Wednesday, December 17, 2008

NY Times Flashback: Chrysler Got $232m in 1997

NY TIMES (August 12, 1997) -- The Chrysler Corporation has become the latest company to negotiate extensive tax breaks and other government incentives, winning concessions totaling $232 million (MP: $307 million in 2008 dollars), or about $47,000 for each job retained, for building a Jeep assembly plant in Toledo, Ohio.

Never mind that the new factory will have 600 fewer jobs than the one it replaces, that unemployment rates are at record lows and that Chrysler planned to stay within 15 miles of Toledo -- possibly somewhere in Michigan -- even if it had abandoned its downtown site. Cities, like workers themselves, remain eager to hold onto jobs in this era of downsizing. City and state tax revenues paid by Chrysler and its workers would have plummeted had Chrysler moved out.

This is not the first time Chrysler has gotten an incentive package to have a plant stay put. In 1992, Chrysler replaced an 85-year-old plant in Detroit with a $1 billion sophisticated factory where Jeep Grand Cherokees, the high end of the Jeep line, are built. Back then, the company received a package of financial incentives worth more than $250 million ($378 million in today's dollars).

The Minneapolis Federal Reserve Bank argued that while the competition for jobs among states might shuffle jobs from state to state, it created no new jobs nationally. The bank argues that Congress, which has the authority to regulate interstate commerce, should deter such competition by taxing as income the special deals offered to companies like Chrysler.

HT: Johnny

8 Comments:

At 12/17/2008 3:25 PM, Blogger RebelRenegade said...

Walt G. will be along shortly to spin this.

 
At 12/17/2008 4:10 PM, Anonymous Anonymous said...

I am waiting for Walt to compare the handouts given here to the tax incentives given to the foreign transplants to open *new* factories with *new jobs*.

Here it seems that the Big 3 has a habit of getting tax incentives once and then when things start to look dicey they look to the government for a handout (not cost reductions from the UAW).

Gee, that sounds like what they're trying to do now.

Also, not interested in hearing about how the UAW made big concessions to start sometime...maybe (2011). There are reasons why the public doesn't support a federal bailout 1.) UAW workers are job trained unskilled workers who are overpaid and 2.) car quality used to suck souring a generation on the Big 3. Quality sucked when the UAW was at its peak membership incidentally.

And yes management has a role in this. The managment of the Big 3 is captive to the UAW because they need the UAW to approve anything. The UAW backs the management because they are in bed with the UAW.

 
At 12/17/2008 5:13 PM, Blogger happyjuggler0 said...

It is outrageously illogical to tax companies, then turn around and use that money to give to...companies.

Abolish the state corporate income tax. (Abolish the federal corporate income tax too, but that is off topic). Stop taking money away from growing companies that want to create even more jobs. Especially since all taxes are paid by people, the vast majority of whom got their money they used to pay those taxes from jobs at...corporations.

In short, the corporate income tax kills the goose that lays the golden eggs.

 
At 12/17/2008 7:29 PM, Blogger Walt G. said...

Here's my spin: All you folks that dislike the UAW and unions in general can ________ refuse to accept money from anyone who is in a union. If you have a store, put a sign in the window that states: "No Money Accepted From Union Workers." Same goes if you are a barber, own a gas station, sell insurance, sell furnaces, teach college classes, or. . . . You really are hypocrites if you fail to put you money where your mouth is. I will be happy to spend my money elsewhere if you think me and my kind are so bad. Just give me a sign!

Come to think of it, I will have signs made for all of you (from a union printer of course) and sell them to you at my cost. How many shall I order? I'm serious—I think I will really do this. Thanks guys!

I honestly don't care to support those who do not support me. Remember, though, we are your friends and neighbors, and you probably enjoy benefits as free riders from a union threat or from our past bargaining to create a middle class. When unions are gone, your world is going to get much tougher, too.

 
At 12/17/2008 8:26 PM, Anonymous Andy said...

"Those who cannot remember the past..."

 
At 12/17/2008 8:33 PM, Anonymous Anonymous said...

Walt,
How do you like the UAW Golf Course/money pit in the middle of nowhere?

I would have no problem selling to a union worker - I believe in free exchange.

Instead I will not buy anything that a UAW worker has produced - a big 3 car.

 
At 12/17/2008 9:07 PM, Blogger Walt G. said...

I don't golf. I don't care.

 
At 12/18/2008 9:16 AM, Blogger RebelRenegade said...

It would seem that most of Walt's previous objections about the transplants getting tax aid have been overcome now that it's been pointed out that the big 3 were getting subsidies too and couldn't compete.

I was hoping for a better rebuttal than "fine don't sell us stuff".

 

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