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Will They Ever Learn?

Local governments are constantly cutting deals with corporations because they are promising to create jobs in the area. They compete to offer the corporations the best package to attract them using money that has to be made up by existing businesses and tax payers. The corporations don’t stay, and the money is wasted. They just don’t learn.

Jim DeRosa has the story of Evergreen Solar, as reported by the local paper, the Worcester Telegram & Gazette, while Oly Mike uses the New York Times version.

From the NYT: “Even though Evergreen opened its Devens plant, with all new equipment, only in 2008, it began talks with Chinese companies in early 2009. In September 2010, the company opened its factory in Wuhan, China, and will now rely on that operation.”

These are “the jobs of the future”, “the green jobs” that are going to solve all of our problems, and despite tens of millions of dollars in investment and tax breaks by local government, they didn’t even let their equipment get broken in before they started their planned move to China.

It is all about greed.

Governments need to stop offering these deals without iron-clad long-term contracts before any money changes hands. They would be better off helping local small businesses expand, than betting on the “big prizes” that they are never going to win.

7 comments

1 Ame { 01.19.11 at 8:07 pm }

And the sad truth is that the majority of local government officials aren’t qualified to negotiate business deals.

2 Bryan { 01.19.11 at 8:20 pm }

Ain’t that the truth. All you have to do is look at one of the road re-paving contracts to figure out they don’t have any idea what they are doing.

You can’t convince them that they need to look at these things as if the money was coming out of their own checking accounts. No one would agree to having some of the contract winners put in a driveway for them, so why to they get to repave miles of roads.

Once you get into millions, you need penalty clauses that cause pain, not discomfort, and clear performance standards.

3 Badtux { 01.19.11 at 11:25 pm }

According to an article in The Nation, the actual culprit here was that Evergreen Solar needed money to expand, and couldn’t get it here in the United States. The banks refused to loan them any money at any interest rate, not even at 20% interest rates, and the Federal government basically told them to go away.

Meanwhile, the Chinese offered them a huge loan at less than 6% interest, due in 2015. Okay, so America is telling you to go fsck yourself, and China is saying “hey, we want you, come on over!”. Y’know, I’d give the middle finger to America too in that circumstance… even a bird-brain penguin can figure *that* one out, yo!

– Badtux the Snarky Penguin

4 Bryan { 01.19.11 at 11:47 pm }

Politicians + Bankers … What could go wrong?

Banks aren’t apt to attract any deposits when they are jacking up all of their fees and offering CDs below 1%.

There was on time when the stock market took care of things like that…

5 Kryten42 { 01.20.11 at 7:32 am }

Last post before I pack up the ‘puter tomorrow. 😉 🙂

I just watched the latest TDS and Jon had an author (Paul Clemens) who wrote a book called ‘Punching Out – One Year in a Closing Auto Plant’. I had to watch the interview a few times to get my head around it…

Apparently, a new industry has sprung up and what they do is close down plants in the USA, and move them to other countries and set them up to manufacture things that were made in the USA, and it takes about a year to do it. Now the interesting thing is that the case in the book is a stamping plant in Michigan (Bud plant built in 1919, and stamped the panels for the 50’s Ford Thunderbird, for eg.), and the company that was basically created to close/move/setup the plant overseas, was created between two Chrysler plant’s, using mostly workers that used to work in the plants being closed. This company moved the stamping plant to various overseas companies, mainly in Brazil & Mexico (A Spanish plant in Central Mexico bought a part of the stamping plant to manufacture parts for the Chrysler Dodge Journey). So… basically, a US plant that was essentially next to Chrysler, was moved to Mexico to make the parts cheaper. They even have a newsletter, Plant Closing News.

It’s crazy. I think you’d have to get the book to really understand (if that’s the correct word here) what’s going on. Mostly, it seems to me that the book is mainly about the rapid decline in the USA of blue-collar work.

Anyway, if you want to watch the interview (and I thought it was very interesting, and very little *intentional humor) from Jon.

TDS – January 19, 2011 – Paul Clemens

I honestly do not see how the USA can survive if the business ethos is as explained in this book. *shrug*

6 Bryan { 01.20.11 at 9:28 pm }

It can survive if no one minds the economy of the Cayman Islands with a few winners at the top and abject poverty for the majority of the population.

You have to have something to sell. You have to have real assets, not just paper and promises. You have to make something that people want and need.

At one point the Spanish Empire had the majority of the gold and silver in the world, but they didn’t actually make anything, so it was all exported to buy what people wanted and/or needed. That is where the US is headed.

7 Badtux { 01.20.11 at 10:02 pm }

The Chinese understand that. The U.S., however, appears to have forgotten. So it goes, the fate of the Spanish Empire awaits…

– Badtux the Industrial Penguin