Today's lesson is ``Leverage and How to Use It.''
First, the players. In one corner are businesses, smart and ready to exploit opportunities. On the other side are city and state governments, ripe and ready for plucking. Finally, there are the taxpayers, prepared to foot the bill. Now pay attention-there's money to be had.
The first thing to remember is that politicians will do almost anything to create or keep jobs (also known as ``votes'') in their community. They'll do more than almost anything to get new jobs, and to increase the tax base. South Carolina is a case in point.
You won't find a state more amenable toward business. South Carolina is absolutely, positively a pro-business region. Ask Michelin North America Inc., which plans to spend another $500 million to expand its plants in that state, creating 1,600 jobs.
Michelin operates five plants in South Carolina. It certainly could have put that investment in some of the 15 other facilities it owns in the U.S. and Canada. But South Carolina is the most aggressive state in offering tax breaks and other incentives, so that's where the expansion money goes.
If another community wants Michelin money, the benchmark is what South Carolina has done. That's called leverage, and Michelin has it.
Rule No. 2 is ``You don't have to be Michelin to get a good deal.''
Green Tokai Co. Ltd. is the example of this. The company cut a generous tax-incentive deal with the state to open another auto parts plant in Ohio. But why stop there: the manufacturer is investigating if it can get a better shake from Kentucky and Indiana.
I find it interesting that playing one side against the other has trickled down to the $10 million plant level. For a company, that's a pretty good thing-it's government vs. government, so you might as well see how well you can do.
Plants, jobs, companies-even pro football teams-are good for communities. But it gives you pause when you think about where all that tax incentive money is coming from-or not going to. Cleveland, for example, is ready to spend $175 million on a stadium fix-up so it can keep the Cleveland Browns' robber baron owner from moving the team to Baltimore. But the public school system is in such lousy shape the state now is running it.
It also makes you wonder how valuable a facility really is when South Carolina gives incentives worth $65,000 a job to BMW to build a plant. And that pales in comparison to the Mercedes factory in Alabama, costing taxpayers $168,000 per job.
Just priorities, I suppose.
Noga is editor of Rubber & Plas tics News.