Intel’s Job Announcement at the White House was Just a PR Stunt
by Bryce Covert –
The plant that Intel says it will now complete was first announced alongside President Obama.
Intel CEO Brian Krzanich traveled to the White House on Wednesday to announce his company will spend $7 billion on a semi-conductor chip plant in Chandler, AZ — which will mean hiring 3,000 new people once it’s completed.
Later that day, President Trump took to Twitter to take credit for the news. “Thank you Brian Krzanich,” he wrote. “A great investment ($7 BILLION) in American INNOVATION and JOBS!”
The White House also sent out an email in which it said “we have already begun bringing OUR jobs back to OUR country,” pointing to the Intel announcement.
But as with other recent jobs announcements, there’s not much that Trump can actually take credit for.
Intel first announced its plans to build the new factory in Chandler in 2011. At that time, then-CEO Paul Otellini broke the news that it would spend $5 billion on the plant alongside President Obama. Construction started that year, and the company thought it would be done by 2013.
But in early 2014, as PC sales began to lag, the company postponed the opening of the Chandler factory, saying it would instead manufacture the chips in its existing plants by making them more efficient. The company rolls out new manufacturing on a two-year cycle, and at the time it announced the postponement of the plant, it couldn’t say whether construction would be complete within two years or later. “We left it open so we could have maximum flexibility,” a spokesman said at the time.
At the White House, Krzanich credited the “tax and regulatory policies” of the Trump administration, which he said are “advantageous,” for why the company decided to revive construction now.
But Trump has not actually put forward any tax legislation as president, let alone signed any into law, although on the campaign he promised to reduce the corporate tax rate to 15 percent and to give corporations a tax break to bring overseas profits back to the U.S. So far, the steps he’s taken on regulation have been to freeze new ones and issue an order calling for two regulations to be axed for every new one created.
Privately, however, Krzanich had a different explanation. In a memo he wrote to employees about the announcement, he answered the question “why now?” by saying it is “relatively simple”: “Intel’s business continues to grow,” necessitating investment in capacity. He also added that the 7 nanometer (nm) semiconductor requires more factory space. “These two factors have driven Intel to a point where we must get to work and build out another factory for 7 nm capacity,” he said. Since factories take a few years to build, “we made the decision to start the process now.”
As to why he announced the decision at the White House, Krzanich told employees it’s because “we support the Administration’s policies to level the global playing field and make U.S. manufacturing competitive worldwide through new regulatory standards and investment policies.”
It also seems likely that the restart of the company’s plant building would have happened regardless of whether Trump was in the White House.
“This would have happened anyway. This was always part of their plan,” Jim McGregor, an Intel analyst at Tirias Research, told the Washington Post. He added that it’s not a significant change in the company’s strategy; most chipmakers have a cycle of periodically shuttering or building plants.
Meanwhile, things were rough enough for Intel recently that it cut 12,000 jobs last year, or 11 percent of its workforce, as it restructured to shift focus away from PCs to drones and artificial intelligence. That came on top of 1,155 layoffs the year before. So while it may now be adding 3,000 new positions, that makes up less than a quarter of the jobs it has shed. McGregor also told the Washington Post that with the new investment in the Chandler plant, it’s likely Intel will retire older factories elsewhere, which would mean shedding jobs.
And while Trump has set a particular focus on bringing offshored jobs back to the U.S., Krzanich made it clear that’s not part of Intel’s plans. When asked by the press pool whether the company will bring jobs back, he said the announcement “is actually about expansion, this is about growth.” The company has production in China, Ireland, and Israel.
This is not the first time Trump has claimed credit for jobs that had little to do with him.
Last month, after General Motors said it would invest $1 billion in American plants and create or retain 1,500 jobs while bringing back 450 jobs to the country, Trump tweeted about “all of the jobs I am bringing back into the U.S.” But GM was publicly adamant that the decision had nothing to do with the administration; meanwhile, it’s laying off about 3,300 American workers at other plants.
Ford said in early January that it had decided to invest $700 million in a Michigan plant instead of in one in Mexico, thus creating 700 jobs. Trump thanked the company on Twitter, but the CEO insisted that the move wasn’t related to a deal with the administration.
Outside of the auto industry, Trump took credit for a decision by Sprint that will bring back or create 5,000 American jobs, as well as for satellite startup OneWeb’s addition of 3,000 jobs. While Masayoshi Son, CEO of Sprint parent company SoftBank, gave Trump credit, both are actually part of an investment that SoftBank made before November.
None of this stopped the White House from pointing to Sprint and GM, once again, as evidence of Trump’s impact on American job creation in the email it sent out Wednesday afternoon touting the Intel announcement. The email also claimed that air conditioner and heater manufacturer Carrier had pledged to “create 1,000 new jobs” thanks to Trump. But while the president did work out a deal with the company to keep under 800 jobs from moving to Mexico, they aren’t new positions, nor do they come to 1,000. The company will still move 1,300 jobs below the border.