Posted: 08/26/10 00:14
by Dave Mindeman
I understand the latest pitch to Ford to keep the St. Paul factory open. But what I found more interesting is what it told us about the relationship between business and government.
Tom Emmer and the Republicans make it a central argument that business and government are adversaries. That government is an intrusion into business and should stay away.
Yet, when Ford makes examines its situation in St. Paul and makes a purely business type decision, what does Pawlenty do?
The incentive package includes a variety of tax breaks amounting to roughly $90 million if Ford decided to retrofit the plant. The facility currently makes Ranger pickup trucks.
In addition, the St. Paul Port Authority offered to buy the land and lease it back to Ford, allowing the company to use the cash infusion toward renovations.
That was a hefty offer. Now, if what Pawlenty and Emmer have been telling us is true, then you would think Ford would have been very tempted to change their mind and take advantage of all of those government breaks. After all, isn't it the "burden" of government that is driving these businesses away from Minnesota?
But, here's the reality:
But Gov. Pawlenty says Ford's decision may not come down to money alone. He says Ford officials emphasized their need for operations that can be flexible and produce more than one kind of vehicle, and that these plants should be situated near a supply chain.
"At least for automobile manufacturing, Minnesota lies outside the ... traditional supply chain corridor," Pawlenty said. "That's a geographical question we can't change, and there's no amount of money that would easily replace that."
The "decision may not come down to money alone." Now there's the rub. We tend to forget amidst all of the political rhetoric, that business decisions are seldom about corporate tax rates, general tax environment, or even about property taxes.
No, business decisions are more about logistics, work force, supply lines, and geography.
Whether or not Minnesota has a 1% higher corporate tax rate than another state has very little to do with it.
Pawlenty and Mayor Coleman made the only argument that government entities can make.....tax breaks and monetary incentives.
The Ford response makes the point. Business doesn't make its bottom line decisions on taxes.



