The Milwaukee Journal Sentinel’s Thomas Content reported on the elements of Wisconsin’s $195 million play for General Government Motors’ new subcompact car production facility, and despite the claims at the time from Gov. Jim Doyle that Wisconsin’s offer was better than Michigan’s, Wisconsin’s offer fell far short by every objective measure. The summary:
– The biggest chunk of the $195 million offer was a 10% tax break on the value of new capital investment plugged into the DemoBudget. Since it was estimated that retooling the plant would cost GM $700 million, the break would be $70 million.
– An additional $45 million in state aid included an unspecified amount of “stimulus” money. The Janesville Gazette reports that the $45 million also included a 7% payroll tax credit.
– Rock County, the county in which Janesville lies, was willing to kick in $20 million.
– The city of Janesville offered to provide $15 million in cash, as well as take over the GM plant’s wastewater facility, worth $1 million per year. The wastewater offer was not included in the $195 million total above, but would add $20 million to its worth over 20 years.
– The city of Beloit, just a bit south of Janesville and hurting in its own right, pledged $2 million.
– The Gazette also reported that private interests were willing to kick in $42 million, including reductions on health insurance premiums from a local insurance company.
Meanwhile, Michigan offered a total of $779 million-$1,011 million in incentives over, depending on the news source, 20 to 25 years, for not only the subcompact production facility, but also the non-closing of a Pontiac stamping facility originally slated to close and the promise of at least 20,000 Michigan GM employees over that 20 years. The AP, via WILX-TV, reported that most of the money was a continuation of tax breaks GM had previously received, but that $300 million was new tax breaks. The Journal Sentinel stated that $236 million was directly related to the Orion facility deal.
The Wall Street Journal reported that local moneys were worth an additional $102 million and that Michigan was going to use $130 million in federal money for “worker training”. Since a total of 1,600 jobs would be “saved” between Orion and Pontiac, and that 1,200 jobs were in Orion, I would estimate that, on top of the $236 million of Michigan state money the Journal Sentinel said was directly related to the Orion deal, another $174 million of federal and local money is related, making the total haul for GM $410 million.
In comparison, Tennessee, the third wheel on this bicycle, offered a “mere” $20 million in job-training funds and an unspecified amount of long-term tax breaks. Tennessee was counting on GM factoring in a nearly-new $225 million painting facility built at Spring Hill as part of its recent $1 billion retooling of the facility, compared to a requirement to build a new painting facility in Orion (and presumably, Janesville) to carry the day, but Tennessee Gov. Phil Bredesen said that GM wanted something north of $250 million to stay in Spring Hill.
Even if Wisconsin, or Tennessee for that matter, matched Michgan’s offer, The Wall Street Journal reports there were also poltiical considerations. The first two criteria for the competition, as told to Tennessee’s delegation, were “community impact” and “carbon footprint”. While Rock County’s unemployment is, at the moment, slightly higher than Oakland County’s (the county where Orion lies), the fact that those formerly employed by GM in Janesville are already on the unemployment line, while those employed by both GM and Chrysler in Oakland County are not yet counted, skews that. Further, the Journal Sentinel reports that the Orion facility is powered by methane from surrounding landfills, a “green” energy source.
The bad news doesn’t end there. The Journal Sentinel further reports that, while Janesville is still technically on “standby”, the local incentives to reactivate the plant are now off the table.
