When the story about the proposed subsidization of TG Missouri was published, some small details were left out.
TG Missouri is owned by Toyoda Gosei Co., LTD (Japan).
According to their 2009 annual report (PDF):
They have 25,792 employees.
Capital Investments (2009) [like air conditioning!]: $682,818,091.00
NET Assets (2009): $6,411,685,341.00
Average NET Income per year (2005-2009): $168,475,391.00
According to 1Si, the England Administration, and the Daniels Administration:
Toyoda Gosei can't justify what for them is an infinitesimal expansion without public assistance. (A potential $3 million investment represents .004% of their capital investment for 2009.)
The England administration thinks a $150,000 deal is a make it or break it proposition when they make location decisions.
The Daniels administration thinks giving them a tax break is the way to go, even though they depreciated and amortized $419,994,000 in assets last year alone.
I'm guessing 1Si's Kathleen Crowley didn't exactly highlight any of that during her advocacy because, you know, 1Si is the voice of Southern Indiana's small businesses-- especially if they're a multi-billion dollar Japanese multinational corporation with a really Midwestern sounding name.
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Corporate welfare, plain and simple. Skewing the free market - pretty obvious. But the politicians who get to partake of the expensive comp lunches that come with making these deals are disingenuous when they sell it to the public as "make-or-brake" jobs creation work. Studies have shown no long-term effect on job creation from most of the tax breaks and tax abatements that private economic entities have become accustomed to receiving from the lesser minds in gov't that dole them out.
My interest is in attracting jobs and investment, and in being wise with public money. When a business is deciding to expand, that business is going to expand where it makes the most economic sense for them. To the business, a dollar saved is a dollar saved, whether you're a cash strapped start up or a cash rich multinational.
There are only a couple questions here, and none of them have anything to do with TG Missouri’s balance sheet. The relevant questions for the city are:
1. If NA provides an incentive, will it make a difference in whether the company adds (or retains) jobs here?
2. Are the amount of jobs retained (or added) the highest and best use for those incentive dollars?
3. How certain are we that the company will add (or keep) the jobs once the city money is gone?
Kentucky gave $150 million in incentives to Toyota for the Georgetown plant. By all accounts it was public money very well spent. Not only has Toyota expanded, adding many more high paying jobs than initially projected, but numerous suppliers set up in the region employing many thousands more.
Dan, $13 an hour isn't a job. It's survival.
Gina has this one right. There's rarely long-term benefit to these subsidy programs, either in job creation or increased wages.
They've helped corporate ownership much more than the labor force. For municipal entities and their citizens, it is indeed a race to the bottom.
For an official to say "I'm doing this for jobs" is generally inaccurate.
It's importnat to the people working for $13/hr.
If you can tell me how we can get $16 or $20 or $25/hr jobs for a similar investment, I'm all ears.
Tell me how we can get other cities to stop providing incentives and I'll agree with your point.
Dan, the answer is simple: Stop giving handouts for $13 an hour jobs. You get what you incentivize. Jobs at that pay scale pretty much require a worker to take 2 jobs, leaving them little time to live life since every dollar is going to survival.
All I know is that now I really feel like a rube. I settled for a sidewalk, when I could have had 1Si ask the city for an entire brewing system.
After all, averaged together, my brewers make more than $15 an hour. Hell, I qualified! And I'm not even Japanese ...
But there's the rub. The corporate entity wishes to set up shop here precisely because they're $13 an hour jobs. They'd be in Bolivia for $7 if there was an interstate close by.
At $ 27,040 per year, $ 13 per hour is 23.7% better than the Floyd County, Indiana average per capita of $ 21,852.
New Albany's average per capita is $ 18,365, making the $ 13 per hour 47% higher than the average per capita income.
Sadly, Floyd County, Indiana is in the top ten percent of Indiana counties (per capita income). Floyd County's per capita average is at least 10% higher than Clark and Harrison Counties.
It seems to me New Albany needs more $ 13 per hour jobs, not less of them.
What would happen if $ 150,000 was spent actually recruiting more employers and promoting the work force?
Right here, Hitachi Cable is manufacturing the high voltage, armored wiring harnesses for GM's Chevrolet Volt hybrid as well as the Chrysler hybrid vehicles.
Arguably, cutting edge development and manufacturing is taking place daily in our market, employing our neighbors as the human capital that make it happen.
The city and county sits on its butt, not letting the world know the true story of what our market can do (and is doing).
$ 150,000 would be a decent start for a marketing effort to promote the area to businesses.
The key to true wealth for both families and municipalities is manufacturing. I've seen post after post on this blog pleading with folks to end their addiction to petroleum.
We're actually helping folks do just that right here, manufacturing components for hybrid vehicles. Will that break Big Oil's back? No, but its a start, and it's a story that should be told to kick start a better view of our area's economic development.
Why there is no local effort to logically promote the area for business development is beyond me.
Let's not forget - things that last often start small, are nurtured and grow.
$ 13.00 per hour jobs are important. We actually need more of them. The more families that earn money in the market, the more money is in circulation in the market. Maybe a family around here could actually buy a house instead of renting.
And I do think TG Missouri should (and will) air condition their own building on their own dime. Again, promotion of what Hitachi is doing (which I imagine is in air conditioned comfort) might shame them into providing their employees their own climate control. If they walk, sell the building to a better business. Why cave to threats from a bully? We need partners.
It seems often this market doesn't act like it has any strength at all and runs back and forth from one "crisis" to another.
Make a plan and work the plan. Review results and modify the plan. Work the plan. Plan...
Please note that nowhere did I write that I support this particular allocation by NARC. I wrote that I do not oppose business incentives in general. Which businesses get incentives specifically is a different story.
If the people at this factory making $13/hr lost their jobs, would they go to $9/hr jobs or could the money be used elsewhere to get them $20/hr jobs?
You can't say this is a good or bad deal unless you weigh the alternatives.
I'm afraid that I am going to piss off several of my friends on this one. I apologize in advance but I know that most of you understand and support debate.
Anyone remember a certain sidewalk that was replaced and widened at a strategic point(along with a few others sidewalks downtown)? Some of the people opposed to that used the same argument that some of you are using . "We ought to help business's that offer "real" wages."
I don't know whether this incentive is needed or not. There is no way of knowing for sure. Yeah, my first thought was the same as most people's, this sucks. But does it? Are "we" talking out of both sides of our mouth?
I think the saddest part of all this is that New Albany has no function, full time economic development team. There's no place and no one to whom we can go make these comparisons. There's no one in a decision making capacity to carefully weigh the alternatives. No one is being proactive to create new, better alternatives. The jobs falls upon the very part-time redevelopment commission and Carl, whose job function includes a million other things. 1SI's motivations sometimes will align with the residents' motivations and sometimes they won't. Professional "Economic development" in New Albany for New Albany is virtually nonexistent and only New Albany can take credit for that.
To my ex-friend Mark ...
LOL!
I see a difference, in that repairing a city-owned sidewalk that had not been touched in over a half-century was necessary, anyway, and would have happened at some point. The sidewalk was widened, yes. That helped us, yes. But it essentially was the city repairing its own property.
Air conditioning doesn't fit quite the same bill.
As I joked, I've learned my lesson. TGM gets HVAC, and all I got was some lousy cement. I should have asked for the brewing system and cited the salaries paid the brewers.
Per capita = per person. Retired, infant, school child, etc. So, possibly, $13 an hour is a good starter job for a single person with no kids, living at home with mom and dad.
I know that there are differences--always are. However, there are enough similarities when viewing the overall concept on this issue.
Consider this, though: If a family of four had TWO parents making $13 an hour, their average household income would be $52,000- well above the median household income. $13 may not work for a one working parent family, but it's pretty significant for two incomes.
Estimated median household income in 2008: $39,106 (it was $34,923 in 2000)
New Albany: $39,106
Indiana: $47,966
Estimated per capita income in 2008: $21,453
Read more: http://www.city-data.com/city/New-Albany-Indiana.html#ixzz0y6MwIsB9
I have to go off topic momentarily and ask snittersnik who takes care of the family/children in your 2-earner family model of good middle class living?
Mark - you're comparing apples and oranges. Infrastructure is the responsibility of government. Deciding who amongst all the various players in the free market is your best bet should be left to professional stock brokers. However the poster with the non-reproducible screen name does make good points about the lack of 21 century economic vision in New Albany. Dan, I also can't argue with your devil's advocacy for $13 jobs. I just fundamentally disagree that smart sustainable economic policy for our region includes local gov't or state gov't picking "who promises the most jobs" schemes that in the end just deplete our common treasury.
We need 21 century planning, infrastructure and green industry. How can we subsidize conservation of resources as just one example of 21 century thinking.
What is $150K went toward on-site day care?
GCoyle,
We do daycare...to the tune of 6K-10K per year annually for two kids. (as their ages have changed, rates have gone down.)
We've done the numbers and we cannot subsist on one income, even with that expense.
As of last week, we've become a one income household due to a layoff- at this point, we're thankful that unemployment exists to get us through the weeks or (hopefully not) months until we gain that second employment back.
I totally agree that $13/hour jobs don't constitute household sustainability...but, that number is a good starting point in a really terrible economy, this particular project notwithstanding.
If 50 $13/hr. jobs disappeared from New Albany, and 50 new $25/hr jobs appeared, what happens to the employees who were making $13/hr.? If they don't have the technical training for the $25/hr. jobs, they likely won't get those jobs. What then?
For clarification, I didn't mean for that to be in any way a statement against $25/hr. jobs. I'm asking what retraining opportunities are available to workers?
Gina,
To quote one my favorite people, I disagree. One of the objections was very clearly aimed at the wages. Same argument was used by the naysayers to the sidewalk. I know it's infrastructure. There are much worse sidewalks in New Albany. Actually, where I live, we don't have any sidewalks--good or bad. So, let's don't kid ourselves that it was "just" infrastructure improvement. Clearly intended to help a business--and I have no problem with that.
I agree that abatement's have been abused here and elsewhere. I really don't see much difference in doing the air conditioning vs another $150,000 abatement's. It's a cost, no matter which way. Like Dan said, there needs to be proper protocol developed. I would perhaps even require a bond to be posted in the event the company doesn't add the promised number of jobs for a specified period of time.
What is $150K were only available for green jobs? I love that idea, but I don't want the people I elected to make the essential commonalities work, instead working on "jobs schemes" The jobs will come when people want to live here and contribute here and not just excavate value from here. Safe clean neighborhoods with good schools are the only economic development activity I think is valid for our elected officials.
The way we did it with Windstream Technologies is we gave them a $50,000 loan for buildout at Purdue. If they created X jobs in Floyd Co. within five years, the loan was forgiven. I believe the trigger number of job was 160. For me that was a no brainer.
Dan Chandler, are you speaking here officially as a member of the economic development commission? Or simply as an interested observer?
Randy, I have no authority to speak for EDC as a body. Also, I don't think I've made too many statements in this tread; mainly I've asked questions. When I did make a statement though, I did so with general city policy mind, not specifically EDC.
I'm curious why you ask. I hope everyone would agree that the city could use more economic development staff and planning, or that a $13/hr. job is a good deal if your next best option is $10/hr.
Dan, you are the only public official commenting on the thread. That's why I asked. It's important to know from whence you are speaking.
I would think whether anyone agrees the city could use more economic development staff and planning would depend largely on what they'd be advocating, spending money on, etc.
To me, with the exception of pointing out that all these incentive programs combined have been largely unsuccessful in raising median wages across the country for a couple of decades or more, the "what if" wage argument is irrelevant. Is $13/hr better than $9? Sure. Is it better than $17? No.
As also mentioned, a well-trained worker, though, is valuable to a lot of people who might compete for them. Such a program would incent both the worker and the business to come or stay here. Why not direct the cash that way, toward the fishing person, rather than at one fish?
Interesting idea, Jeff. How about a couple of details? Where would you target the money?
I think the initial trick, Mark, would be to decide how much to target individually to see how feasible it would be.
You'd want to make sure the opportunity for increased skills was accessible to as many as possible but also that accessible meant really accessible.
What I mean is that a small scholarship alone really doesn't equate to accessibility. First, I'd put someone in place (or work with schools) to make sure that all preexisting financial resources per student had been exhausted, ie, pell grants, etc. Then we'd be looking to help make up the difference - tuition, transportation, housing, etc.
Once a generalized feel could be established for how much that really costs in combination, then the goal would be to fund as many people as possible to cover those costs, depending on available funds. It would probably take some tweaking, but there's bound to be a sweet spot in there somewhere.
If we spent our transportation dollars on transportation and mega projects were aimed at actually moving people from school to work to home, that sweetspot number could be lowered.
We need a mix of vocationally and university trained people, so both Ivy Tech and the four year schools would be in the mix and included in coordination.
Depending on where dollars were coming from, you could set geographic limits based on city, county, region, etc, with guidelines requiring that recipients continue to live in those areas after graduation - perhaps one year of funding forgiven for each year they remained a resident - or something like that. Otherwise, there would have to be terms for paying it back.
With more trained people and less student debt, i.e., taking whatever job you can get to make student loan payments, car payments, etc., I think entrepreneurship could increase as there would be more opportunity and less risk.
It needs much more thought, but it's a start towards using citizens' money toward empowering citizens rather than corporate subsidies which have proven to do us very little good.
Thanks, Jeff. Figured that is where you were headed but, me being me, ASSumption sometimes bites.
I like it. And remarkably detailed for fleshing out an idea. Why am I not really surprised? Somehow, I've got to figure out a way to spend more face to face time with you. Maybe I could pay you to tutor me.
Thanks. I'm sure I managed to cobble that together from other people's ideas. But, until you find them, picture me holding a "Will Work for (good) Beer" sign.
Most, if not all ideas, are refinements and/or compilations of other people's. The "art" is in the recognition.
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