[HN Gopher] After getting $824M in state aid, GM to cut 900 jobs...
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After getting $824M in state aid, GM to cut 900 jobs at Orion
Assembly
Author : belltaco
Score : 74 points
Date : 2023-12-14 20:54 UTC (2 hours ago)
(HTM) web link (www.michigancapitolconfidential.com)
(TXT) w3m dump (www.michigancapitolconfidential.com)
| jayzalowitz wrote:
| I guess its better than a sports stadium...
| legitster wrote:
| > Taxpayers spent $600 million to create 4,000 jobs
|
| Taxpayers spent $0. They _gave up the potential_ to make $600
| million. And that was only _if_ Orion created the full 4,000
| jobs. So they potentially only forwent ~$135 million based on the
| actual amount of people hired.
|
| But it's ridiculous to frame it this way. If a store gave you a
| coupon for $20 off your order, no one in their right mind would
| say the store "spent $20 on a subsidy". Especially if I never
| even cashed the coupon!
|
| If you don't think corporations should get tax breaks that's
| totally fine. But framing it as an _outlay_ is misleading.
| JumpCrisscross wrote:
| > _$66.1 million in site readiness_
|
| This sounds like cashs spent up front. But you're correct, I
| don't think it went to GM.
| legitster wrote:
| It's hard to know exactly what "site readiness" includes, but
| it usually means putting down roads, traffic control, etc. In
| this case, it could literally also mean the real estate costs
| of permitting and clearing the lots for their construction.
|
| But again, these are usually improvements the state gets to
| keep, or are marketing costs for the land they were trying to
| develop. So not ideal but not a total loss either.
| omgwtfbyobbq wrote:
| That's a good point, but I wouldn't assume they spent $0.
|
| The direct costs and increases in undesirable externalities do
| have quantifiable costs.
|
| If the government has been prudent and thorough, most if not
| all of those costs will be offset by positive direct benefits
| and externalities.
|
| If not, the activity will be a net negative to the community.
| rbetts wrote:
| Respectfully, I do not think this is fully correct. These are
| in part state tax dollars being paid to industry. I'd welcome a
| good source to the contrary.
|
| https://www.legislature.mi.gov/documents/2021-2022/billanaly...
| legitster wrote:
| Maybe! This article could be mistaken calling this a tax
| abatement. The original press release refers to this as a
| "grant" (perhaps still tax abatement with financial
| shenanigans).
|
| Still, under the terms of the grant program, the state has
| lots of options to claw back any grant money if the recipient
| doesn't fulfill their requirements: https://www.michiganbusin
| ess.org/48f6cb/globalassets/documen...
|
| I can't find any source on what the actual financial
| agreements of the grant are.
| culi wrote:
| This is not at all like a coupon that you never cashed in. The
| company actually received $824 million in corporate welfare.
| Meaning if it weren't for the state they would literally have
| $824 million more and the state would literally have $824
| million more.
| JumpCrisscross wrote:
| I wish these stories would describe in more detail whether cash
| was spent up front (and if it was handed to the company or spent
| on projects), or if it was _e.g._ an abatement, that doesn 't
| have an opportunity cost and won't make the company money.
| ojbyrne wrote:
| This doesn't seem like a great site anyway. The link to the
| WARN notice at the bottom doesn't work, they use the phrase
| "corporate welfare" somewhat excessively, i.e. they definitely
| have an ax to grind, and they don't say if the site is actually
| shutting down or what proportion of the existing workforce 900
| jobs is.
| legitster wrote:
| > Michigan Capitol Confidential is the news source produced
| by the Mackinac Center for Public Policy. Michigan Capitol
| Confidential reports with a free-market news perspective.
|
| It's weird to me, even as a relatively free-market guy, that
| a paper dedicated to small government would be so firmly
| opposed to tax cuts. I wonder if the distinction between
| "corporate welfare" and "tax cut" is solely down to the
| administration responsible.
| oivey wrote:
| It isn't a tax cut. It's a tax subsidy unevenly distributed
| to one company. Extremely not free market.
| legitster wrote:
| It clearly states several times in the article that it is
| a tax cut. And is there any evidence that it is unevenly
| distributed to one company? It seems like Michigan offers
| an open Express application program with clear
| requirements: https://www.michiganbusiness.org/pre-app/
| peterleiser wrote:
| The original announcement from January 2022 provides overall
| details as well as specific bullet points on each dollar amount
| of the "corporate welfare":
| https://www.michiganbusiness.org/press-releases/2022/01/hist...
| rbetts wrote:
| Thanks for the link:
|
| > A Critical Industry Program grant in the amount of $600
| million for the creation of up to 4,000 jobs related to the
| Orion Township and Ultium projects; > An 18-year Renewable
| Energy Renaissance Zone which will require a minimum
| investment of $1.5 billion with the potential for up to $2.5
| billion, estimated to be worth $158 million; > A Strategic
| Site Readiness Program grant in the amount of $66.1 million
| awarded to the Lansing Economic Area Partnership (LEAP) for
| public infrastructure and utility upgrades.
|
| The grant legislation: https://www.legislature.mi.gov/documen
| ts/2021-2022/billanaly...
|
| It certainly sounds like the grant portion was state tax
| money paid to GM. I wonder under what requirements.
|
| The tax abatement is essentially shifting some of the tax
| base from corporations to individuals. Some of whom can pay
| those rates when they next find work.
| bcrosby95 wrote:
| For anyone that doesn't know - in these deals, "creating" 4,000
| jobs means 4,000 person-years worth of jobs. The requirement is
| satisfied if they hire 4,000 people for 1 year, 1,000 for 4, 500
| for 8, etc.
| readyplayernull wrote:
| > GM will lay off 911 workers there.
|
| Wait, is that a distress message they are sending?
| ellisv wrote:
| I suggest the Detroit Free Press article for more neutral
| coverage: https://www.freep.com/story/money/cars/general-
| motors/2023/1...
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