United States.

Energy Secretary Ernest Moniz then claimed that the tax credits would “create new jobs and supply more clean-energy projects in the United States and abroad with equipment made in America.” And Senator Joe Donnelly (D., Ind.) said, “The tax credits will help these companies invest further in more good-paying manufacturing jobs right here in Indiana.”

Carrier, a subsidiary of United Technologies Corporation, won the $5.1 million award in 2013 after vowing to expand production of energy-efficient gas furnaces at its Indianapolis facility.

“Now, they’re going to build them in Mexico instead of building them here,” says Chuck Jones, the president of Indianapolis’s United Steelworkers Local 1999. “It’s a damn shame all the way around. . . .  They blind-sided us — 1,400 people and their families are going to be disrupted. . . . There will be no more jobs in Indianapolis.”

#share#Under the 48C Program, facilities that received awards in 2013 were supposed to have functioning projects in place by 2017.

A 2010 report by Good Jobs First and the Apollo Alliance raised questions about some of the companies receiving tax credits through the 48C program.

A sizeable minority of recipients had foreign parent companies, and U.S.-based companies received only 59 percent of the total amount of money distributed in the first round of funding, announced in 2010. Furthermore, many of the recipients with foreign ownership also seemed to be expanding their production at facilities in other low-wage countries.

“While the 48C credits are likely leading these companies to pay more attention to U.S. production, it is also possible that their American manufacturing activities are little more than fig leaves meant to hide the fact that they are mainly relying on offshore low-wage activities,” the report concluded.

Though the report ultimately supported the 48C Program, Good Jobs First recommended “adding ‘clawback’ provisions that would enable the federal government to recoup the tax credits if 48C jobs ended up being sent offshore.”

By deadline, the Department of Energy had not responded to National Review’s queries about what went wrong at the Indianapolis facility, whether any such clawback provision was introduced, or whether taxpayers would recoup their investment.

A spokesperson for Carrier wrote in an e-mail, “We do not disclose the details of our negotiations with state and local officials, but we will honor the terms of our agreement in Indiana as we do everywhere.” She would not provide more-specific details of how the company would fulfill its obligations.

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