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Most tax credits never lead to jobs 2007 MEGA credits* Companies that achieved or exceeded total new jobs Companies that only met the minimum jobs to get a tax credit Companies approved for credits but never hired enough to cash in

12% 29% 59%

* Year analyzed by Auditor General

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SUNDAY, JULY 18, 2010

THE GRAND RAPIDS PRESS

JOBS

IF YOU SEEK A TAX INCENTIVE, LOOK ABOUT YOU

DEBATE OVER INCENTIVES GOES BACK CENTURIES

THE MEGA MAP

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bringing jobs to their communities. “In the six years I’ve been here, I don’t think we’ve done a significant deal that we haven’t used MEGA,” Kitchens said. “It’s one of the smartest incentives in the country.” But critics say the public is given an inflated view of MEGA in the monthly news conferences Granholm holds to announce new business investments. A Mackinac Center study found just 29 percent of promised jobs in MEGA deals between 1994 and 2005 were actually created. Similarly, a state auditor general’s report in April found that about 56 percent of all companies that were awarded MEGA credit between 2005 and 2007 never used them because they failed to meet the minimum number of jobs required. Main said many companies had to put hiring on hold because of a deep national recession that started in 2007, but they still could create jobs. The auditor general’s report chided the MEDC for inadequately auditing payroll records for compliance. In spot checks of 15 MEGA credits, it found the companies did not report hours worked for 1,229 jobs included in the credits. As a result, tax credits may have been improperly awarded in those cases, according to the report. “The audit was a fairly blistering analysis” of the MEGA program, said state Sen. Nancy Cassis, R-Novi. Cassis, chairwoman of the Senate Finance Committee and a critic of the state’s tax incentives, has introduced a bill that would limit MEGA projects to 13 a year.

“These programs create ribbon cuttings and photo ops, but not real jobs,” said Michael LaFaive, from the Midland-based Mackinac Center for  Total MEGA tax credits from April 1995-August 2009: 530 Keweenaw  Estimated company investments/tax credits: $25.7 billion/$4 billion Public Policy, a persistent critic of tax  Largest tax credit: $157,798,000 for General Motors Corp., 2008 incentives.  Largest company investment: $1.2 billion, Hemlock Semiconductor Corp., On the other side of the argument: 2008, Saginaw, $12.2 million tax credit Some of Michigan’s largest compa Most jobs to be created: 4,700, Ford Motor Co., 2009, Wayne County, nies say they are hiring hundreds of Houghton $400 million investment, $1.2 million tax credit workers thanks to the state’s premier 96 tax incentive program, the Michigan Ontonagon Economic Growth Authority tax Baraga 235 Gogebic 100 credits. Outside Saginaw, for example, Luce Marquette Hemlock Semiconductor Corp. used 95 750 Alger Chippewa a tax credits in 2008 for one of the Iron Schoolcraft state’s biggest ever “incentivized” inMackinac Delta Dickinson vestments, $1.2 billion. 265 125 Tax incentives also played a major role in convincing Korean company, Jobs created with LG, to build an electric-car battery plant in Holland Township. Presi- MEGA tax incentives* Menominee Emmet dent Obama led the groundbreaking 40 Cheboygan None ceremony Thursday for the factory Presque Isle expected to employ 400. 1 to 100 *There are 17 Charlevoix But critics say there are not enough agreements with 100 to 500 of these success stories to justify the Ostego Montmorency Alpena Antrim 15,119 jobs listed millions they drain from the state’s 100 150 for multiple Leelanau 500 to 2,000 treasury. counties that are Studies done by the Mackinac CenGrand not on the map. Benzie Traverse Kalkaska Crawford Oscoda Alcona 2,000 to 10,000 ter and others have found only about In addition, four 251 30 percent of jobs promised in MEGA agreements with 10,000 and more deals have been created. 15,343 jobs are Manistee Wexford Missaukee Roscommon Ogemaw Iosco

MICHIGAN ECONOMIC GROWTH AUTHORITY TAX CREDITS, BY COUNTY

Nothing new Using tax incentives to grow t h e e co n o my h a s l o n g b e e n controversial. Ron Kitchens, president of Southwest Michigan First, an economic development agency in Kalamazoo, likes to point out the first incentives were used by the early Romans to reduce tariffs at seaports. “We’ve been arguing about the value of incentives ever since,” he said. Kitchens and other local economic developers say incentives are critical in helping them compete with other states. “I’ll go out of business and so will everyone else doing local economic development if we eliminate the use of tax incentives,” said Birgit Klohs, president of The Right Place economic development agency, based in Grand Rapids. She and others point to the companies prospering in their communities, thanks in part to tax incentives. Hemlock Semiconductor, which received $30 million in state tax breaks over several years, is in the midst of a $1.2 billion expansion. That is expected to boost employment from 1,300 workers to 1,750 in the production of polycrystalline silicon for cell phones, home electronics and other uses. GE Aviation, which was awarded tax credits for an expansion that was supposed to create 120 jobs, has actually added nearly 400 jobs. (It was known as Smiths Industries at the time.) “We expanded our Grand Rapids business in 2003 by adding another facility (at 36th Street SE) that includes engineering and integration labs with about 500 employees,” said George Kiefer, general manager for Avionics North America at GE Aviation. “This is how positive partnerships with our local and state officials can help businesses in Michigan to grow,” he said. One of the Lakeshore’s success stories is specialty meat producer Boar’s Head Provisions Co. in Holland Township. A Community Development Block grant in 2005 and a MEGA tax credit in 2008 have swelled the payroll by more than 400 workers. The plant now employs 700 in producing roast beef, corned beef and turkey sold across the country.

Subsidized competition Some critics argue tax incentives amount to an unfair subsidy by other taxpaying businesses that don’t benefit from them. John Koegel, president of Koegel Meats Inc. in Flint, said he was perturbed when competitor Boar’s Head received the 2008 MEGA credits, saying his company could not afford equipment Boar’s Head had. “I think any company that has paid taxes on an ongoing basis should not subsidize its competitors,” Koegel said. “Government shouldn’t be in the business of providing subsidies.” Those subsidies proved ineffective in other cases, notably Troy-based Kmart Corp., X-Rite Corp. of Kentwood and the now-liquidated Plastech Engineered Products in Dearborn. Greg Main, president of the Michigan Economic Development Corp., the state’s business development and marketing arm, attributes the criticisms of tax incentives mostly to “the silly season” of election-year politics. He says it’s absurd to think Michigan can eliminate tax incentives

Osceola 513

County name Number of jobs created

Number of MEGA tax credit agreements

listed as to be determined and not on the map.

85

2,213

Mason 100

Lake

Osceola 513

Clare 418

Gladwin

Arenac 75

A different conclusion

Main says many of the auditor general’s recommendations are Mecosta being implemented or already Oceana Newaygo Isabella Midland 630 671 70 377 have been put in place. 1995-August 2009 in top 10 counties Tuscola And he notes MEGA was Muskegon Sanilac Montcalm Gratiot Saginaw 1. Oakland 114 6. Ottawa 19 used to save or create near1,377 334 357 262 1,194 ly 62,000 jobs in the three 2. Wayne 68 7. Ingham 13 Lapeer years examined by the AudiGenesee St. Clair 3. Washtenaw 53 8. Kalamazoo 13 390 tor General. Main points to 3,211 Ottawa Kent Ionia Clinton Shiawassee 2,113 those jobs as one of the few 4. Kent 28 9. Calhoun 13 7,112 150 8,621 Macomb bright spots in a state econo5. Macomb 19 10. Monroe 10 10,476 Oakland my that has been “collapsing 38,128 Barry Allegan Eaton Ingham Livingston SOURCE: All MEGA Projects worksheet, Michigan Strategic Fund all around you.” 152 2,420 1,650 6.479 1,077 He also cites a study done by the W.E. Upjohn Institute for EmVan Buren Kalamazoo Calhoun Jackson Washtenaw Wayne ployment Research that found MEGA 531 5,855 3,490 1,157 14,675 35,787 CONNECT grants created jobs at a cost of about $3,500 each.  Full auditor’s general report and list of MEGA tax credits Berrien Cass St. Joseph Branch Hillsdale Lenawee Monroe As a result, the study said MEGA 293 1,321 792 1,095 1,289 1,933 2,554 can be found at bit.ly/AuditorReport is a mostly effective, low-cost way of attracting investment and jobs. “The net cost of MEGA’s job creOttawa, 104, $7,930,000, $1,409,229 $10,511,000 ation is modest compared to the likely Who got a MEGA grant in R $42,700,000, R LeanLogistics Inc., 2008, Ottawa, 581, Lacks Enterprises, 2004, Kent, 424, economic and social benefits of high$13,900,000, $14,698,684 $17,500,000, $2,507,000 West Michigan? er employment rates for Michigan R Precision Aerospace Corp., 2008, Kent, 190, R Steelcase Wood Plant, 2004, Kent, 350, $10,100,000, $3,048,089 $3,400,000, $2,456,000 Here’s a list of the state’s MEGA tax residents,” study co-author Timothy R Request Foods Inc., 2008, Ottawa, 202, R Nicholas Plastics, 2004, Ottawa, 250, Bartik said. credits approved between April $26,100,000, $2,554,000 $18,000,000, $3,777,000 1995 and August 2009 for area It also refuted claims by the MackiR Bissell Inc., (retention), 2008, Kent, 106, R Saturn Electronics, 2004, Ottawa, 124, companies in Kent, Ottawa, nac Center and others that the state $7,750,000, $2,454,000 $20,000,000, $1,637,000 Allegan, Ionia, Barry, Mecosta and would be better off by lowering busiR Federal-Mogul Corp., 2004, multiple sites, 1,866 R Leggett & Platt Inc., 2008, multiple counties, ness taxes for all companies. Montcalm counties. (job retention), $6,000,000, $65,490,000 233, $3,100,000, $2,488,000 R Metaldyne Machining & Assembly, (rural tax R Sequenom Inc., 2008, Kent, 523, $20,250,000, The Upjohn study determined the Company, year approved; project county; credit) 2005, Barry, 64, $8,100,000, $670,000 $24,999,000 state created 16,700 more jobs between maximum number of new jobs; company’s R Emerald Graphics, 2005, Kent, 347, R JCIM (Johnson Controls) US LLC, 2008, multiple 1996 and 2007 through MEGA than it investment; maximum tax credit $9,000,000, $3,198,000 sites, 325, $4,000,000, $3,579,000 would have by cutting the business R Hoover Universal, 2005, Ottawa, 544 R Hart & Cooley Inc., 2008, Kent, 48, $3,900,000, tax rate by the same amount foregone R Haworth Inc., 1995, Mecosta, 342, $43,332,000, (retention), $69,000,000, $6,382,000 $1,670,000 $6,387,000 R X-Rite Inc., 2005, Kent, 313, $44,500,000, R Emergency Technology Inc., 2009, Ottawa, 100, through MEGA tax credits. R Meridian Inc., 1995, Ottawa, 500, $24,006,000, $10,698,000 $6,100,000, $1,414,155 But some argue Michigan can’t af$15,073,000 R Smiths Aerospace (now GE Aviation), 2005, R Global Futures & Forex Ltd., (high-tech tax ford even that modest cost of bringing R Shape Corp., 1996, Ottawa, 400, $21,000,000, Kent, 65, $2,400,000, $648,000 credit), 2009, Kent, 105, $13,168,600, $3,597,281 jobs to the state. $11,442,000 R S2 Yachts, 2005, Allegan, 400, $14,000,000, R Compact Power Inc., 2009, Holland, 443, Advocacy groups, including the R Lacks Industries, 1996, Kent, 200, $37,800,000, $4,723,000 $244,000,000, $25,259,019 Michigan League for Human Services $5,533,000 R Keebler Co., 2005, Kent, 352, $5,600,000, R Continental Dairy Products Inc., 2009, Ottawa, R N-K Manufacturing, 1997, Ottawa, 540, $3,857,000 70, $103,200,000, $1,526,259 and the Michigan Education Asso$10,500,000, $6,626,000 R Surefil LLC, 2006, Kent, 278, $6,200,000, R Johnson Controls-Saft Advance Power ciation, say the state is giving up too R Weyburn Aquisition Co., 1997, Ottawa, 163, $3,708,000 Solutions LLC, 2009, Allegan, 1,096, much revenue. $21,000,000, $5,426,000 R United Solar Ovonic LLC, 2006, Montcalm, 200, $220,000,000, $48,542,153 Michigan last year gave up nearly R Smiths Industries (now GE Aviation), 1998, $129,200,000, $5,696,000 R DornerWorks Ltd., 2009, Kent, 50, $1,500,000, $2 billion in business tax revenue Kent, 105, $7,450,000, $4,225,000 R Otsego Paper Inc., 2006, Allegan, 112, $600,398 R Steelcase Inc., 1999, Kent, 290, $34,000,000, through these tax-reduction pro$102,000,000, $1,147,000 R GRW Technologies Inc., 2009, Kent, 66, $4,406,000 R American Litho Inc., 2006, Kent, 163, $2,000,000, $606,963 grams, according to the nonpartisan R Murco Foods Inc., 1999, Allegan, 300, $13,500,000, $1,697,000 R Energetx Composites LLC, 2009, Ottawa, 1,068, Senate Fiscal Agency. $1,500,000, $5,616,000 R PureFlex Inc., 2006, Kent, 225, $7,300,000, $37,000,000, $27,522,123 A March study by the Anderson R Parker Hannifin, 1999, Allegan, 87, $21,000,000, $4,202,000 R Farmers Group Inc., 2009, Kent, 1,600, Economic Group, conducted for the $1,120,000 R Siemens Water Technologies Corp., 2006, $84,400,000, $62,593,927 teachers’ union, was particularly critiR Behr Industries Corp., 2000, Kent, 341, Ottawa, 80, $3,000,000, $1,109,000 R Holland Awning Co., 2009, Ottawa, 270, $3,044,000, $2,314,000 R The Tech Group Grand Rapids Inc., 2006, Kent, $3,700,000, $2,122,892 cal of MEGA, tax-free Renaissance R Haworth Inc., 2000, Ottawa, 455, $17,700,000, 105, $12,400,000, $1,827,000 R Roskam Baking Co., 2009, Kent, 1,500, Zones and the state’s film industry $9,091,000 R MBtech Autodie LLC, 2007, Kent, 200 $60,500,000, $20,172,545 tax credits. It found those programs R Perrigo, 2002, Allegan, 25, $1,600,000, (retention), $5,400,000, $1,868,000 R Atwood Corp., 2009, Kent, 51, $3,800,000, cost the state $85 million in lost an$395,000 R Boar’s Head Provisions Co. LLC, 2008, Ottawa, $483,026 nual taxes and nearly 25,000 jobs (that R Gentex Corp., 2002, Ottawa, 625, $97,000,000, 208, $24,000,000, $1,618,000 R Ventra Ionia Main LLC, 2009, multiple sites, 934 could have been created with lower $9,240,000 R Northland Corp. Inc., 2008, Montcalm, 157, (retention), $42,000,000, $4,675,342 R Royal Plastics, 2002, Ottawa, 828, $9,600,000, $2,312,000 R Bradford White Corp., (rural tax credit) 2009, taxes) compared to a small cut in busi$35,000,000, $13,652,000 R Priceline.com Inc., 2008, Kent, 424, $7,700,000, Barry, 88, $3,480,000, $1,020,623 ness tax rates. R Smiths Aerospace (now GE Aviation), 2003, $4,599,000 R Haworth Inc., 2009, multiple sites, 346, The controversial film program Kent, 120, $5,400,000, $2,178,000 R Perrigo Co., 2008, Allegan, 400, $10,500,000, $15,650,000, $5,297,673 gives filmmakers up to a 42 percent R USF Technology Services, 2003, Kent, 80, $8,438,000 R Wolverine World Wide Inc., (rural tax credit) refundable tax credit to offset produc$28,000,000, $2,117,000 R Genzink Steel Supply & Welding Co., 2008, 2009, Mecosta, 288, $6,270,000, $22,437,419 R Haworth Inc., 2004, multiple counties, 1,000, tion costs, which means producers get a check whether or not they pay any state taxes. Cassis sites a recent Senate Fiscal and survive in the the wages and health care benefits dismantled the economic developeconomic-develop- paid to employees, multiplied by the ment apparatus built by Democratic Agency study that found Michigan ment war among the state’s personal income tax rate of Gov. James Blanchard, saying those receives 17 cents in tax revenue for evstates. 4.35 percent. programs were little more than public ery dollar of film incentives granted. “Hollywood producers are getting “There’s not a state The state requires refunds if jobs relations hype for Blanchard. But after General Motors Co. shut- most of the benefit and taking it back in the union that are moved out of state during the life tered its Willow Run assembly plant, to California with them,” she said. doesn’t have some of the agreement. MEDC kind of incentive proThe five Republican candidates stunning the state and killing 4,200 Some economic development exgram,” he said. seeking to replace Granholm say, if jobs, Engler rebuilt the state’s eco- perts say Michigan should rely less on president M a i n a n d o t h - elected, they will revamp the state’s nomic development structure and hunting for new companies with tax Greg Main: incentives and focus more on “ecoRead a Q&A ers note Michigan’s job-creating strategy by cutting taxes included tax incentives. MEGA incentives are and reducing reliance on incentives. Those MEGA deals originally were nomic gardening”— helping existing with him in structured so compaMEGA and the MEDC are under capped at 25 a year, but greatly ex- companies grow. Monday’s nies don’t receive a attack mainly from Republicans and panded— more than 600 have been Klohs, president of The Right Place Press. dime until they cre- free-market advocates who say the approved since 1995. and a MEDC executive board member, ate the promised jobs. state should replace targeted incenMichigan has a handful of other tax says she’d be willing to stop using tax “If companies don’t do what they tives with across-the-board tax cuts. incentives, including controversial incentives under one big condition. say, it costs us zero,” Kitchens said. Ironically, both are creations of for- film industry tax credits, tax-free Re“As soon as all of my competitors “It’s a great deal for the taxpayers.” mer Gov. John Engler, a conservative naissance Zones and various property do away with theirs, I’m willing to lay MEGA credits can be awarded for Republican who also preached the tax abatement programs. down my arms, too.” up to 20 years. They reduce a busi- gospel of tax cuts. Local economic developers say ness’ taxes by up to 100 percent of After taking office in 1991, Engler MEGA is an indispensable tool in E-mail Rick Haglund at haglund.rick@gmail Huron

Bay 245


THE GRAND RAPIDS PRESS

SUNDAY, JULY 18, 2010

“There’s not a state in the union that doesn’t have some kind of incentive program.” — Greg Main, president of the Michigan Economic Development Corp.

CHECKING THE COMPETITION A SAMPLING OF INCENTIVES OFFERED BY OTHER STATES AND ONTARIO CALIFORNIA (Private employment: 11.8 million)

ONTARIO, CANADA (Private employment: 6.6 million)

A bid to win back movie producers: California is offering a new five-year film tax credit for new or returning businesses; 20 percent credit for new companies; 25 percent for those returning. The fund is capped at $100 million a year. Stem cell research initiative: Effort is financed with $3 billion in state bonds, offering up to $350 million a year for research and development. Special enterprise zones let companies use tax credits to cover state taxes on corporations. It covers sales and use tax on the first $20 million of new or used equipment a company buys each year.

The new five-year Open Ontario plan: Program is out to lure more auto companies to its borders, with aggressive corporate tax cuts that took effect July 1. Reduction in corporate income tax for manufacturers: Rate dropped from 12 percent to 10 percent. The corporate minimum tax rate fell from 4 percent to 2.7 percent. And automakers get bigger breaks on sales taxes for most business expenses and investments. By 2013, Ontario expects to offer the lowest corporate income tax rate in North America. Other incentives: 20 percent tax credit for scientific research companies; 25 percent refundable tax credit for movie producers; and companies with 100 highpaying jobs and $25 million invested over five years can tap the Jobs and Investment program.

Small businesses: Companies with 20 or fewer employees can claim $3,000 income tax credit for each new hire, until $400 million in credits are claimed.

VIRGINIA (Private employment: 3 million) OKLAHOMA (Private employment: 1.2 million) New jobs: Companies can get a 10year cash incentive, up to 5 percent of payroll for new jobs with minimum wage of $29,409 (or county average). The payroll must reach $2.5 million within three years. Investment/new-jobs tax credit: Businesses get a five-year credit, equal to either 1 percent of capital improvement or $500 per new employee, whichever is greater; that amount doubles if investment tops $40 million. High salary bonus: If new jobs are high paying, the state cash-back incentive is 10 percent of payroll for up to 10 years; more than 50 percent of sales must be out of state.

Quality jobs: For companies that create at least 50 jobs that pay 110 percent of county average, there’s a quality-jobs credit: $2,500 to $5,000 tax credit per job per year, up to five years.

Jobs incentive: New program offers a “discretionary” incentive grant set by economic-development officials and approved by the governor. It is for companies that invest $250 million and create at least 400 full-time jobs: others who come to Virginia or expand can get a $1,000 break on their corporate income tax credit for each new job (50-job minimum).

Looser requirements: Georgia dropped an investment criteria for its big-project candidates — companies that come with a $150 million payroll and 1,800 jobs no longer have to invest at least $450 million.

Smaller scale: Another awards companies that create 25 or more jobs and invest $1 million.

Simplified taxes: Accountants don’t need complex calculations to figure Georgia’s corporate income tax — it doesn’t count property or payroll taxes.

Sliding scale: For big employers, grants of varying amounts reward those with 1,000 new jobs (400 jobs if they pay twice the prevailing wage) and investment of $100 million.

GEORGIA (Private employment: 3.2 million)

Money talks: In 2006, Georgia ponied up big bucks to beat Mississippi for Kia’s first U.S. auto assembly plant. Incentives totaling $410 million included $76 million in job tax credits and $130 million in property tax breaks. The plant opened last fall and employs 3,000.

Traditional industry: Virginia also has special funds targeting tobacco fields and coal mines.

Michigan tax breaks target technology, brownfields, obsolete properties, more Michigan offers more than 70 different credits that reduce business taxes. Here are major ones used to encourage new jobs: Michigan Economic Growth Authority (MEGA): This is the state’s centerpiece program. It issues credits against Michigan Business Tax (MBT) liability.  Enacted in 1995, it offers credits of up to 100 percent for wages and benefits for each job created multiplied by the personal-income tax rate of 4.35 percent. Jobretention MEGA credits are similar but require an investment of $50,000 per job. High-tech MEGAs allow for credits of 200 percent to 300 percent of wages and benefits. Michigan Advanced Battery Credits: This is a key incentive in Gov. Jennifer Granholm’s effort to make Michigan a center of battery manufacturing for

hybrid and electric vehicles.  Enacted in 2007, the program offers various credits against MBT liability for engineering and manufacturing of battery cells and packs. Industrial property tax abatements: This program, enacted in 1974, reduces taxes on industrial property expansions by 50 percent for as many as 12 years. Brownfield Development Financing Act: This program, enacted in 1996, offers MBT credits to companies that reuse old industry sites for new development. The amount and duration of the tax credits are determined on a case-by-case basis by the state Brownfield Development Authority. Obsolete Property Rehabilitation Act: This 2000 program freezes

in the state. the property tax payments on  The state also offers a film commercial buildings and land that infrastructure tax credit of 25 are rehabilitated in blighted areas at percent against business taxes for pre-rehabilitation levels. The credit an investment of at least $250,000 amounts are determined on a case-byin film studios, equipment or other case basis by local governments and capital expenditures. It is also a can last as long as 12 years. refundable credit, which means a check is written even if there is no Commercial Rehabilitation Tax tax liability. Abatement: This is basically an extension of the Obsolete Property New personal property tax Rehabilitation Act. It is designed abatement: This 1998 law allows local to encourage reuse of commercial governments to exempt personal property, but does not require that property (equipment) investments property be blighted. Enacted in from the full millage rate in local 2005, this program freezes property communities. The amount and taxes on qualified properties at preduration are not restricted by law. rehabilitation levels for as long as 10 years. Renaissance Zone Act: This 1996 law established about 20 Renaissance Film tax credits: Enacted in 2008, Zones in which businesses in those Michigan’s film tax incentives offer zones are exempt from virtually all refundable MBT credits of up to 42 percent of the cost of producing films state and local taxes.

Boar’s Head uses grants to add jobs BY MYRON KUKLA THE GRAND RAPIDS PRESS

HOLLAND TOWNSHIP—Juan Hernandez felt lucky when he got a job with Boar’s Head Provisions Co. seven years ago. “It was a good stable job in a company that was growing,” said Hernandez, who started as an hourly worker and is now leader on the turkey deli meat processing line. Married with two children, Hernandez knows his ability to move up comes from hard work and the company’s growth the past five years. “I know we have gotten state grants that keep the company in Michigan and growing,” said Hernandez, who lives in Pullman. The company expanded in 2005 and 2008, with state help. It received a Community Development Block grant in 2005 and a MEGA tax credit in 2008, together worth $3.5 million. It also received a 50 percent property tax abatement on the new construction from the township. Boar’s Head invested more than $34 million in infrastructure, property and equipment, according to a

200 jobs in that category range, with new hires starting at $10.95 an hour. “We started production in 2000 with less than 100 employees and today we have nearly 700 working here,” said Director of Manufacturing Chris Anthrup. Anthrup had worked for Tyson Foods Inc., which operated a chicken processing facility at the plant until the late 1990s. He recommended Boar’s Head consider buying and reopening the facility there after Tyson closed the plant, laying off 600. PRESS PHOTO/JOEL HAWKSLEY “We’ve been very pleased with the Sold locally: Boar’s Head plant manager Ross Rubley says the MEDC, state grants and tax incentives that have helped us expand and crecompany’s meats are available here, “but our main market is mom and ate more jobs over the past 10 years,” pop (delicatessens) up and down the eastern seaboard.” Anthrup said. grant-closing report filed by the com- Township Manager Don Komejan The plant is owned by the Sarasota, pany in May with Holland Township, said. “The incentives help neutralize Fla.-based Boar’s Head Provision Co., which acted as the grant petitioner some of the costs of doing business a privately owned company started in and administrator. that are greater here.” 1905 as a specialty meat company in The first expansion was forecast to New York City. With the expansions, the plant proThe company has about 2,400 emduces about 2 million pounds of roast create 232 jobs and in fact created 238 beef and corned beef for U.S. markets jobs. More than 200 jobs came with ployees in the U.S. Products include weekly. It also produces the compa- the second phase, in 2008. As part of turkey, beef and ham deli meats, ny’s top selling Ovengold Turkey. the agreement, Boar’s Head promised prosciutto, capicola and salami and “In Holland Township, we believe 51 percent of jobs would be for low American and European cheeses, the state and local incentives help to middle-income wage earners. The mustards, horseradish and barbecue attract and keep companies here,” company actually created more than sauces.

A11

WHAT THEY’RE SAYING What key players say about tax incentives: “MEGA credits were a significant factor in our decision to relocate here. While broadbased business relief would be the best approach for Michigan to stay competitive, in the current environment and given competing rebates in other states, the MEGA credits play an important role.” — John Mooney, Haworth Inc. vice president of global finance “To do away with tax incentives when times are tough is like saying ‘Let’s lay off the salesman.’ If we can’t offer an incentive, at what risk do you put the company and our city?” — Kentwood Mayor Richard Root “It would be more effective to have a lower tax for all businesses, rather than giving out special breaks.” — State Rep. David Agema, R-Lowell “Tax incentives do work. I came here to do one movie, and I haven’t left.” — Randall Emmett, Los Angeles filmmaker and founder of Grand Rapids Films & Services “I think any company that has paid taxes on an ongoing basis should not subsidize its competitors. To me that’s not good government. Government shouldn’t be in the business of providing subsidies.” — John Koegel, president of Koegel Meats Inc., Flint “MEGA has been an important part of the state’s ability to compete for new business investment. It would impair the ability of the state to compete if it were weakened.” — Jay Biggins, executive managing director of BLS & Co., a site selection firm in Princeton, N.J.

MORE  Nancy Crawley column: Tax credits hold the employer’s feet to the flame to deliver jobs, but that detail gets lost in the debate over government handouts. Business, G1

COMING MONDAY What will our next governor have to do about incentives?

COMING TUESDAY Join the conversation with two leading voices for and against tax incentives on a MLive.com chat at 12:30 p.m.

ABOUT THIS SERIES JANUARY What will it take to get Michigan working again? FEBRUARY Is it time to pay the toll for roads? MARCH Is selling natural resources a solution? APRIL Tax changes could eliminate our deficit, but at what cost? MAY Time to take some communities off the map? JUNE Can our cities ever be cool? JULY Do tax incentives bring new jobs? AUGUST Do we need 553 school districts? SEPTEMBER Are labor unions the problem? OCTOBER Time to tear up the state constitution?

0718-Mi10-TaxBreak  

Most tax credits never lead to jobs 59% 29% 12% Companies that achieved or exceeded total new jobs Companies that only met the minimum jobs...

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