A spreadsheet of analysts hanging with The Detroit News all agree with TTAC's Best and Brightest: Michigan is the least likely place on Earth of the three states VW's considering for its new U.S. plant. Hello? Bis morgan? Didn't anybody notice the fact that Volkswagen NA ALREADY LEFT DETROIT? Anyway, for some strange reason– something to do with labor costs and work rule flexibility– unionization seems to be hamstringing MI's chances of landing the gig. "That's the big risk of coming to Michigan or anywhere in the north," says Aaron Bragman, an analyst with Global Insight. "A lot of companies have wanted to avoid" the UAW. (For this he gets paid?) IRN's VP of auto forecasting says Alabama is the likely front-runner, followed by Tennessee. Erich Merkle fancies 'Bama's chances, citing the success of Mercedes-Benz production and the "German supply base that's already pretty well-established." Ultimately, the decision between the two right to work states will come down to the bribes incentive packages each state offers VW.
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And Michigan, being BROKE, will be able to offer exactly – what?
I was born in Michigan. Still have a lot of family there. There is still a lot of Michigan in me, and I do love the place….
With that said, here is more proof that Michigan’s corporate policies are hindering it moving forward in the business world. This is a state with a hugely competitive workforce, especially in automotive, with lots of people looking for such work. It should be a dream setup for any auto company.
Instead the UAW and I would assume Michigan business taxes have scared away (again and again and again) investments like this one.
At what point do you say enough is enough, and make Michigan right to work?
Though I have to say I think it is BS that governments can offer tax incentives as they see fit. I honestly feel it should be illegal for states to spend millions/billions to lure certain companies to the state. Why should it be that because Alabama (a state that gets far in excess of $1 back from the federal government for each $1 it pays….Tennessee too) is willing/able to spend, say, $50,000 per job created should they be able to say “Oh, VW, you can get this” while meanwhile thousands and thousands of other businesses, creating far more jobs, have to continue to pay into the system?? Is it fair my company pays so they can give it to VW? Hell no. It should be states set their tax rates/rules, and business decide based on that. This carrot dangling is ridiculous.
Meanwhile, while the tax rules and unions hinder a lot of other states, places like Michigan, Illinois, etc get back far less in federal taxes than we pay in. Those recipient states get better economies, better infrastructure, lower taxes (on the backs of those who donate), and more money to throw around. And they use all of the above to their advantage to lure businesses and residents to their state.
So you’re welcome Alabama. I’m glad you get to sell your low tax rate and wonderfully smooth roads, paid for with my money, while us northerners continue to pay higher taxes for less in return.
Ug.
Tax incentives to lure big industry are a long-accepted and prevalent way for states to do business. They’re not stupid, and they won’t give away the farm. Bringing in industry adds employment far beyond the new factory jobs. There is an economic ripple effect as those paychecks get spent. In the end, the state likely comes out ahead because of the resulting growth in its tax base.
The supply of experienced (e.g., overpaid) labor in Michigan is insufficient to offset the risk involved in training a new workforce in a right-to-work Southern state. Closed-shop policies will bring about the eventual extinction of unionized American production labor.
As an Alabama resident, I can tell you there was MUCH hand-wringing in the mid-90s when we were trying to lure Mercedes. Now with 50-some-odd German supplier here, as well as major Hyundai and Honda plants, the expenditures have more than paid off in worker skills.
But smooth roads? Birmingham to Tuscaloosa (Mercedes), sure, but the rest of our roads are pretty horrendous…especially for mild winters. These plants increase skills and living standards in rural areas, but don’t exactly turn this place into paradise.
The rust belt only really existed because the Industrial Revolution spread from the population centers in the northeast. The South was mostly agrarian at the time, which is increasingly less common these days as foodstuffs come from all over the world. So in a sense, we’ve lagged economically due to our abundant farmland and natural resources. Now companies are realizing that climates and taxes are better here, and that there’s not much reason to stay up there. This is also just temporary, as it was for the Midwest. At some point there will be better incentives somewhere else and they’ll all move along again.
VW already tried the unionized north – Westmoreland, PA. Total disaster. The fault can surely be placed entirely on management, but that bad taste probably still lingers.
“places like Michigan, Illinois, etc get back far less in federal taxes than we pay in.” Which is basically because Michigan and Illinois are more prosperous than states like Alabama and Kentucky. In fact, among the southeastern states, only Virginia and Florida (obvious special cases) enjoy incomes like northern states.
The War For Southern Independence devastated the South, while the North became even more prosperous. It took almost a century for the South to just get back in the race, and in general it still has a way to go.
BTW–if one wants to talk about unequal flows of money, Southerners might mention how they had to sell their crops for whatever commodities were bringing, while the Big 3 for long sold their cars, trucks and tractors at oligopolistic prices.
Hah, Michigan ?!? Not a chance.
My bet would be on Tenn. due to it’s central location, accommodating government and low costs. Oh yeah, and it’s lack of a union tradition in manufacturing.
Alabama and Tennessee are “right to work” states. Michigan is not.
That difference alone assures that there is no way that Michigan is going to get another auto plant, from anyone. Every state in the southeast has right-to-work laws, so they will be first on everybody’s lists for future auto plants. I seriously doubt that VW seriously gave Michigan much consideration.
At what point do you say enough is enough, and make Michigan right to work?
Never. The unions would rather close the state than accept the reality that they are no longer calling the shots.
“The War For Southern Independence devastated the South, while the North became even more prosperous. It took almost a century for the South to just get back in the race, and in general it still has a way to go.”
The Civil war did devastate the south, however they were far behind the north before the war. They had little industry and even the cotton gin was invented by a northerner.
Hey guys?
Like in any other continent sized country, this goes on down here, too. Except we have some dumb ass pols trying to stop the so-called tax credit war between states. If this happens, guess who loses?
And that coming from a guy who lives in a state that could be likened to a northern American state, a rich one (though in Brazil the richer states are in the south). Long live tax wars!!
It helps the poorer guys and ultimately helps to balance out wealth distribution. Anyway, what exactly does a tax break mean on an industry that otherwise would never grace these lands if such “tax break” were not given? A tax break only happens after an industry is instaleed if it’s never installed such a break is like political bullshitting…words tossed into the wind.
My bet is on Limestone County, Alabama. Right in the middle of suppliers, near Brown’s Ferry nuclear plant AND the Tennessee River. A very highly educated, hardworking workforce (Huntsville is no hick town!) plus a very nice environment.
I can’t harp much about offering incentives.
Tennessee gave away the bank to land General Motors’ Saturn plant, then let them import their workers from out of state GM plants. At least Alabama hasn’t been as brain dead as Lamar Alexander!
Alabama does receive more in federal dollars back than they pay in as Jerome10 states. However, if you strive for this situation to be reversed, the only way to achieve that is through attracting more high paying jobs. Therefore, translating into higher federal income taxes paid and fewer people requiring government assistance.
Michigan has long enjoyed the benefits of abundant high wage automobile industry employment. It is time for someone else to share in the wealth.