After getting $824M in state aid, GM to cut 900 jobs at Orion Assembly | Hacker News Reader

After getting $824M in state aid, GM to cut 900 jobs at Orion Assembly

michigancapitolconfidential.com

126 pointsbelltaco31 comments

> Taxpayers spent $600 million to create 4,000 jobs

Taxpayers spent $0. They gave up the potential to make $600 million. And that was only if Orion created the full 4,000 jobs. So they potentially only forwent ~$135 million based on the actual amount of people hired.

But it's ridiculous to frame it this way. If a store gave you a coupon for $20 off your order, no one in their right mind would say the store "spent $20 on a subsidy". Especially if I never even cashed the coupon!

If you don't think corporations should get tax breaks that's totally fine. But framing it as an outlay is misleading.

> $66.1 million in site readiness

This sounds like cashs spent up front. But you're correct, I don't think it went to GM.

It's hard to know exactly what "site readiness" includes, but it usually means putting down roads, traffic control, etc. In this case, it could literally also mean the real estate costs of permitting and clearing the lots for their construction.

But again, these are usually improvements the state gets to keep, or are marketing costs for the land they were trying to develop. So not ideal but not a total loss either.

If that's the case, it's possible the money could be considered spent to overdevelop an area that will now be underutilized and will create an increase in maintenance costs for no good reason.

That's a good point, but I wouldn't assume they spent $0.

The direct costs and increases in undesirable externalities do have quantifiable costs.

If the government has been prudent and thorough, most if not all of those costs will be offset by positive direct benefits and externalities.

If not, the activity will be a net negative to the community.

Respectfully, I do not think this is fully correct. These are in part state tax dollars being paid to industry. I’d welcome a good source to the contrary.

https://www.legislature.mi.gov/documents/2021-2022/billanaly...

Maybe! This article could be mistaken calling this a tax abatement. The original press release refers to this as a "grant" (perhaps still tax abatement with financial shenanigans).

Still, under the terms of the grant program, the state has lots of options to claw back any grant money if the recipient doesn't fulfill their requirements: https://www.michiganbusiness.org/48f6cb/globalassets/documen...

I can't find any source on what the actual financial agreements of the grant are.

UPDATE - I found the terms of the $600 million dollar grant (not tax abatement!): https://www.mackinac.org/archives/2022/GM%20Board%20Pack%20A...

> The MSF may require repayment for: (i) failure to obtain the Jobs Commitment (proportional), (ii) mass relocation of jobs out of state, and (iii) breach of representations, misappropriation, insolvency.

GM has been getting reimbursed quarterly based on real expenses they have occurred, but may have to give some or all of it back.

You should update your original comment. HN is full of desperate efforts to dodge any skepticism of sketchy and dishonest capitalist behavior. It doesn't need more of them.

Page 9 of the document you linked to:

* A provision that all money subject to a clawback or repayment provision must be paid within 90 days of notification by MSF. Amounts not paid within 90 days would be subject to a penalty of 1% per month, prorated on a daily basis. *

That word "clawback" is key. Elsewhere in the document it refers to benchmarks, so I presume if the benchmarks are not met that the clawback would take effect. In this case I have no idea what the contract is with GM, so we also don't know the benchmarks that would impact the clawback.

This is a good start though - hopefully someone can find the actual contract with GM.

This is not at all like a coupon that you never cashed in. The company actually received $824 million in corporate welfare. Meaning if it weren't for the state they would literally have $824 million more and the state would literally have $824 million more.

> no one in their right mind would say the store "spent $20 on a subsidy"

I could be wrong but... when you sell a business, the people buying it very much want to know about outstanding liabilities in gift cards and 100% add it to some accounting column to count them as "in-existence"?...

That's a terrible way of framing it because taxes for a corporation are involuntary.

How is it like a coupon issued by the store and not like purchased gift cards that later go unused? Do you think $600 million were generated by the state?

For anyone that doesn't know - in these deals, "creating" 4,000 jobs means 4,000 person-years worth of jobs. The requirement is satisfied if they hire 4,000 people for 1 year, 1,000 for 4, 500 for 8, etc.

In otherwords, it's outright lying unless they create the 4,000 jobs for 1 year, in which case it's still extreme dishonesty at best, given the importance of the 1 year term.

Capitalists and capitalist politicians should never be taken in good faith.

What, do you think, is a proper way to describe the number of jobs an organization or economy creates?

Just say the number of jobs actually being created. Nobody in Michigan thinks any job is permanent no matter what you say.

Or just say "job-years". Anyone reading such an article will know what it means but there's no harm in defining it either.

There is obviously no excuse for just lying, and if it was unintentional then the responsible person should lose some job-years of their own.

I think it's less lying and more having no incentive to inform people as to what it actually means.

I agree that calling them "job-years" would clear it up but I think politicians would get a lot more pushback against these deals if people knew. So they don't. For a long time I wondered what these numbers meant, and sometime in my 30s I did some looking into it.

Now whenever one of these deals comes up I like to pop in a little comment to help inform people.

I wish these stories would describe in more detail whether cash was spent up front (and if it was handed to the company or spent on projects), or if it was e.g. an abatement, that doesn't have an opportunity cost and won't make the company money.

This doesn't seem like a great site anyway. The link to the WARN notice at the bottom doesn't work, they use the phrase "corporate welfare" somewhat excessively, i.e. they definitely have an ax to grind, and they don't say if the site is actually shutting down or what proportion of the existing workforce 900 jobs is.

> Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.

It's weird to me, even as a relatively free-market guy, that a paper dedicated to small government would be so firmly opposed to tax cuts. I wonder if the distinction between "corporate welfare" and "tax cut" is solely down to the administration responsible.

It isn’t a tax cut. It’s a tax subsidy unevenly distributed to one company. Extremely not free market.

It clearly states several times in the article that it is a tax cut. And is there any evidence that it is unevenly distributed to one company? It seems like Michigan offers an open Express application program with clear requirements: https://www.michiganbusiness.org/pre-app/

Not once in the article does it mention tax cuts. It mentions tax abatements, which are very much not the same thing.

Any abatement of this size is going to be inherently political. I would be surprised if someone at GM used this web form to put in a request, even.

The original announcement from January 2022 provides overall details as well as specific bullet points on each dollar amount of the "corporate welfare": https://www.michiganbusiness.org/press-releases/2022/01/hist...

Thanks for the link:

> A Critical Industry Program grant in the amount of $600 million for the creation of up to 4,000 jobs related to the Orion Township and Ultium projects; > An 18-year Renewable Energy Renaissance Zone which will require a minimum investment of $1.5 billion with the potential for up to $2.5 billion, estimated to be worth $158 million; > A Strategic Site Readiness Program grant in the amount of $66.1 million awarded to the Lansing Economic Area Partnership (LEAP) for public infrastructure and utility upgrades.

The grant legislation: https://www.legislature.mi.gov/documents/2021-2022/billanaly...

It certainly sounds like the grant portion was state tax money paid to GM. I wonder under what requirements.

The tax abatement is essentially shifting some of the tax base from corporations to individuals. Some of whom can pay those rates when they next find work.

I suggest the Detroit Free Press article for more neutral coverage: https://www.freep.com/story/money/cars/general-motors/2023/1...

I guess its better than a sports stadium...

> GM will lay off 911 workers there.

Wait, is that a distress message they are sending?

I saw the same. And I have thought of a Porsche 911. Much better than the crap they build at GM.

Someone should go check management didn't get stuck in the money box.. again.

Reply on news.ycombinator.com