Why the governors’ plan is good for taxpayers, automakers

Other blogs
Related Links
Related Topics

TRAVERSE CITY, Mich. -- You’ve got to be skeptical -- OK, cynical -- when four governors get together during an election year and tell the auto industry they want to help.

But when the leaders of Illinois, Michigan, Missouri, and Tennessee appeared at the 2012 Management Briefing Seminars here on Wednesday to say that they were forming the bi-partisan National Governors Auto Caucus, there was reason to hope this might be something more than political grandstanding.

In short, the states need to get together and agree on a common set of rules for helping the auto industry decide where to invest in new plants and operations.

Auto industry jobs are coveted for a myriad of reasons such as wages and benefits, but most of all for the spinoff effect they have on local economies. One auto job means multiple service jobs.

But for too long, states have opened their taxpayer-financed wallets too wide to attract these jobs. It’s questionable whether the economic gains from a new plant ultimately paid for the tax breaks, free land, free job training, and other incentives states used to lure the jobs in the first place.

States need to draw the line somewhere on how much taxpayer money goes into attracting these jobs. The auto caucus is a good start.

If they do this right, the governors will agree to limit incentives across the board. They’ll agree on a common procedure template for “bidding” on a new auto plant. They’ll agree that the taxpayers won’t get fleeced. And they’ll agree on what is fair game for state competition: education, health care, infrastructure, workers’ compensation, labor climate, utility rates, tort reform, etc.

In essence, the states can educate taxpayers/voters by promising to reduce corporate welfare, but with the caveat that their respective state must take the legislative actions needed to make their business climates more competitive.

And what’s in it for the auto industry? Sanity. Stability. Less politics. Most of all, a credible set of rules to follow for plant location decisions.

You can reach Philip Nussel at pnussel@crain.com.

Have an opinion about this story? Click here to submit a Letter to the Editor, and we may publish it in print.

Or submit an online comment below. (Terms and Conditions)




Rocket Fuel