The writer is a Los Angeles freelancer and former Detroit News business reporter. He blogs at StarkmanApproved.com.
By Eric Starkman
Hey Michiganders, please join me in giving a round of applause to Gov. Gretchen Whitmer and Ford Motor Co. for winning the Center for Economic Accountability’s 2023 “Worst Economic Deal of the Year” award. Ford’s Communist China battery partner gets an honorable mention.
I’m looking for a mighty hearty applause, one that can be heard from the Detroit River to Lake Superior. This is an opportunity to celebrate Michigan’s twice-elected governor and 2028 presidential hopeful and the corporate pride of Dearborn, which boasts on its website it is “All In On America.”
“Oh say can you see…”
CEA is an award-winning think tank that opposes corporate welfare and allowing companies to feed at the public trough. The organization is appropriately based in Michigan, where under Whitmer the state has become ground zero for diverting taxpayer funds into the treasuries of profitable corporations, particularly Ford and GM, whose CEOs these past two years respectively received $44 million and $58 million in compensation.
CEA’s dubious annual “Worst Economic Deal” award recognizes “a state or municipal government subsidy of a private company in the name of ‘job creation’ and economic growth that goes further than any other that year to exemplify the massive wastefulness and ineffectiveness of state government economic development subsidy programs.”
Despite stiff competition, Whitmer’s decision to spearhead $1.7 billion in subsidies to entice Ford to build a battery plant in rural Marshall grabbed top honors because of a “unique combination of factors” including “a massive $700,000 per-job price tag for below-average (wage) jobs, the use of unrealistic ‘job multipliers’ to artificially justify its massive price tag, and an uncertain future where success would depend on labor negotiations, consumer preferences, federal policy and technological advancements.”
CEA gave a deserving shoutout to the Detroit Free Press for its September 15 story by Dave Boucher about political groups tied to Michigan Gov. Gretchen Whitmer spending an estimated $100,000 in “dark money” to run a PR campaign discrediting local Marshall-area residents who opposed the deal because of environmental concerns, particularly fears that a lithium battery plant could harm their local water supply and potentially the Kalamazoo River. Underscoring the ruralness of Marshall, some area residents still get their water from wells.
Local Marshall opposition was so intense that residents raised funds to hire a lawyer in hopes of derailing the deal.
“The reported use of political consultants to run a smear campaign against skeptical local residents that really set Michigan’s subsidies for Ford’s Marshall battery plant apart from all the other terrible corporate welfare deals across the country,” said CEA president John C. Mozena.
“It’s one thing for politicians to use fuzzy math to throw massive amounts of public money at a giant corporation so they can take credit with voters for so-called ‘job creation;’ we see that all the time. This award was nailed down for Michigan when a governor’s political cronies reportedly pushed out campaign-style mailers and robocalls against average, everyday people who dared to exercise their fundamental right to ask their elected officials for straight answers to questions that mattered to their community.”
Marshall, located about 100 miles west of Detroit, is a rural community the Pure Michigan website boasts is “nationally recognized for its architecture and museum collections that rival the Smithsonian.” Michigan’s economic development folks thought Marshall would be a swell place to build a lithium battery plant. Michigan spent millions destroying fertile farmland and century old trees to prepare Ford’s mega site, all in the supposed name of protecting the environment.
Adding insult to Mother Nature’s injury, Ford scaled back its initial ballyhooed plans to invest $3.5 billion to build its battery plant and create 2,500 jobs paying about $41,500 a year, below the prevailing median wage in the Marshall region. Ford only plans to spend $2.5 billion and create only 1,700 jobs.
Some of those jobs will go to employees of Contemporary Amperex Technology Co. (CATL), a communist China-based battery manufacturer whose technology Ford is licensing. Critics of Ford’s CATL deal say the company is looking to circumvent the intent of the Inflation Reduction Act (IRA), which provides lucrative taxpayer credits for electric vehicles manufactured in North America providing that by 2025 they aren’t heavily comprised of critical minerals extracted, processed, or recycled by a “foreign entity of concern” like China.
IRA’s intent is to reduce America’s dependence on China for EV manufacturing, and Ford’s CATL arrangement does the opposite. The Michigan media emphasizes that Republicans questioned Ford’s CATL deal, but the Wall Street Journal reported that GM CEO Mary Barra warned President Biden and members of Congress about the arrangement, which she said would put GM at a competitive disadvantage and force the company to strike its own deals with China-based companies.
Barra is reportedly very close with Biden, having visited the White House at least eight times since he was elected president.
The Marshall deal isn’t the only instance where Ford played Whitmer and the Michigan Economic Development Corp. for fools.
In July 2021, Anand Sankaran, a Ford executive assigned to oversee a planned battery and research facility at Ford Ion Park in Romulus, was quoted in this release the Michigan Economic Development Corp. issued saying the project was “part of Ford’s renewed commitment to making Michigan a centerpiece of its focus on EVs.” Ford’s battery R&D facility was projected to create 200 engineering jobs and received taxpayer-financed incentives.
Tennessee and Kentucky
Two months later, Ford issued this news release announcing that it would invest $11.4 billion in Tennessee and Kentucky and create 11,000 jobs. Ford said the mega campus it planned in Tennessee to build an EV truck and battery facility and the two battery plants it planned for Kentucky were the linchpins of the company’s efforts “to lead America’s shift to electric vehicles.”
Ford has since announced that it will build only one battery plant in Kentucky. Fortunately, Japan-based Toyota stepped up to the plate to fill the voids resulting from Ford’s broken promises in Michigan and the Bluegrass State.
Toyota in October announced that it had signed a supply chain agreement with LG Energy Solution for lithium-ion battery modules that will result in LG Energy investing $3 billion to expand its Holland battery plant near Grand Rapids. Last June, Toyota announced it would invest $50 million to build a R&D battery lab in Michigan to support its manufacturing plants in Kentucky and North Carolina. Toyota received a $500,000 Michigan Strategic Fund grant and a 12-year State Education Tax Abatement valued at $1.09 million to build its battery lab.
Toyota in May announced it would make its first U.S.-made electric vehicle in Kentucky, home of Toyota’s biggest manufacturing site in the world. Toyota also plans to invest an additional $8 billion in its North Carolina battery plant, bringing the company’s total investment to near $14 billion. While Toyota, like Ford, GM, and Stellantis, is looking to downsize its U.S workforce, the Detroit Free Press’ Susan Tompor recently reported that Toyota offered workers buyout packages as much as double what the Detroit 3 automakers offered their employees.
In my mind, the most troubling 2023 economic development incentive deal was the below market $9.3 billion loan Energy Secretary Jennifer Granholm gave Ford to finance most of the company’s costs to build its EV plants in Tennessee and Kentucky. The loan was the biggest to an automaker since the bailouts of 2009 and it reeked of backroom politics.
The loan was made through a special DOE fund to finance innovative programs that wouldn’t qualify for traditional funding. Granholm named Chris Smith, Ford’s chief lobbyist, an advisor to the fund in April; weeks later she approved the DOE’s sweetheart loan to Ford.
Smith previously worked at the DOE, as did Ford’s legal rock star chief lawyer Steve Croley, who also served as a senior aide in the Obama Administration. Ford was a major contributor to the Lincoln Project, an organization dedicated to derailing Donald Trump’s presidential bid. Granholm was promoting Ford’s electric Mustang during a period when her husband owned undisclosed Ford stock.
Speaking of Ford’s electric Mustang Mach-E, that vehicle is manufactured in Mexico, as is Ford’s Maverick pickup, ranked by multiple sources as the “least American” pickup truck because only 26 percent of its parts are sourced in North America.
Not what I’d expect from a company that boasts it’s “All In On America” and then fleeces taxpayers to finance deals with questionable economic benefits. It’s also alarming that Whitmer, one of the media’s favored presidential hopefuls abetted the con.
Michigan residents should be mindful of the adage, “Fool me once, shame on you. Fool me twice, shame on me.”