Mitsubishi selling Illinois plant, should Ford buy it?

[blazerdude20]

http://m.leftlanenews.com/mitsubishi-to-close-us-plant-by-november-seeks-buyer-89197.html

 

There has been a lot of discussion here the last few years about wether ford needs more capacity. If the price is dirt cheap do you think Ford would buy the plant? Plant produced upto 220k units in the early 2000's.

[transitman]

It's a Mitsubishi, so no, they shouldn't buy it.

[aneekr]

The MMNA facility in Normal, Illinois, is located approximately 130 miles away from Ford's Chicago Assembly plant and about 125 mi. from Chicago Heights Stamping plant, so that may be considered advantageous. However, the state of Illinois is infamous for being the least competitive state (or very close to it) in the USA for business climate and economic growth, with an inept government, high taxes, and burdensome regulations at the state level.

 

IMO, it's extremely unlikely that Ford will purchase the MMNA facility. If Ford really needs to expand production capacity in North America, a greenfield site in northern Mexico would probably be the most logical choice.

[mackinaw]

I really don't care what Fors does, but I do hope that Ford doesn't buy this plant.

[blazerdude20]

I really don't care what Fors does, but I do hope that Ford doesn't buy this plant.

Gah I need to proof read mobile posts. My phone likes to "correct" my spelling. Mods can someone correct the title?

[theoldwizard]

Why ? Ford has plenty of capacity in the US. MAP has some stamping there now, but lots of space. Oakville Assembly is well below 50% capacity (maybe below 33%). Finally, Ohio Assembly will never produce the volume of Medium Duties that they did of E-series in the past 10 years.

[akirby]

I thought Ontario was in Canada........

 

They're currently making 260K+ vehicles - are you saying they can make 800K+???

[Biker16]

I thought Ontario was in Canada........

 

They're currently making 260K+ vehicles - are you saying they can make 800K+???

 

OAC Was formerly known as OAP (oakville assembly plant) and OTP (Oakville truck plant) it used to have two separate facilities on the same site.

[akirby]

 

OAC Was formerly known as OAP (oakville assembly plant) and OTP (Oakville truck plant) it used to have two separate facilities on the same site.

 

I know that, but can it make 800K vehicles annually?

[robertlane]

Even though it's in Illinois, they would get big tax breaks for taking it over. I wonder if Ford has their eye on plants down south more than any other location right now.

[kyle]

Even though it's in Illinois, they would get big tax breaks for taking it over. I wonder if Ford has their eye on plants down south more than any other location right now.

 

Here is what the old Taurus facility looks like today! I think the big 3 are done with putting plans all over the country and will concentrate in certain Regions and Mexico. If I was Alabama would I offer up a bunch of tax incentives to a OEM that has union employees?

[aneekr]

 

If I was Alabama would I offer up a bunch of tax incentives to a OEM that has union employees?

 

 

Yes. Alabama officials have done just that to several firms in the past, particularly in the aerospace industry (e.g., Boeing, United Launch Alliance, L-3).

 

The state's penchant for doling out tax breaks and other incentives for new or expanded corporate facilities has earned it the title "Sweet Home of Incentives" by some economic development consultants.

[akirby]

 

Yes. Alabama officials have done just that to several firms in the past, particularly in the aerospace industry (e.g., Boeing, United Launch Alliance, L-3).

 

The state's penchant for doling out tax breaks and other incentives for new or expanded corporate facilities has earned it the title "Sweet Home of Incentives" by some economic development consultants.

 

And how many jobs has that created? And in turn, employees who pay income taxes.

 

I don't understand why people question local tax breaks for companies creating local jobs. The payoff for the communities in local business revenue and local and state income taxes makes it a no-brainer.

[Biker16]

 

And how many jobs has that created? And in turn, employees who pay income taxes.

 

I don't understand why people question local tax breaks for companies creating local jobs. The payoff for the communities in local business revenue and local and state income taxes makes it a no-brainer.

 

 

incentives have a corrosive effect on the tax base. give large companies huge incentives while raising taxes on small and medium sized business, hurts your economy and stifles innovation and job creation.

 

https://en.wikipedia.org/wiki/Rent-seeking

 

 

In economics and in public-choice theory, rent-seeking involves seeking to increase one's share of existing wealth without creating new wealth. Rent-seeking results in reduced economic efficiency through poor allocation of resources, reduced actual wealth creation, lost government revenue, increased income inequality,[1] and (potentially) national decline.

 

Attempts at capture of regulatory agencies to gain a coercive monopoly can result in advantages for the rent seeker in the market while imposing disadvantages on (incorrupt) competitors. The term itself is attributed[by whom?] to Gordon Tullock (1922-2014) in its modern sense with political connotations, but with antecedents and common sense[clarification needed] back to David Ricardo[2] (1772-1823).

 

If it were so successful why is Alabama still 46th in median income.

 

the best thing a state could do is to invest in infrastructure to reduce congestion and the costs of congestion, and invest in people and things the attract smart and educated people that will create small businesses and jobs.

Edited July 27, 2015 by Biker16

[silvrsvt]

 

If it were so successful why is Alabama still 46th in median income.

 

the best thing a state could do is to invest in infrastructure to reduce congestion and the costs of congestion, and invest in people and things the attract smart and educated people that will create small businesses and jobs.

 

The problem is that its Alabama....Huntsville has alot of DOD/High tech jobs, but once you leave the immediate area, you have to be careful of what skin color you are or if your not from the area.

[bzcat]

I don't think Ford is in that dire of situation for capacity that they will want to take over this plant from Mitsubishi. For the last 2 years, the plant has been doing CKD assembly of Mitsubishi Outlander and Outlander Sport and so the production facilities are probably very outdated. The last actual manufacturing of cars that took place was the 2004-2012 Galant - which means most of the technology in the plant was installed in 2002-03. Ford will have to tear everything down and start over from scratch. For example, think of all the robots from 2002 vs. 2015. Or the advance in paint technology since that 2002... Might as well expand in Mexico... or restart production in one of the mothballed Ford owned plants (e.g. Wayne Assembly)

Edited July 27, 2015 by bzcat

[akirby]

It has nothing to do with median income - that's a function of geography and other factors. It has to do with job growth.

 

Are those cities and counties in Alabama better off or worse off with a new factory employing thousands of people?

 

A new business either brings in new residents or gives existing residents who would be otherwise unemployed a job. Either way you've increased the local and state tax base and created more revenue (and therefore more taxes) for local businesses.

 

And it may be the only way to entice a business to come to your city.

 

The net benefit to the local and state governments is positive - otherwise they wouldn't make those offers.

 

How can taking an unemployed person costing the government money and putting them to work where they can now pay taxes a bad thing?

[akirby]

incentives have a corrosive effect on the tax base. give large companies huge incentives while raising taxes on small and medium sized business, hurts your economy and stifles innovation and job creation.

 

https://en.wikipedia.org/wiki/Rent-seeking

 

You can invest all you want in infrastructure or other things that make employees want to live there, but you can't force a company to build or relocate a new facility to your area without economic incentives.

 

You don't raise taxes on small and medium sized businesses to pay for the incentives for larger companies. The larger companies bring hundreds or thousands of NEW JOBS to the area along with more revenue for all businesses (dining, shopping, etc.). More home sales potentially.

 

As long as you're creating new long term jobs then the government will get more revenue in the long run from income taxes, corporate taxes and local businesses as well as property taxes.

 

That is not rent-shifting at all.

[akirby]

http://usatoday30.usatoday.com/news/nation/2010-03-24-boomtown_N.htm

 

 

Researchers at Georgia Tech estimate that Kia will generate 20,000 new jobs in a nine-county area of western Georgia and eastern Alabama by 2012, generating an annual economic impact in Georgia alone of $4 billion a year.

[akirby]

$4B positive impact in exchange for $100M in property and road improvements and another $130M in property tax abatements.

 

Even you can't spin that as a negative.

[aneekr]

 

The problem is that its Alabama....Huntsville has alot of DOD/High tech jobs, but once you leave the immediate area, you have to be careful of what skin color you are or if your not from the area.

 

That's not unique to Alabama, or to the USA for that matter. Major economic development announcements (such as new or expanded offices, manufacturing facilities, research labs, or distribution centers) always elicit some opposition, and examples of such opposition exist for every inhabited continent.

 

My visits to Alabama - Huntsville, Decatur, Cullman, Birmingham, Muscle Shoals, and Talladega - were as pleasant and welcoming as any I've experienced in the U.S.

 

 

You can invest all you want in infrastructure or other things that make employees want to live there, but you can't force a company to build or relocate a new facility to your area without economic incentives.

 

You don't raise taxes on small and medium sized businesses to pay for the incentives for larger companies. The larger companies bring hundreds or thousands of NEW JOBS to the area along with more revenue for all businesses (dining, shopping, etc.). More home sales potentially.

 

As long as you're creating new long term jobs then the government will get more revenue in the long run from income taxes, corporate taxes and local businesses as well as property taxes.

 

 

That's all well and good, but the information provided on state economic development websites often makes it difficult for citizens to glean basic details pertinent to a cost-benefit analysis: actual number of jobs created, site locations, median wages/salaries, etc. However, the states (as a whole) are improving when it comes to disclosing details of specific incentives and subsidies. Here's the portal for my home state of Indiana:

 

https://transparency.iedc.in.gov/Pages/ContractSearch.aspx

[ibinubu12]

Why ? Ford has plenty of capacity in the US. MAP has some stamping there now, but lots of space. Oakville Assembly is well below 50% capacity (maybe below 33%). Finally, Ohio Assembly will never produce the volume of Medium Duties that they did of E-series in the past 10 years.

 

Oakville is maxed out. 100% of capacity and mandatory weekends to catch up to orders. They are building absolutely as many as they can.

[Biker16]

 

You can invest all you want in infrastructure or other things that make employees want to live there, but you can't force a company to build or relocate a new facility to your area without economic incentives.

 

You don't raise taxes on small and medium sized businesses to pay for the incentives for larger companies. The larger companies bring hundreds or thousands of NEW JOBS to the area along with more revenue for all businesses (dining, shopping, etc.). More home sales potentially.

 

As long as you're creating new long term jobs then the government will get more revenue in the long run from income taxes, corporate taxes and local businesses as well as property taxes.

 

That is not rent-shifting at all.

 

the issue is that these Aren't always new jobs they are jobs that have been relocated from somewhere else.

 

So when you say X created 1000 new jobs, it should be considered that X really shifted 1000 jobs from Michigan to Alabama. the kicker is that those investment are being driven by the Workforce that is available in the rural south, usually Low Skill, and Lower paid workers. vs the higher paid and higher Skilled worker up north.

 

The conventional logic that workers follows jobs is incorrect, Automakers moved south because the workers wold work for less than the workers in the north. Silicon Valley has tech companies because the best workers are there, and companies appreciate Workers that are more productive and innovative. Amenities attract highly skilled workers, and Companies that covet those workers will go where those workers are.

 

A microcasm of this is when a retailer closes one store and opens a new store in an adjacent community, because of tax incentives, one community can boast about jobs, and Tax revenue while the other cannot. there is a cost for Rent seeking in empty buildings and legacy infrastructure that is not longer needed, along with the Cost of building new roads, sewers, etc to service that "new business."

 

In the end Economic development is truly based on investments that increase productivity, not simply on investment that reduce the cost of labor, taxes, or property.

[akirby]

People in the South are not less skilled and I find that assertion personally offensive. The South is attractive due to a lower cost of living. That's not just lower wages. Real estate is generally cheaper as are property taxes.

 

I was specifically referring to businesses hiring locals like Kia in West Point, GA - not businesses simply relocating their current employees. But even if they were relocated you just added those jobs to the local economy - shopping, buying homes, etc. so the benefits for the local government is still there.

 

The only question that needs to be asked is whether these new jobs are bringing in more revenue to replace the revenue lost by the tax breaks.

 

I agree you shouldn't get a tax incentive for just moving a store across town. I also agree you shouldn't be given short term deals because you don't want businesses ping ponging between locations to get more and more tax breaks.

 

 

This is essentially a bidding process between states, counties and cities just like any other bid. The one who meets the requirements with the lowest cost wins.

 

Taxing businesses in the first place is a bad idea because the businesses simply pass that cost to the consumer and if you're taxes are too high then businesses will simply find cheaper places to locate including outside the U.S.

 

Cut business taxes across the board and encourage more companies to do business here and the economy will grow and that growth will replace the lost business revenue. You don't grow by increasing taxes.

[Biker16]

People in the South are not less skilled and I find that assertion personally offensive. The South is attractive due to a lower cost of living. That's not just lower wages. Real estate is generally cheaper as are property taxes.

The south is home to 8 of the 10 states with the highest poverty rates.

 

http://www.factofun.com/top-10-states-highest-poverty-rates-usa/

 

States with best and Worse schools.

 

http://wallethub.com/edu/states-with-the-best-schools/5335/

 

States with the Lowest percentage of college graduates

 

http://www.usnewsuniversitydirectory.com/articles/states-with-the-lowest-number-of-college-graduat_13860.aspx

 

of the Bottom 7, 6 are in the south.

West Virginia (17.3%).

Arkansas (18.9%).

Mississippi (19.6%).

Kentucky (21%)

Louisiana (21.4%).

Nevada (21.8%). The only state on this list outside of the South,

Alabama (22%).

 

I am sorry if you are offended, but the facts are the facts.

 

I was specifically referring to businesses hiring locals like Kia in West Point, GA - not businesses simply relocating their current employees. But even if they were relocated you just added those jobs to the local economy - shopping, buying homes, etc. so the benefits for the local government is still there.

 

Yes but the market for cars hasn't grown due to the addition of the KIA facility, the volume created had to be taken from somewhere else, that somewhere was the Midwest and the domestic automakers that have lost soo much market share over the last few decades.

 

 

The only question that needs to be asked is whether these new jobs are bringing in more revenue to replace the revenue lost by the tax breaks.

 

I agree you shouldn't get a tax incentive for just moving a store across town. I also agree you shouldn't be given short term deals because you don't want businesses ping ponging between locations to get more and more tax breaks.

 

 

This is essentially a bidding process between states, counties and cities just like any other bid. The one who meets the requirements with the lowest cost wins.

 

 

This "biding process" only benefits the business and hurts everyone else even the winners.

 

thus the term rent Seeking, governments are not supposed to Favor one business over Another, this leads to an inefficient allocation of resources.

 

 

Taxing businesses in the first place is a bad idea because the businesses simply pass that cost to the consumer and if you're taxes are too high then businesses will simply find cheaper places to locate including outside the U.S.

 

Cut business taxes across the board and encourage more companies to do business here and the economy will grow and that growth will replace the lost business revenue. You don't grow by increasing taxes.

 

Corporate Taxes like all taxes are eventually paid for by the consumer. the difference is the burden of the tax is indirectly spread over more people. much like a VAT spreads the cost of the tax more evenly than a True sales tax, it also happens to be less regressive, I.E. the cost shared between the Rich and the Poor.