The Slippery Slope

  • $7 million in public support for 11 jobs.
  • An energy industry segment that is “cute” according to Bill Gates and will never provide the megawatts we need.
  • The smoky intersection between laissez-faire lobbying, former government officials, elected officials, private-sector business, public subsidies and fraud.
  • A lack of fairness in trade – instead of rewarding those that are working the hardest we pay attention to those making the most noise.
  • Taxpayer subsidized rebate programs that over promise and under deliver.

We’ve seen this before. The dirty evolution of the economic development hierarchy in Minnesota, other states and at the federal level. And I’m sorry to say controls are not improving, it appears to be getting worse. Try and keep your food down with this read:

Some call Silicon Energy rebates a win, while others cry foul.
http://www.startribune.com/local/307268181.html

Our business community should be focused on reining in those that are working to undermine a fair economic playing field. Unique incentives, paid lobbyists, and over subsidizing economic activity with little upside all at taxpayers expense must be reversed.

SMALL TOWN ADMINISTRATIONS VS AMAZON.COM

They just keep pulling up to the trough.

Amazon.com is opening a new distribution center in a small town near where I live in Minnesota. Sounds like a good thing, doesn’t it? I’m not so sure.

Let’s add it up: Low-paying warehouse jobs. Significant tax breaks with local municipalities. And a new small-town neighbor that isn’t very neighborly, doesn’t pay its fair share and is a multinational monster of a company. How local will they be? Not very.

Oh, they may spin a veneer of support but we all know that headquarters is where the decisions are made and the small towns will get left out.

Subsidies by state and local municipalities have run amok. It’s gamesmanship by amateurs using taxpayer dollars. You have small town governing administrations and would-be politicians in office for a few years at a time with little experience. They are tasked with negotiating with titans of industry representing the largest companies in the world, in this case Amazon.com. Who’s going to win that discussion? Add on the feverish climate of doing anything for large companies that promise jobs and you have to wonder, will a small town get a fair shake? Do they have the experience to be doing this kind of negotiating?

I don’t believe so. A $6.4 million tax increment financing package is just the start of what Amazon.com will take from the small community near where I live.

http://www.startribune.com/business/300852681.html

http://www.startribune.com/local/south/304062531.html

Big Government Spending Helps French Manufacturing Company Profit, Not Americans

I’ve been following what was once the feel-good story of a small town Minnesota business on the heels of revolutionizing energy efficiency in buildings. However, after the company received taxpayer funds as part of a federal loan development program, the company was sold to a French-based company. What happened?

Sage Electrochromics of Faribault, Minn. developed “smart glass” for windows. Smart glass electronically tints glass to adjust to sunlight conditions resulting in energy reduction. In 2010, Sage received more than $31 million in tax credits to help this business grow.

Through government program funding, Sage CEO John Van Dine noted, “Global market potential and energy savings are enormous. Sage aspires to be a global leader in a new glass technology.” Fast-forward to 2012.

Two years after receiving tax credits through a largely inactive federal program, French glass and building materials giant Saint-Gobain bought-out Sage. While the factory will remain based in Faribault, Minn., Saint-Gobain took over the company— taking with them the technology and potential. And, one year after selling his stocks of Sage, CEO Van Dine stepped down to “focus on more charitable efforts.”

The short of it, the government dumped millions into a taxpayer-funded program that failed. It was supposed to position a small Minnesota-based company as a global leader. Instead, the government provided tax credits to a company that is now owned by a French manufacturing giant.

And, it hits home.

The Mall of America recently announced that SageGlass panels will cover several thousand square feet of skylight space at the mall’s new entrance. With the company’s expansion now complete mostly due to federal support, it has the “capability to meet most architectural needs,” according to Derek Malmquist, a marketer for Sage Electrochromics. What does this mean? Big government spending has cost taxpayers millions, and has paved the way for a French-based company to use American technology and tools to gain global leadership and profits.

 

Shutterfly receives final approval for Shakopee plant

Shutterfly receives final approval for Shakopee plant

http://www.startribune.com/business/220398731.html

The fact that Scott County commissioners voted to approve a nine-year tax abatement for Shutterfly, a company with annual revenue of about $500 million, is maddening.

The abatement is valued at $551,159 to $734,878. This deal, and an agreement to allow the California based company use of Scott County’s fiber-optic infrastructure to defray transfer costs, plus another agreement offering Shutterfly sewer-access charge credits valued at about $174,000, robs from the poor and gives to the rich. Any number of small companies could be helped by utilizing the tax money Shutterfly will now line its fat pockets with.

Even if the government insists on the abatement and the other agreements, why not make access to these incentives fair access the board? Not only would struggling, small businesses and new upstarts benefit from the stability a small break or credit could provide, but the county’s purported justification for granting the Shutterfly breaks, job creation, would be redoubled by local entrepreneurs who could afford to hire more employees.

It is time the government stop making deals with big business and start dealing with the fact that small businesses need a little support to keep America’s economy diversified and healthy.

Re-shoring? I’ll take it!

I believe the next 5 to 10 years will see a considerable rebirth in domestic manufacturing in the United States. I am optimistic that our political leaders will take the steps necessary to encourage this growth and revisit the destructive role government has played in the off-shoring of our manufacturing base over the last 40+ years.

My company Minimizer has been manufacturing all of the components we need for our product in Blooming Prairie, Minnesota for nearly 30 years.