This Is The Tale Of Two Communities

Both articles were printed March 18, 2004

2 DEALS: A NUTSHELL
The state announced two corporate tax credit offers on Wednesday:
General Motors Corp.
What GM must agree to: Spend $299 million on its Warren Transmission plant to convert it from building four-speed transmissions to six-speed front-wheel-drive transmissions.
State offer in return: Single Business Tax credit worth $10.4 million over 20 years.
Local offer: 12-year tax abatement worth more than $19.6 million from the City of Warren.
Number of jobs directly saved: 518*
Potential total workers' income generated over life of agreement: $2.9 billion*
Dr. Schneider Automotive Systems Inc.
What Schneider agreed to: Build a $26.5-million plant and North American headquarters in Brighton to build interior automotive trim parts.
State offer in return: Single Business Tax credit worth $3.1 million over 15 years.
Local proposal: 12 years of tax abatements worth more than $800,000 from Brighton.
Number of jobs directly created: 350*
Potential total workers' income generated over life of agreement: $329 million*
*University of Michigan estimates
2 big tax breaks aim to keep jobs
BY JENNIFER BOTT
FREE PRESS BUSINESS WRITER
March 18, 2004
Michigan is offering General Motors Corp. and a German auto supplier two hefty tax credits to keep and create at least 868 manufacturing jobs in southeast Michigan. The move announced Wednesday is the latest by Gov. Jennifer Granholm's administration to stem the tide of manufacturing jobs leaving the state. Michigan has lost 175,000 manufacturing jobs since 2000. Currently, there are about 720,000 manufacturing jobs in the state, down 25,000 compared with a year ago. But layoff notifications are down considerably so far this year. And in January, manufacturers added about 2,000 jobs, according to a state payroll survey. Granholm said it's not enough. "I'll be satisfied when everyone has a job and we're not losing manufacturing jobs," she said Wednesday. That goal could take awhile considering how aggressive other states and countries are going after Michigan manufacturing jobs these days. In the most oft-cited example, Swedish appliance maker Electrolux AB in January announced plans to close its Greenville plant, which employs 2,700 people, and move the jobs to Mexico. "It's clear Michigan is in a tightly fought war for preserving manufacturing jobs," said Patrick Anderson of Anderson Economic Group, a Lansing-based consulting company. That's where the tax credits, offered through the Michigan Economic Development Corp., come into play. According to the deals, GM will get a $10.4-million Single Business Tax credit over 20 years if it invests $299 million in its Warren Transmission plant for future business. The move, if approved by GM, could save 518 jobs there. Separately, Dr. Schneider Automotive Systems Inc. of Kronach, Germany, will receive a $3.1-million tax credit over 15 years to build a plant in Brighton that could employ 350 people by 2011. Schneider -- which makes interior trim parts like vent covers for automobiles -- is to break ground in April with a scheduled opening in early 2005. Last week, legislators also approached Southfield-based Lear Corp. to see whether tax credits or incentives might sway it from merging two Grand Rapids plants, which could eliminate 400 or more jobs. "These incentives are necessary," Granholm said. "We cannot compete with our arms tied behind our backs."But others like Sung Won Sohn, a Minneapolis-based chief economist at Wells Fargo Bank, are skeptical. "I'm not sure how effective these subsidies are," he said. "One could argue the firms would have stayed anyway." Officials from Schneider and GM say that's not necessarily true. Schneider President Peter Jansen said his parent company contemplated building its plant in Ontario. GM won't disclose which sites besides Warren are on its shortlist to build six-speed front-wheel-drive transmissions. The Warren plant currently produces four-speed transmissions. Jim Marcum, secretary treasurer of the 1,600-member UAW Local 909at the Warren plant, said the operation is slated to produce four-speed transmissions through 2010. Locking up the six-speed transmission work would help increase job security, he said. Darla Park, a GM Powertrain spokeswoman, said GM could decide within a month or two whether Warren will get the business. Aside from the 868 direct manufacturing jobs tied to the Schneider and GM deals, the state says the businesses could save or create an additional 2,000 jobs. According to a University of Michigan analysis, the Schneider plant could lead indirectly to 295 more jobs, while keeping the GM transmission business in the state could indirectly result in 1,723 more jobs. In addition, the university estimates the Schneider project will result in a net state revenue gain of more than $22 million and $329.5 million in workers' total personal income over the life of the tax credit. The GM deal could result in a net state revenue gain of more than $213 million and $2.9 billion in personal income, the university said.
Copyright © 2004 Detroit Free Press Inc.

Part II

THE WINDSOR STAR March 18,2004

Auto companies need cash: MPs
BY DONALD MCARTHUR
STAR STAFF REPORTER

Windsor's automotive industry will vanish in a decade unless Ottawa spends hundreds of millions of dollars enticing companies to set up shop in the region, say NDP MPs and labour leaders.
" In ten years we will not have an auto industry in this community if the governments of the day don't start taking action and taking this seriously because we're losing jobs every day," said Tom Lesperance, first vice-president of CAW Local 444.
Lesperance joined Windsor-West NDP MP Brian Masse and Windsor-St. Clair NDP MP Joe Comartin for a Wednesday morning news conference outside the Pillete assembly plant that is closed and slated for the wrecking ball.
" This is going to be the future of the auto industry if they do not take it seriously," Masse said.
" We are seeing this week what is going to happen to our plants in the future."
The trio blasted Prime Minister Paul Martin for failing to understand the need to stay competitive with corporate subsidies and his failure to announce an automotive strategy during a pre-election swing through Windsor last week.
" We have consistently seen states in the United States putting hundreds of millions of dollars on the table to lure assembly plants," Comartin said. Three Canadian assembly plants, including the Pillete plant, have closed in recent years and Canada is home to only one of the nearly 20 plants built in North America over the past decade, Co-martin said. The federal government must open its wallet to lure companies to Canada and will get that money back through increased employment and tax revenue, he added.
The Pillete plant employed more than 2,000 people at its peak before it was closed last June. It will be demolished in the coming weeks.