Employees at Ford Motor Company will head into this Labor Day weekend with pink slips in their hands, among 3,000 workers in Michigan to be fired from the auto manufacturer as part of its plans to shift toward producing electric vehicles at the government’s behest. And the layoffs are happening despite Michigan taxpayers paying Ford $100 million in exchange for investing $1 billion and creating at least 3,030 jobs in the state—a deal that was announced just two months ago.
If you do the math, Michigan is ahead 30 jobs and behind $100 million. But don’t put down your calculator yet.
It’s the second time in recent memory that Ford slapped Michigan square in the face. Last year, the company announced plans to invest $11.4 billion in Tennessee and Kentucky to build new car battery plants, creating 11,000 new jobs hundreds of miles south of its Dearborn, Mich., hometown. It’s certainly not for lack of workers (Michigan has 202,000 folks sitting on the unemployment line) or for lack of taxpayer-funded incentives. Four years ago, Ford was handed more than $200 million to rehabilitate a decrepit train station in downtown Detroit as part of a new center for research that will house 5,000 workers. So far, the building has new windows; time will tell whether the promised development will materialize.
Michigan Gov. Gretchen Whitmer was caught flat-footed when she heard the news of Ford’s plan to massively invest in the south and blamed her state’s “dysfunctional” economic development strategy. Apparently, she had not been consulted in the move (nor should she have been; Ford can do what it wants). But rather than consider what might be attracting automakers to invest in southern states—lower energy costs, lower taxes, lower cost of living, livability, skilled workforce—Whitmer and the GOP legislature decided to double down on government subsidies, approving $1 billion in taxpayer-funded incentives for “transformative” projects. Good luck.
When it comes to corporate subsidies and the failed promise of job creation, the story isn’t a new one.
Back in 2009, Michigan Gov. Jennifer Granholm (now U.S. Energy Secretary) touted a “new energy economy for Michigan” with the launch of a state-government-funded hybrid bus company called Fisher Coachworks. Two years later, it was out of business. Granholm’s administration also handed $140 million to Chinese automobile battery maker A123 Systems in exchange for a promise to create 3,000 jobs in Michigan in the state. Today, that company is bankrupt.
And four years ago, General Motors (GM) announced plans to close two plants in Metro Detroit and lay off 14,700 workers, despite an $11.2 billion taxpayer-funded bailout to keep the company running. Today, GM is living on the government’s steam and stands to reap the benefits of the Biden administration’s plan to subsidize the purchase of electric vehicles with a $7,500 tax credit, also funded by taxpayers. Never mind the fact that both GM and Ford announced shortly thereafter that they would be raising prices on their electric vehicles by between $6,000 and $8,500.
Who’s to blame Ford and GM? They’re doing what companies are supposed to do—sell a product and earn a profit. Why wouldn’t they take government incentives? And they see the writing on the wall: Government is forcing a move toward electric vehicles (see California Gov. Gavin Newsom’s recent ban on the sale of new gas automobiles). They need to build new battery factories to fuel the future, and they have to do it where costs are lower and in states where workers want to live.
The problem lies in politicians who hand out taxpayer dollars in the name of creating new jobs. History shows that simply doesn’t work. The Goldwater Institute has reported on the fatal flaws of taxpayer subsidies being used to incentivize economic development—and how projected return on investment falls flat. It’s up to taxpayers to stand up to these handouts and demand an end to the endless subsidies coming out of their pockets.
Mike Brownfield is the Director of Communications for the Goldwater Institute.
