Tuesday, October 26, 2010

Get While the Gettin' is Good: Biggest MEGA Day Evah, Big 3 Are Here to Stay

With all the Rick Snyder and Republican chatter about blowing up our economic development efforts at MEDC AND our business tax rates as well (because if there is one thing business loves, it's uncertainty, right?), it looks like the Big 3 and other companies are signing up for some deals while the deals are there to be had. Along with the major announcement from Ford yesterday, GM and Chrysler are getting in on the act as well today - bringing the grand total to over $2 billion invested and hundreds of thousands of jobs created and/or retained at the automakers alone.

Yes, you read that right. Hundreds of thousands of jobs. Here. In Michigan. Why Michigan? Because we hustled for them and beat out other states. Oh, and Mr. Snyder? Might want to pay attention to these words from Ford and Chrysler. They are more than willing to pick "winners and losers" - and at this point, we are the winners.

Auto officials said the $2 billion in investments wouldn't have happened without the tax incentives.

"Without the tireless efforts of the state of Michigan, Chrysler could not have made this business decision," Chrysler's Brian Glowiak said.

In come cases, Michigan was competing with other states for the same investment.

"Red carpets are rolled out for manufacturing around the world," said Curt Magleby, director of state and local government relations for Ford. "Michigan understands that."

If the state didn't make it financially attractive to invest here, "there are a lot of other red carpets," he said.

Chrysler will be investing $850 million at Sterling Heights, once slated to be closed, and $150 million at the Dundee engine facility. That's over 90,000 retained jobs right there, with the economic activity surrounding these facilities predicted to retain another 72,000 indirect jobs. Without our incentives, they would have gone to Ohio.

GM has to submit plans for a "successful, competitive business case", whatever that means. But when they do, they will be adding 900 new jobs at the Warren Tech Center, and they are also looking for more support at the Brownstone Battery facility - and that is expected to add another 150 jobs. This will support thousands of other jobs statewide. Thank the nice President for saving the company.

Ford's investment of $850 million will create 1,200 new jobs, and the work will retain thousands more in plants across the state. This is where the major competition came into play. MEDC lists competing sites in India, South Africa, Europe and Asia as vying for the business - and keep in mind, Ford doesn't have any strings on them. They could pack up and go anytime. And they picked us.

Other companies from today's announcement, job totals, and who got the beat down:

  • Cequent Performance Products, 115 jobs, Indiana (the Daniels magic in action)
  • Creative Foam Corporation, 144 jobs, Colorado
  • Dematic Corp. (GR news is going nuts on this) 910 jobs, Kentucky and Utah
  • Dokka Fasteners, 168 jobs, Missouri and Illinois
  • Dynamic Captioning, 56 jobs, New York
  • EnovateIT, 387 jobs, Ohio
  • Eovations, 64 jobs, Ohio (you're slipping, Ted)
  • Mountain Valley Recycling, 1,303 jobs, Oregon, Arizona and Nevada
  • P3 North America, 129 jobs, New Jersey (Chris Christie will be back to campaign for Snyder soon)
  • Powertrain Integration, 41 jobs, no state listed - niche automotive
  • Roush Clean Tech, 85 jobs, North Carolina, Florida, Nevada, Oregon, Minnesota, Texas, Ohio, Indiana and Wisconsin. Whew, they are popular. They do R & D for "alternative energy solutions to fleet vehicles"
  • Yanfeng USA Automotive Trim Systems, 466 jobs, Missouri. (51% Chinese owned. No "bashing" here)
  • County of Washtenaw, a brownfield development for Zingerman's!, 65 new jobs.

    Business leaders might find they have a problem with Snyder's attitude towards MEDC and our incentives. While they all admit that the process could be made better (even MEDC admits that), his plans to severely curtail the credits and not go after large companies doesn't sit well with some folks. Regional economic development officials got together in August to urge the retention of incentives, correctly stating that without them, we're toast. Low tax rates just won't cut it anymore - if they ever did in the first place.

    Birgit Klohs, CEO of The Right Place Inc. in Grand Rapids, says the present policy of targeting high-growth sectors, such as life sciences and alternative energy, is a proper strategy.

    “There is no state, there is no business, that doesn’t decide what sector it wants to compete in, and we have to decide what sectors are growth sectors and what can add to our economy,” Klohs said during a recent roundtable discussion with her colleagues from West Michigan.

    They say companies across the U.S., even when they consider states with a lower business-tax burden than Michigan, have come to expect some kind of incentives.
    “We cannot stop incentivizing companies that are looking to grow to protect companies that are looking to stay put,” Lakeshore Advantage President Randy Thelen said.

    And as far as targeting the big fish...

    Klohs says the state cannot turn away from recruiting large employers that can create jobs in greater volumes through a single win than small businesses.

    Why is it that Republicans are supposedly better for business? They have spent the past four years creating uncertainty, first by throwing out the SBT, then dragging their feet on the MBT, and now we are looking at changing both tax rates and incentives AGAIN, with no clear plan on how it would all work. John Engler tried this same trick with MEDC when he was elected, disarming us in the race for jobs, and he set us behind when the economy picked back up in the 90's. That could be why Blanchard ended up with a better jobs record than Engler did.

    Sure hope we don't have to learn that lesson again - but sure glad to see the automotive jobs stay here in the meantime. If the Republicans screw this all up, we are going to need them. Go Big 3!