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Then ABB cried poverty, telling the development agency, "If you rescind the tax exemption, we'll owe $1.2 million in taxes, which we can't afford."
To date, Monroe County has waived collection. Thus, a division of a multinational company--which had sales of $31 billion last year--received some $26 million in tax breaks and economic aid. For what? To eliminate 426 jobs.
ABB illustrates another corporate-welfare story that TIME encountered repeatedly. After failing to keep a facility up to date, a company claims a plant is "archaic" and threatens to close it unless government officials come up with incentives to help pay for modernization. That is what happened in Louisville, Ky., where a much larger conglomerate, General Electric Co., said that to meet profit goals, its plant had to be modernized--with taxpayer dollars. This from a company that appears at the top of the lists of the "best managed" corporations in America, whose revenue last year reached $91 billion and whose earnings topped $8 billion.
GE, which over the years had failed to update a washing-machine factory in Louisville--described as an "obsolete facility" that is "just one step above archaic"--threatened to close it unless state and local governments helped subsidize its modernization and 7,000 hourly employees agreed to cost-cutting work rules.
Faced with this threat, Kentucky officials hired Coopers & Lybrand, an accounting and consulting firm, to conduct a study--paid for by GE--on whether the company really intended to turn out the lights. The answer Coopers & Lybrand came up with: yes.
It is not clear why the state of Kentucky believed it was the responsibility of taxpayers to improve GE's profit margins. Nevertheless, in 1993, Kentucky granted $19 million in income tax breaks over 10 years to the washing-machine factory in GE's sprawling Appliance Park complex. The city of Louisville and Jefferson County kicked in an additional $1 million.
The tax break notwithstanding, employment in Appliance Park continues to fall. Last February, GE announced that over the next two years, 1,500 jobs would be eliminated as range and dryer production is phased out and moved to Georgia, where wages are lower, and Mexico, where wages are much lower. Today 6,200 people work in Appliance Park--down 72% from a high of 22,250 in 1973.
NEW MEXICO Intel's Billion-Dollar Bunny Suits
With ABB and GE, the threat of losing jobs often became too much for a community to bear. The workers, their families and local politicians wanted to keep the jobs at all costs.
Yet the same hysteria flows when large, fast-growing high-tech companies start shopping around for new plant locations. Intel Corp. invited six Western states--Arizona, California, New Mexico, Oregon, Texas and Utah--to compete for a new computer-chip fabrication plant, or fab, and selected the winner in March 1993. A senior executive explained the decision this way to the San Jose Mercury News: "We're going to build where Intel gets the best deal."