Most people agree that free trade is a great thing for consumers and companies alike. Companies must offer high-quality goods at competitive prices; otherwise, they will miss out to the competition. The downside is when people lose their jobs through no fault of their own.
Companies that can offer high quality at low cost can make huge profits, and free trade is also generally better for the economy: more jobs are created, meaning more people have money and can pay taxes, and more goods can be made and sold, meaning more money in the market.
Why are some people so against free trade?
Recently, a video showing 1,400 workers losing their jobs at once went viral. Free trade sometimes bites back and this can have real negative impacts on the lives of real people.
These workers were employees at an Indianapolis plant operated by the air conditioning manufacturer Carrier. Carrier decided that it would make better business sense to move production from Indianapolis to Monterrey in Mexico, where rates are cheaper and profits can be maximised.
In the video, the company’s representative tells staff that the relocation will allow Carrier to offer competitive prices and high-quality products while continuing to serve the price-sensitive marketplace. He assures the staff that there is nothing personal about this; it is strictly a business decision.
For the staff listening, this explanation will be difficult to hear. They didn’t lose their jobs because they did something wrong or because they should have tried harder. No matter how good they were at their jobs, how long they had been there or how hard they worked day in, day out, they still had to go home that evening and tell their families that they had lost their jobs.
Carrier knows that its decision has a real impact on real people. The representative apologises for the impact that the loss of their jobs will have on the staff, their families, and the wider community. For 1,400 people in one community to lose their jobs is a huge blow; however, business is business and running a business in Mexico is cheaper than doing so in the US.
It is also worth noting that Carrier was not doing badly before it made this cost-cutting decision to relocate. Carrier is owned by United Technologies Company, which made $7.6bn (£5.4bn) profit in 2015.
It did not make its decision because it needed to save money or risk bankruptcy; instead, like everyone, the heads of the organisation and its shareholders want to maximise their profit by reducing their expenditure. Every penny that the company can save in production is profit; therefore, it is worth scrimping to keep everyone happy.
As more companies compare prices at home and abroad, more individuals are in danger of losing their livelihoods to workers overseas. As long as consumers want to pay less for their products, and companies want to maximise profit and minimise loss, this will always be a risk.
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