Carrier, Fresh Off Trump Talks, Increases Prices on Higher Costs
(Bloomberg) -- Carrier Corp., the maker of air conditioners that was persuaded by President-elect Donald Trump to abort plans to close a U.S. factory, is increasing prices to stay competitive as higher costs weigh on the industry.
The United Technologies Corp. division that includes brands such as Carrier and Bryant will raise the amount it charges for residential and commercial HVAC equipment by as much as 5 percent, according to a company statement. The change will go into effect Jan. 1.
United Technologies agreed last week to keep about 1,100 jobs at an Indianapolis plant after Trump and Vice President-elect Mike Pence spent weeks pressuring the company over the plan to move operations to Mexico. Trump made the Carrier talks a priority after repeatedly criticizing the company during the campaign and turning it into a symbol of the ways that trade deals harm U.S. workers.
Shutting the gas-furnace plant and moving jobs abroad would have helped United Technologies save about $65 million a year. The company will receive an incentive package from Indiana worth $7 million to keep the facility open and invest $16 million in improvements. United Technologies still plans to move more than 1,000 positions to Mexico.
Manufacturers of heating and cooling equipment, including Lennox International Inc., are taking steps such as raising prices to counter the effects of higher raw-material costs, according to Julian Mitchell, an analyst with Credit Suisse. Farmington, Connecticut-based United Technologies, which typically announces equipment price changes around this time each year, said the increase is unrelated to the Carrier plant announcement.
Besides competitive pressures, makers of heating equipment are also contending with soft demand amid unseasonably mild temperatures, Mitchell said.
“Warm weather is clearly a drag for all furnace makers in the U.S., but they remain hopeful that demand will pick up sharply as soon as the temperature drops,” he said Monday in a note.