F Ford Motor Company

First Carrier Corp., now Rexnord Corp.

Donald Trump criticized a second U.S. manufacturer for its plans to move a factory from Indianapolis to Mexico, as the president-elect took to Twitter over the weekend to press his attacks against American companies shifting production abroad.

"Rexnord of Indiana is moving to Mexico and rather viciously firing all of its 300 workers," Mr. Trump wrote late Friday. "This is happening all over our country. No more!"

Rexnord, which is based in Milwaukee, intends to move production of the industrial bearings it makes in Indianapolis to Monterrey, Mexico, according to its employee union. The move, expected by the middle of next year, would eliminate about 300 jobs.

The company didn't respond to requests for comment. Shares of Rexnord have tumbled about 8% from Wednesday's close.

Early Sunday morning, Mr. Trump sent out a series of tweets reaffirming his position that companies that move production abroad and fire workers in the U.S. will face consequences, such as a 35% import tariff. "Please be forewarned prior to making a very expensive mistake!" he wrote.

He encouraged business leaders to explore relocating factories between states and negotiating for tax breaks, a strategy that some state officials fear will escalate an arms race of incentives.

A spokesman for the Trump transition team didn't respond to a request for comment.

Mr. Trump helped fuel those concerns by engineering $7 million in state tax breaks last week to save 800 jobs at a Carrier plant in Indiana. He had criticized Carrier during the presidential campaign.

Asked Sunday on ABC's "This Week" whether Mr. Trump was going to intervene at Rexnord and other companies, Vice President-elect Mike Pence said Mr. Trump "will make those decisions on a day-by-day basis."

Carrier, a unit of United Technologies Corp., still plans to shift 1,300 jobs from Indiana to Mexico. On Friday, Ford Motor Co. Chief Executive Mark Fields said he would forge ahead with shifting small-car production to Mexico despite repeated criticism from Mr. Trump.

Chuck Jones, president of a United Steelworkers local that represents Indianapolis workers at Carrier and Rexnord, said Friday he was grateful for Mr. Trump's intervention at Carrier but added that he wasn't optimistic other companies will shelve plans to move manufacturing abroad, even if they are offered state or federal incentives.

"There's not enough taxpayer money to reward companies not to leave the country when we're competing with $3-an-hour wages in Mexico," Mr. Jones said.

The steelworkers union said the hourly wages at the Rexnord plant, which currently range from $18.82 to $30.81, would have to drop below the U.S. minimum to match the company's estimated cost savings in Mexico.

Mr. Trump's representatives were in touch with Rexnord as recently as mid-November, said a person familiar with the matter. This person didn't know the status of those discussions and declined to speculate about whether Rexnord might reconsider its plans now that Mr. Trump has challenged the company publicly.

The closing of the Indianapolis plant is part of Rexnord's plan to counter slow sales by cutting $30 million in costs and as much as one-quarter of its factory space globally before the end of March. North America is expected to bear the brunt of the cuts. In its fiscal year ended March 31, Rexnord's sales fell 6.3% to $1.92 billion. Its profit sank 19% to $67.9 million.

Rexnord is far smaller than United Technologies, a group with nearly 200,000 workers and big defense projects. Rexnord, whose factories churn out ball bearings, gears, plumbing valves and other industrial products, had 7,700 employees, including 4,200 in the U.S., as of March 31.

Kurt Bauer, chief executive of the trade association Wisconsin Manufacturers & Commerce, predicted companies in that state, where Rexnord is based, would wait to see what Mr. Trump does as president, rather than overreact to public shaming.

"Honey works better than vinegar," Mr. Bauer said. "If he promises to create a business climate that is attractive to businesses, they will stay and they will produce and they will invest here in the United States."

Foster Finley, a managing director at consulting firm AlixPartners, said some manufacturers are reassessing their plans after Mr. Trump's statements.

Companies that choose to move factories from Asia to Mexico instead of the U.S. might be able to carry out those plans without attracting attention, he said. They could also move forward with U.S. layoff plans without highly public plant closures.

"There are many strategies," Mr. Finley said, "that can keep them out of the crosshairs."

Write to Bob Tita at robert.tita@wsj.com and Andrew Tangel at Andrew.Tangel@wsj.com

(END) Dow Jones Newswires

December 04, 2016 21:05 ET (02:05 GMT)

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