Industrial component manufacturer Rexnord (RXN) is the latest to be thrust into the spotlight by Donald Trump over job relocation plans, with the president-elect going to Twitter over the weekend to criticize the company over its plans to shift work to Mexico.
Trump tweeted that Rexnord is "rather viciously firing all of its 300 workers" in Indiana, referring to the company's plan to close an industrial bearings factory and shift production to facilities in Texas and Monterrey, Mexico. Milwaukee-based Rexnord told union officials last month that "cost-saving measures offered are not near enough to change the tentative decision to relocate the plant," according to the United Steelworkers Local 1999.
Trump has said he intends to impose a 35% tariff on companies that move jobs overseas, on Sunday saying in a tweet that those who do move jobs abroad are "making a very expensive mistake."
The Rexnord plant is the second downsizing Indiana facility to come under fire from Trump, who last week reached an agreement with United Technologies (UTX) for its HVAC arm Carrier to keep about 1,000 jobs planned for relocation. Trump had made the Carrier plant a key talking point on the campaign trail, but the two sides negotiated a deal involving $7 million in state tax breaks over a 10-year period in return for keeping at least some of the 2,100 jobs earmarked for Mexico in Indianapolis.
The Rexnord industrial bearings facility is prototypical of the types of manufacturing jobs leaving the country. While companies have had success keeping higher-margin and more proprietary manufacturing operations in the U.S., commoditized parts not protected by patents and with little advanced engineering are marketed based almost entirely on price and so more sensitive to wage disparity.
The Trump attention is but the latest headache for Rexnord, which last month saw shares drop more than 13% in a single session after reporting tepid fiscal second-quarter results and lowering full-year guidance to below analysts' expectations. Analysts including Barclays' Scott R. Davis at the time called the selloff "overdone," and the shares did recover. But part of the reason for optimism is tied to the company's efforts to cut costs via restructuring efforts including closing the Indiana facility.
Shares of the company traded down less than 1% on Monday morning.
With the incoming administration receiving criticism for offering tax incentives to Carrier, Trump could be hesitant about offering a similar amount of largess to Rexnord. The company has not yet responded publicly to Trump's criticism.
Vice President-elect Mike Pence, who is also governor of Indiana, on the Sunday news circuit said only that Trump will make decisions on whether to try to pursue deals or punish companies moving jobs overseas "on a day-to-day basis in the course of the transition."
Rexnord's $1.9 billion in annual revenue is split about 60-40 between water management tools and process and motion control components, generating about 68% of its sales from North America, 15% from Europe and 4% from Latin America.