Michigan Small Car Assembly Bid "Loss Leader"

Edward Niedermeyer
by Edward Niedermeyer

UPI reports on recently-released documents which detail the extent to which states went to secure GM’s recent compact car manufacturing contract. Wisconsin had committed “$213.14 million in concessions from United Auto Workers Local 95, $100 million in Enterprise Zone tax credits and $24 million in discounts from health insurers and providers,” according to the report. Another $100M was added to the incentive package after Wisconsin officials learned that it was falling behind in the bidding, bringing the total package to $409M. Which wasn’t even close to enough to beat out Michigan’s winning bid, which totaled $1B.

Yes, that’s one billion dollars from Michigan’s less-than-swollen tax coffers for the right to assemble next-generation Aveos (presumably) at Orion Township instead of Wisconsin’s Janesville or Tennesse’s Spring Hill plants. “Definitely, it’s going to be a loss leader for them,” Wisconsin Deputy Secretary of Commerce Aaron Olver says of Michigan’s billion dollar baby. “These types of offers have to be grounded in some kind of economic reality . . . You see numbers that big — you just know they don’t pencil out in terms of a return to the treasury.” Ya think?

Edward Niedermeyer
Edward Niedermeyer

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  • Ronnie Schreiber Ronnie Schreiber on Sep 15, 2009

    Instead of billion dollar incentives, Michigan should just eliminate all business taxes and fees.

  • Ronnie Schreiber Ronnie Schreiber on Sep 15, 2009

    John Horner, Offshoring jobs will eventually end. Japan and Germany were once low cost producers. As China and India develop, wages will go up.

  • Mattstairs Mattstairs on Sep 15, 2009

    Ronnie, Some have suggested that MI do just that. We used to have something called the SBT, which businesses hated and said was unfair. So, it was replaced by the MBT, which businesses hate and say is unfair. The funny thing is, MI has skewed both its business taxes to the benefit of manufacturers and the detriment of retailers, services companies, etc. Michigan has a reputation as a bad place to do business, I would argue because of its history of labor/management hostility. Things may start to change, mainly because Michigan has fallen so hard it is becoming a cheaper (wage) place to do business.

  • Geeber Geeber on Sep 15, 2009
    PeteMoran: Where are the free market neo-cons that usually talk carp about market distortion? There are plenty on this board and in the real world. They regularly get lambasted for not "caring about the workers" or being foolish Ayn Rand worshippers who don't understand how the real world works.