Thursday, March 21, 2013
Corporate welfare Nucor steps up opposition to steel mill subsidies UPDATE
Posted by Max Brantley on Thu, Mar 21, 2013 at 8:22 AM
Roby Brock at Talk Business has a full report on the Nucor talking points, going out to legislators. It includes a warning that the state subsidies could contribute to market conditions that will force Nucor to pare its Arkansas jobs.
This has always been the core problem with corporate welfare. One player's gain is another player's loss, one way or the other. If the Big River Steel proposal is solid, why can't it make it on its own, in the free market, without taxpayer subsidy? (The standing state answer is that another state will get the jobs if Arkansas taxpayers don't pay tribute.) Still, is it fair for taxpayers to subsidize one business at the expense of another? Nucor's memo says, in part:
Help us understand how you can be backing a competitor when we have been in Arkansas for 25 years, have poured $2B of direct and indirect taxes in the state treasury, have brought many customers and corresponding manufacturing jobs to Mississippi County, and have been a good corporate citizen to the state and to northeast Arkansas.Help us understand why the state believes this is such a good investment when the industry is operating at 70 to 75%, Nucor Steel Arkansas hasn’t run full since September, 2008, Nucor Steel Arkansas didn’t produce 600,000 tons last year due to lack of orders, and the BRS financial assumptions are more than questionable. If this is such a good deal, with their overstated rate of return, why aren’t steel mills popping up all over the place?
By voting to subsidize BRS ($400,000+/job), you ARE voting against jobs. You are voting against high paying jobs that have been in the area for 25 years. As stated earlier, having 3 mills so close together will drive up the costs for all mills. At some point, orders, tons and people will flow to where they can most profitably be produced. In Nucor’s case, that will be one of our 3 sheet mills in Indiana, Alabama or South Carolina.
We don’t believe it makes political sense for the state to attempt to pick winners and losers and putting existing successful industries in jeopardy by giving unique advantages to their competitors. Do other established businesses need to worry about the state subsidizing their competitors?
The state, however, picks winners and losers all the time. The Republican legislature is poised to designate the wealthy as the big winner in the tax cut derby. Those sorry takers who are the working poor will be losers, both through minimal tax cuts and the certain decline in public services (particularly in vital higher education) that will have to follow.
UPDATE: Roby Brock of Talk Business is reporting additionally on the new report by legislative consultants on the deal. They say the market can absorb additional steel capacity, though the state perhaps has overestimated the long-term economic benefits of Big River Steel. More here from Arkansas Business.
Speaking of...
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Now come the tax cuts and handouts
April 16, 2013With House approval of the Medicaid expansion, other pieces are beginning to fall in place. /more/
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Nucor-Yamato seeks $115 million local bond issue
April 14, 2013The Blytheville Courier News reports that Nucor-Yamato Steel is planning a $115 million expansion to produce a new type of steel product. /more/
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UPDATE: House approves bonds for Big River Steel mill
April 8, 2013The House today overwhelmingly approved, 78-18, legislation to issue state bonds for the startup Big River Steel mill proposed for Mississippi County. /more/
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Legislature today: Steel bill, Obamacare keep rolling
April 3, 2013On the legislative front: * BIG RIVER STEEL: The enabling legislation for state incentives to build a steel mill in Mississippi County won approval in a House committee today. /more/
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Prospects good for steel mill subsidies
March 29, 2013Sounds like this turkey is cooked. Direct support by House Speaker Davy Carter and slightly qualified support by Senate President Michael Lamoureux would make it appear Gov. Mike Beebe is going to get his big state subsidy to help a startup steel mill operation in Mississippi County, despite stout opposition from an existing competitor that cranked up here without such millions in taxpayer help. /more/
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Legislature today — gay rights, environment, football and steel
March 27, 2013From the Capitol today: * BIG RIVER STEEL: Roby Brock at Talk Business reports that details have now been added to the bill to provide $75 million in grants and $50 million in loans to the startup Big River Steel project in Mississippi County. /more/
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The legislature rolls on
March 25, 2013I hope to check in later as joint House-Senate committees discuss the increasingly controversial plan to provide state subsidies for a new steel mill in Mississippi County. /more/
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The Max is Back, But Depleted Edition
March 22, 2013The private option, tax cuts, school choice, voter ID, Big River Steel, the political impact of a Republican majority in the legislature, the governor's race, the tech park and delay tactics in the Lake Maumelle watershed — all covered this week. /more/
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Corporate welfare: Let's review all as carefully as steel mill
March 22, 2013The careful review of a major taxpayer investment in the proposed Big River steel mill is nothing but a good thing and there's no debate we can thank the new Republican legislative majority for the oversight. /more/
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