The people of Kansas City are ready to celebrate. A Canadian company is proposing to build a $375 million aircraft assembly plant in the city that will bring 2,100 good-paying manufacturing jobs.
What's not to like? Well, for starters, it is the weakness of the U.S. dollar that is driving the deal. The manufacturer, Bombardier Aerospace, has a deal in place with the British and Canadian governments to build the plane in Quebec and Northern Ireland. Now Bomardier wants to break that deal and run for a cheaper business climate south of the border. (Yes, that's exactly what Kansas City, Mo. is in this situation -- south of the border. Think about that for a minute.)
But that's just the surface issue. What this development really represents is a milestone on the road to economic Nirvana for multinational corporations: a global labor market in which the cost of labor is essentially equalized and employers can shop globally for the biggest and best taxpayer-funded bribes, with no regard for national borders.
The situation is detailed in a front-page story in today's Kansas City Star: KC in the running to land aircraft manufacturing plant
Pierre Beaudoin, president and CEO of Bombardier, is ready to walk away from a deal under which the Canadian, British and Quebec governments were to pay one-third of the $2.5 billion development cost for the new passenger airliner. In exchange, according to The Star, the city and the state of Missouri would throw bucketfulls of incentives at the company.
"Anything we can do to bring manufacturing and assembly jobs back to Missouri is a huge deal for us," said Greg Steinhoff, director of the state Department of Economic Development, "especially when you look at other Midwest states and the dramatic losses in the manufacturing sector."
Bombardier’s discussions with Kansas City officials have reached the point where legislation is expected to be introduced today in the Missouri General Assembly that would provide the state tax credits required as a prerequisite for landing the deal.
"They really like Kansas City," Steinhoff said. "If we can put together this legislation and have it passed, I think they’ll give us a hard look."
State economic development officials are proposing to provide Bombardier with tax credits through what is being billed a "mega-project" amendment to the Enhanced Enterprise Zone Program. It would be available for projects that hire a minimum of 1,000 employees and invest at least $300 million.
With Bombardier, the state would cap the amount of tax credits at $40 million annually over the 22-year life of the deal or allocate the incentives based on the percentage of payroll: 80 percent the first three years; 60 percent, years four and five, and declining steadily to 25 percent for years 10 through 22.
Still, the central factor driving the deal is the cratering U.S. dollar:
"What caused this to possibly happen for Kansas City is the change in currency," said Mark VanLoh, director of the Kansas City Aviation Department.
In a conference call with investors last month, Beaudoin said Bombardier was forced to look at building the assembly plant in the United States because it would provide substantial savings.
Beaudoin told analysts his firm was at a disadvantage because its revenues are in U.S. currency but its production costs are mostly in Canadian and British currency.
The passages above speak volumes about the current debilitated state of the U.S.economy. But it makes me wonder how much of that weakness is the result of blundering and mindless short-term greed -- the generally accepted explanation -- and how much of it may have been by design.
When people in an industrialized nation start to lose their industry, they get desperate. They become willing to toss aside environmental regulation, workplace safety regulation, collective bargaining and any number of other enlightened aspects of a modern industrialized society; they become willing to pay enormous subsidies to corporations who will throw a few paychecks in their direction. Who benefits from such a situation?
As of today, are American workers competing directly with third-world sweatshop workers? Have national borders dissolved for multinational corporations with jobs to fill? No, not yet. But today, jobs are being offshored to the USA to save money. And I think we are one step closer to a corporate dream that will be a nightmare for 90 percent of the world's population.