January 27, 2007

Driving the Discussion

From story in the Saturday Tennessean headlined Either choice by Toyota will add Tenn. jobs:

No matter which one is picked, the auto plant would attract workers from Tennessee and allow Toyota to tap its existing base of auto suppliers that already feed parts and material to plants in Kentucky and Indiana, Hill said.

While a Toyota plant in Chattanooga would certainly create many new jobs for Tennesseans, that would be true too if the plant was built in Arkansas just across the Mississippi River from Memphis, which is home to the bulk of the population in that area. ...There's not a huge difference to Tennessee in locating the plant in either location, because it still will fuel the business and growth of jobs at auto parts suppliers in the state that already do business with Toyota's Kentucky operations.

And yet Tennessee economic development officials and the Bredesen administration are negotiating with Toyota and probably promising huge tax subsidies and "incentives" to bring the plant to Chattanooga.

That's a big mistake.

Either location for the Toyota plant will boost the Tennessee economy and create jobs for Tennesseans, so the state of Tennessee should not offer Toyota anything other than to pay the state's normal share of road and infrastructure improvements necessary if Toyota chooses the Chattanooga site.

While I'm happy to see the Tennessean follow up on an issue I first raised here on my blog - that either Toyota site would be good for Tennessee - the Tennessean article failed to inform readers of a very important piece of context: That Toyota is an extremely profitable company.

While The Tennessean described the plant as a $1 billion investment that would have a $430 million annual payroll, the paper doesn't tell readers that Toyota is huge profitable - the company made a $3 billion profit in just one quarter last year - in other words, the company made enough to build the plant in one month.

A hugely profitable company like that certainly does not need to dip into Tennessee taxpayers' wallets. And because Tennessee benefits even if Toyota picks the Arkansas site, any offer from Tennessee to Toyota that goes beyond normal infrastructure costs is nothing but a waste of tax dollars.