$195 million not enough for GM to return to Janesville
Podcast Episode
JANESVILLE — Janesville was ready to borrow $15 million and Rock County an additional $20 million to sweeten the pot and lure General Motors back to Janesville.
Beloit would have added $2 million.
Private parties pledged about $42 million more.
The state was ready to kick in $115 million.
But the $195 million package wasn't as sweet as the $779 million offered by Michigan, which won the contest to build GM's new small car at its plant in Orion Township north of Detroit.
Michigan's offer reportedly includes business tax credits over the next 20 years, along with $130 million in federal funds for worker training. Local officials threw in additional $102 million in incentives.
Tennessee's plant in Spring Hill near Nashville also was among the three finalists for the GM small car. Tennessee Gov. Phil Bredesen said last week that GM had wanted "north of $250 million" upfront to select Spring Hill, but his state offered only about $20 million in training and education money in addition to long-term tax breaks.
The local offer
Rock County and city taxpayers would have ponied up about $38 million to bring GM back to Janesville.
The city of Janesville pledged $15 million in cash. Janesville also offered to run GM's wastewater facility, a value of up to $1 million a year.
General Motors had 12 criteria, and the city tried to fit its offer to the criteria, City Manager Eric Levitt said.
In making its offer, the city council considered the impact of the plant locating here and the 1,200 jobs it would create.
"With all those things added together and with all the indirect job creation, they wanted to provide the best proposal possible to GM," Levitt said of the council.
"It was a good effort. I think all the various entities came together. It enhances (our) working relationship moving forward."
The method of financing was not determined and the details hadn't been negotiated with General Motors, said Jay Winzenz, director of administrative services.
The money likely would have been borrowed through general property taxes or TIF funding. Some of that was dependent on the value decrease at the General Motors plant and the corresponding value increase if production had started again.
The city also could have bought some of GM's assets, Winzenz said.
Craig Knutson, county administrator, said the county board was in a unique situation, given the economic impact GM's closing had on the county and the benefits bringing the plant back would have had.
Details as to how the county money would be used or the timeframe were subject to future negotiations, Knutson said.
The county, too, would have borrowed the money.
"I believe that the (task force) worked very well together, and all the participants were fully involved, and I think put forth their best efforts.
"Unfortunately, it was not successful, but it wasn't for lack of a real good try," he said.
About $42 million would have come from private sector incentives that Zach Brandon, executive assistant at the state Department of Commerce, said he could not release. The usual private-sector suspects in economic development efforts typically are economic development entities, health care systems and utilities, he said.
Mercy Health System Vice President Rich Gruber said Mercy's involvement included incentives tied to MercyCare insurance.
Gruber declined to cite specifics, but said the more jobs GM retained or created in Janesville, the more incentives Mercy would have offered.
"We were proud to be able to make some concessions and do something in that arena that helped build the incentive package that GM would take a look at," he said.
The state's contribution
The state of Wisconsin offered $115 million, mostly in tax credits and energy efficiency grants, Brandon said.
The state's tax credits were developed under the Enterprise Zone Program, Brandon said. The incentives included a performance-based payroll tax credit of up to 7 percent and a tax credit on capital improvements of up to 10 percent, he said.
The money carved out for energy efficiency grants would have helped create efficiencies in the plant's lights, windows or roofing, he said.
"When you look at the collective picture—the private sector, local government, state government and the labor union—all coming together to develop a comprehensive package, although it wasn't successful in this specific situation, that's a formula for success," he said, "and one we'll continue to replicate in order to assist Janesville in building new companies and diversifying its local economy."
Brandon also said the collaborative model used—a local task force headed by local individuals—is one that the state will look to replicate elsewhere.
The incentives available through the Enterprise Zone Program offer one of the most powerful economic development tools available now in the country, he said.
Jul 9, 2009 at 5:18 p.m.
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Funny how Janesville anad Rock County have $20 Million laying around for a dead horse, but when services suffer because their budgets are supposed to be tapped, all we hear are the boo whoing. Another thing, no one asked me if I wanted them here and to foot the bill as a Janesville tax payer! Death is never easy, someone needs to drive the final nail in the coffin so this town can move on and flourish with new and diverse industries just as Kenosha has. Good riddens to the dark cloud over this town!
Jul 9, 2009 at 6:30 a.m.
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The place is a dump anyway. GM would like nothing more than to walk away from it. It should be bulldozed and the site made in to a green belt. Good thing we named that new access road Walter Ruether Way, because it really helped.
Jul 9, 2009 at 6:11 a.m.
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Ah...
I am so glad I am a Ford girl.
Did anyone blame those poor helpless machines yet?
Jul 9, 2009 at 3:32 a.m.
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It all came down to $$ and political ties; hence why I put Orion MI as a MASSIVE (2/5) favorite in the betting line I provided back when the 3 finalists were named.
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The GM plant here will become a modern day Pompeii. Much like the old steel mills of Gary, IN or the countless auto plants in Detroit that were abandoned, it will just sit there for decades, and slowly deteriorate. The history channel has a great series called "life after people". That pretty much shows you just how long it takes for building, monuments, infrastructure, ext to break down once abandoned.
Jul 9, 2009 at 12:08 a.m.
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Zoom: Last I had read it was 200 million from Michigan, but that was quite a while ago before all the details came out. Obviously your data is more current and accurate. Honestly, for nearly a billion dollars Michigan can have the GM plant. For that kind of money WI can come up with a lot of alternatives.
Jul 8, 2009 at 11:49 p.m.
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It would be nice if some of these “Cap and Trade” supporters would use the money they save by driving Priuses to pay for the Janesville GM plant removal.
The area surrounding it to Kellogg Av. could be converted back to its “natural” state since much of it is a flood plain anyway.
Environmentalists are too concerned with having someone else pay for what they deem to be a hazard.
I have a feeling the Janesville plant will fall back with the “old GM” assets, sooner or later if it’s not already.
Jul 8, 2009 at 11:29 p.m.
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When I heard that GM was reconsidering Janesville on June 3rd, I thought it was a ridiculous notion.
It made no sense at any level. It now appears it was anticipated that TN was going to give nothing to retain a GM product.
They (Washington-No one inside General Motors makes business decisions any longer) needed states (verses any more Federal tax dollars) to anti-up $$$ to help fund this small car endeavor.
How anyone could be glad their community lost high $$$ jobs is beyond my comprehension. I am almost certain considering 50% of working Americans pay virtually NO FEDERAL tax, those here who love to use the phrase “not MY tax dollars” pay little or NO tax.
Just because one files a tax return yearly, does NOT constitute them as a TAX PAYER. By some of the comments posted here it is evident that some of these people have not figured this out.
Jul 8, 2009 at 10:34 p.m.
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Ok so the next time somebody asks me "did you take a bribe" I'll answer "no, i took an offer" i guess an offer is much different than a bribe.
Jul 8, 2009 at 6:47 p.m.
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I have figured it all out. It's the Mike Sheridan effect. If he says he wants a business to stay it will leave (GM). If he says he is going to put a "hurt" on a business (Woodmans) they stay. If Mike had just said he would put a hurt on GM they would have stayed.
Jul 8, 2009 at 4:35 p.m.
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and that makes 10 blah's in case anyone was counting
Jul 8, 2009 at 4:34 p.m.
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you forgot to put one more blah for good measure................blah LOL
Jul 8, 2009 at 4:14 p.m.
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Opinionsforfree.....Please get your vision tested or take a remedial reading class. Thoughts and prayers are with you.........
Jul 8, 2009 at 3:49 p.m.
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When I read this article. I read Blah blah blah blah blah. Blah blah blah blah.
Jul 8, 2009 at 3:31 p.m.
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They still don't make the top ten for most job losses in 2009 though. Nor do we make the top ten for worst job market or financially. It's poor, but there's many states out there worse off. That's the alarming part.
Jul 8, 2009 at 3:08 p.m.
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Actually, Wisconsin has the 10th highest INCREASE in unemployment since January. Not sure how we rank economically overall.
Jul 8, 2009 at 2:57 p.m.
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beenthere1968 - You sound like you're on drugs if you think this town is going to completely fold because of this. Not going to happen. Glad you left. We don't need your type around. I'd be real curious to see how things are in the town you live in being the whole Country is suffering. Wisconsin isn't even in the top ten states struggling the worst.
Jul 8, 2009 at 2:50 p.m.
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beenthere 1968 "I will be laughing as your business close, homes are boarded up and taxes go through the roof. " --You are quite mean spirited aren't you? Are you going to laugh at families that can't afford to feed and put clothes on their children? Are you going to bust a gut over the homeless children? I have lived in Janesville my whole life, no one in my family has ever worked for GM. I don't really see why you feel so much hatred for the people in our city. I guess we should all be glad you left years ago too!!
Jul 8, 2009 at 2:35 p.m.
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Oh, and does this mean that all that money these municipalities and the state were going to pay GM goes to the State budget? Wow! That will close the gap and keep the working man working! Now for slashing the pay of those six figure incomes that sit on their butts all day and gossip!
Jul 8, 2009 at 2:31 p.m.
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Minority for refusing to buy GM? Get out of Jville! I NEVER even contemplated buying a GM product. They're worthless!
Jul 8, 2009 at 2:22 p.m.
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Will buying a Fiat (Italian) designed and owned Chrysler be American? They are coming.
Jul 8, 2009 at 2:19 p.m.
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woodsman, is buying a Camero mostly designed in Australia and assembled in Canada O.K.?
Jul 8, 2009 at 2:01 p.m.
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Hey, no hard feelings. I'm just fed up with GM and what they've become and I wish more people would see the light as to why things happened the way they did. It doesn't mean people don't understand what they did for the community.
Jul 8, 2009 at 1:56 p.m.
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I see where this has gone,from assuming something,and i did.Had you been more specific in your not buying another G.M.,i would "not" have been so defensive toward you. Just that when most posters on here trade their american made vehicles,for life as they say,they are jumping the ship,if you know what i mean. As long as it is one of the three,as any american knows who they are,i retract my insults of your patriotism with remorse.
Jul 8, 2009 at 1:45 p.m.
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This offer was a joke.
These were my comments in September of 2008:
On Doyle leads delegation to Detroit
Posted on September 13 at 10:04 a.m. ( Suggest removal )
This proposal is much more complicated than it seems from the outside. As somebody who unofficially studies the auto industry, this is really bad timing. GM nor Wisconsin is in the position to take or offer any proposal even if it was significant.
First off - Wisconsin is not finacially in position to offer any significant proposal to GM. I am really interested in what they will have to offer. Historically, WI will not and has not, been in the business of supporting current or future business with huge incentives. WI has a current administration that is content on exploiting what we already have (natural resources etc.)which is the low cost tactic for growth.
Second - GM is also not in a financial position to accept any offer from WI, unless it is almost a free situation. The current site is a no-go. It doesn't model the effecient layouts required for lean and flexible manufacturing. The only chance for the current site is a complete demo, and rebuild. In reality, Janesville needs a whole new site and building. If GM was given a proposal that was something they couldn't pass on, it would have to be with a new site and incentatives so large, ($500M range) that GM would then have to pony up money of their own, and they don't have any. They would have to borrow it, and with their current bond rating in the tank, it would be very expensive for them to do the investment. The only investment on GM's table is small cars. They don't garner enough ROI to make it a go.
Third - GM has excess capacity (hence the reason for the cuts and closures) all over North America. The could think outside the box and convert the current facility (with major demo work on the older side) to reduce it, and use it for something other than auto manufacturing. But this is against their current business plan deployment of shedding all business activities not related to design, engineering, production, and marketing of light vehicles. This was all outlined in the manifesto of GM written by Jerome York a couple of years ago.
If anybody has an opposing view (with facts to verify) I would be interested in seeing it.
Jul 8, 2009 at 1:43 p.m.
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What do you mean our tax's would have skyrocketed! Don't you read the papers,they already are,and no end in sight,for the working person. ( KNOBS)i like that,haven't heard that word in years) LOL!
Jul 8, 2009 at 1:40 p.m.
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Woodsman - If I decide to buy a Ford, I'm still buying American. End of story. Quit dodging the comment about patriotism because that's exactly what you're doing. I didn't start this argument. Besides, I've always had GM, they quit offering what I like, they quit offering the programs that attracted me and they screwed people over and I don't like how they operate.
Jul 8, 2009 at 1:35 p.m.
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I said everyone is & was affected by G.M. putting millions of dollars every year in this town. No one is saying these others of valued employers are not as important "BUT" bread & buttered for the people of this town is increasing as we speak,because of the loss of the plant,agree??? The ignorant part comes from the statement,never buy another G.M.,because of bad management,you could make the same statement about our government,they manage worse then G.M. ever thought of,agree? You going to desert this country too because of bad management?
Jul 8, 2009 at 1:26 p.m.
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Our taxes would have sky rocketed if GM came in Janesville for 195mil. GM is not going to survie anyway, They lost control of their business 20 years ago.
Jul 8, 2009 at 1:12 p.m.
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Woodsman........How patriotic was GM being when their initial plan was to shut down production here, put thousands of Americans out of work, and then turn around and construct a plant in China to produce cars they once produced here? Seriously....at their board meetings their executives probably got a good laugh--while they were shipping production overseas--out of how far they have ridden the "Buy American" bandwagon.....
Janesvillean--the robots had nothing to do with the downfall of GM. Greed and apathy prevalent in both management and the labor union had everything to do with it.......The two major players competing with one another within the same company is a recipe for disaster......
Jul 8, 2009 at 1:06 p.m.
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What is it with you knobs that assume because someone doesn't buy GM, they are buying foreign? Seriously, who sounds like the uneducated one now? I would also love to see how many foreign made products you have in your home. You complete hypocrites!
Jul 8, 2009 at 1:03 p.m.
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woodsman - When did I say anything about one person's opinion winning a debate? I posted my opinion and you immediately questioned my patriotism because of it. Then you tried to turn it around by saying I'm questioning your patriotism and I must know you. Now you just called me an idiot. Huh? You're one confused soul.
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You're right, many people did know people at GM. Do I think it was the bread and butter of this entire town? No. Do I think we will survive this storm? Absolutely. There are many large companies in this town that get overlooked and have for years. Me deciding to no longer support a piss poorly run company that is draining everyone, is perfectly acceptable and doesn't make me less patriotic than you. GET MY POINT?
Jul 8, 2009 at 12:59 p.m.
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I'm sure glad I got out of Janesville years ago and away from the narrow minded over educated rednecks. Janesville flourished for decades because of GM and anyone who thinks otherwise is on drugs. Just wait until the lifelines run out and you smart people will see how much the standard of living plummets in the next couple of years. I will be laughing as your business close, homes are boarded up and taxes go through the roof. Just keep supporting the foreign manufacturers and buying those products, as your manufacturing tax base strinks along with your job base. Oh that right you degreed people will be just fine along with all those thousand of others getting more education. If that's true why don't you tell me where all those highly educated people will be working? Class warfare is just around the corner and you people with the fancy degrees better get your guns loaded, because the rest of the population isn't going to be your gophers and eat the crumbs at your table. Wake up!
Jul 8, 2009 at 12:38 p.m.
Jul 8, 2009 at 12:34 p.m.
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oops company
Jul 8, 2009 at 12:33 p.m.
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Hey don't forget we all own 60% of GM as taxpayers, maybe we need to support the comapany we all have a stake in...
Jul 8, 2009 at 11:56 a.m.
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"Michigan had the advantage politically for a variety of reasons from its electoral influence to its longtime association with cars (and GM in particular). We could have won, but only if we saw this as a political battle as much as a financial one."
You just contradicted yourself. Since we know Janesville didn't compete financially, how would Janesville overcome the political advantage Michigan had?
Jul 8, 2009 at 11:36 a.m.
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garyprimer - Exactly!
Jul 8, 2009 at 11:34 a.m.
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I'm sorry that this has to be considered merely a financial matter. All of this should be considered in light of the initial decision to locate the plant in the US rather than abroad. The decision, in other words, was political from the beginning. GM could have made more money if they located it abroad, but they bowed to political pressure in this regard. As such, we should have approached the issue in a political way rather than merely in a financial way through backroom deals. Michigan had the advantage politically for a variety of reasons from its electoral influence to its longtime association with cars (and GM in particular). We could have won, but only if we saw this as a political battle as much as a financial one.
Jul 8, 2009 at 11:18 a.m.
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I'm glad it didn't go through also. I would not want one more penny of my tax dollars helping this company out. This city will survive this and probably come out ahead of the game.
Woodsman: You really don't have a clue. Just because someone doesn't buy an American made car, by that I mean owned by a US company, does not make them unpatriotic. It makes them a wise consumer. Most (not all) US made cars from Ford, GM and Chrysler are not of the same quality as the imports. Why do you think Toyota is number 1 in the world? It certanly isn't because they produce crap!
I had a 1996 Pontiac Sunfire that had transmission problems at ~60K miles but I had exceeded the warranty by 2K and they wouldn't stand by their product. It cost me close to $3000 by the time it was all said and done. That seems to me like a very good reason not to buy their product ever again. I realize all car manufacturers have issues at times but it seems like the imports stand by their product more than our U.S. made manufacturers do.
Jul 8, 2009 at 11 a.m.
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Yes, a circular firing squad is certainly the way to move forward. Management! Employees! Has anybody blamed the robots yet?
Jul 8, 2009 at 10:57 a.m.
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I am so glad they didn't take our deal. We are already paying for the past street improvements and other incentives that GM will not pay back, why would I want to continue supporting a money sucking company that has no intention of honoring their agreements.
Jul 8, 2009 at 10:22 a.m.
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hankhill - Essentially, what I meant was GM, the union, yadayada, allowed this to happen. Not gas prices, the President, the tooth fairy. Sorry for not wording it correctly. I was busy responding to someone telling me I wasn't patriotic because of a car.
Jul 8, 2009 at 9:57 a.m.
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Hey woodsman, GM is not the only company making 'mericun vehicles. Ford, for example?
Here is a list of the top 10 vehicles currently providing the most jobs to Americans, based on sales and parts content, and deleting vehicles that are soon to be discontinued (Pontiac):
1. Toyota Camry (Georgetown, KY; Lafayette, IN)
2. Ford F-150 (Dearborn, MI; Claycomo, MO)
3. Chevrolet Malibu (Kansas City, KS)
4. Honda Odyssey (Lincoln, AL)
5. Chevrolet Silverado 1500 (Fort Wayne, IN)
6. Toyota Sienna (Princeton, IN)
7. Toyota Tundra (San Antonio, TX)
8. GMC Sierra 1500 (Fort Wayne, IN)
9. Ford Taurus (Chicago, IL)
10. Toyota Venza (Georgetown, KY)
And a list based on parts content:
Ford Taurus 90 percent Chicago
Lincoln MKS 85 percent Chicago
Toyota Sienna 85 percent Princeton, Ind.
GMC Savana 1500 82 percent Wentzville, Mo.
Chevrolet Express 1500 82 percent Wentzville, Mo.
Buick Lucerne 81 percent Detroit
Chevrolet Malibu 80 percent Kansas City, Kan.
Honda Odyssey 80 percent Lincoln, Ala.
Toyota Avalon 80 percent Georgetown, Ky.
Toyota Tundra 80 percent San Antonio
Toyota Venza 80 percent Georgetown, Ky.
Buying American isn't as simple as it seems.
http://www.cars.com/go/advice/Story.jsp?...
Jul 8, 2009 at 9:50 a.m.
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Right on Joker
Jul 8, 2009 at 9:41 a.m.
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Greedy SOB's.
Jul 8, 2009 at 9:17 a.m.
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Thank you Spark. See, we can agree on a few things!
Jul 8, 2009 at 9:15 a.m.
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Joker - I would agree with that.
Jul 8, 2009 at 9:14 a.m.
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Spark, GM and it's management are not the only ones to blame for it's failure. UAW and GM workers are also to blame. Everyone had a hand in their downfall. I suggest that after city and state leaders finish patting themselves on the back, that they get back to work and offer a similiar package to other companies.
Jul 8, 2009 at 9:10 a.m.
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Woodsman - Don't sit here and judge me and accuse me of not being American just because I don't support a company I feel has completely screwed themselves and so many others, including their employees. Spare me with your I'm Mr. Woodsman, God almighty patriot one. You think you're the only one? You think because you don't drive GM you aren't patriotic? You my friend, are the ignorant one if you believe that. What kind of TV do you own? What other appliances do you own? Who said anything about Japanese vehicles. Is Ford Japanese?
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Did I say I was wishing it to fail? It already did fail. Am I missing something? I've heard every excuse in the book as to why they failed. Gas, the President, you name it. Everything but the blame where it should be put. On GM and the management of GM.
Jul 8, 2009 at 8:53 a.m.
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My days of buying G.M. are done! What an ignorant statement. You do realize you are a minority,don't you? To wish something to fail before given a chance,what a team player you are(for the jap's that is). Are you AMERICAN,or just wearing the sheep's closing?
Jul 8, 2009 at 8:37 a.m.
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My days of buying GM are done. Period. Michigan can have the plant because like 916 said, they are headed down a road to nowhere. Just wait and see.
Jul 8, 2009 at 8:18 a.m.
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Unidentified.....GM is not going to need more capacity before the next election--even less is much more likely. Despite the backing of our government, the company is on a road to nowhere. The car that the Orion plant is slated to produce will not be able to compete in the market segment that it is in........
Jul 8, 2009 at 8:14 a.m.
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After reading this I'm glad GM did not get more of my tax money. When do we say enough is enough?
Jul 8, 2009 at 7:27 a.m.
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Let's see here: the Democratic plan is to offer a huge corporate polluter tax incentives to create jobs while simultaneously raising income and capital gains taxes on tens of thousands of small businesses across the state to create jobs. Got it.
Jul 7, 2009 at 9:47 p.m.
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Every plant is probably told they are "the best". Orion thinks they are:
"“Let’s not forget about our membership that produced three No. 1 J.D. Power quality awards in recent years,” added Mike Dunn, chairman of UAW Local 5960, which represents Orion workers. “And the current (Pontiac) G6 and (Chevrolet) Malibu finished second and third in their segment in this year’s quality survey.”
I've always wondered how different any of the GM U.S. workforces really are. Are the differences from one GM factory to the next statistically significant?
Jul 7, 2009 at 9:42 p.m.
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Janesville got outbid, by about $800M.
Janesville is not a better location (no stamping plant nearby).
How much "better" is Janesville's workforce, really? $800M better?
Here is the winning package from Michigan:
"The state came up with a $779 million, 20-year Michigan Economic Growth Authority (MEGA) tax credit package. Separately, Orion Township offered a 25-year 100% personal property tax abatement, potentially worth $100 million over 25 years, according to township supervisor Matt Gibb. Oakland County offered $136.5 million in retraining funds."
http://www.freep.com/article/20090626/BU...
Jul 7, 2009 at 9:24 p.m.
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I find it impossible to believe that politics weren't somehow involved here. We offered up ample cash, we have a better location, and we have a better work force? I'm guessing it has something to do with electoral votes. I also think someone is gambling that GM will need more capacity before the next election and that would include Janesville. It would be a win win for a politician.
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