Race for Saturn Factory a Case of ‘Avaricious Corporatism’

Sometime this month, General Motors assures us, a decision will be announced regarding the location of the Saturn small car factory. For hundreds of local, state and other booster groups, the 7-month period of frantic bidding and anxiety will be replaced by a deep disappointment — except, that is, for the town and state that is chosen.
Forty-eight governors made presentations beseeching the Big Company to come to their state with the new plant. Half of these governors, with their bidding teams, traveled to Detroit to meet either with GM boss, Roger Smith, or other high GM executives. For a plant that would employ, at the most, 6,000 workers, these government officials were very generous with other taxpayers’ money. They offered this richest manufacturing company in the world free land, cheap loans, cash outlays, free worker training, and massive tax abatements. By mid-June, GM President James McDonald acknowledged receiving a thousand proposals. Flint, Michigan put together by itself a package worth $540 million to lure Saturn.

The press is fulsome in its description of the benefits to any community that lands Saturn, but far less informative on the costs. Those elaborate state incentive packages being sent to Detroit spell one word: subsidy. If the Saturn plant gets low-interest loans, free land and other corporate welfare payments, other taxpayers and citizens pick up the difference or suffer the deterioration of community services. If Saturn pays very little property tax, homeowners and other businesses will pay more unless they want, for example, smaller school, health, road repair, firefighter and police budgets in their town.

There is another dark side to Saturn than the plain unfair­ness inflicted on small people by the large and wealthy auto-maker. That side can be called induced censorship. Why is the Michigan Congressional delegation so fearful of expressing any criticism of GM, even if they thought such comments deserving, I asked the good Representative Howard Wolpe (Dem., Michigan)? They’re all waiting to see where Saturn is going to be situated, he replied. Speaking with the powerful Chairman of the House Ways and Means Committee, Dan Rostenkowski (Dem., Illinois), I learned he was quite upset about the way corporations are dangling proposed plants before states to get the latter into a bidding frenzy. Would he consider hearings on this subject, I asked? Not until after the Saturn decision, he replied.

Michigan Governor James Blanchard’s office promised us an interview about Roger Smith and General Motors that we requested. It kept being postponed. Now the Governor’s aide tells us the real reason for the delay: no interview until after Saturn. Blanchard and the state legislature have enacted legislation designating a special, tax-reduced “enterprise community” for “an automobile manufacturing facility…which facility is projected to employ not less than 5,000 people.” There has been no comment on how these lawmakers are going to respond to many other industries which may start to demand comparably favored treatment as GM would receive.

On April 17th, Iowa Governor Terry Branstad assured me that the package Iowa is offering for GM’s Saturn factory is available to any business that chooses to locate or expand in his state even if it creates just one job. In that case, I wrote him on May 17th, please send me the details of the Saturn package. Brandstad has not chosen to reply.

Saturn is casting a more immediate shadow over many states as a political club. GM is swinging the prospect of Saturn in many directions to get states to pass laws that reduce its workers’ compensation and unemployment compensation insurance costs and grant other company objectives. Otherwise, the lawmakers are warned, their state may be dropped from consideration for Saturn. Senator John Danforth (Rep., Missouri) made mention of this side of Saturn at a Congressional hearing on auto safety in February. This use of Saturn partially accounts for the repeated postponements of the decision from April to July. The other reason is that as one state bids higher than the others, GM wants more time to get others to up their subsidies.

The issues raised by Saturn go beyond its direct unfairness, its censoring influence and its use as a mechanism holding states hostage to GM’s demands. The more consequential issue is how many other large corporations are going to do the same thing to our country if there is not a public revulsion against this kind of avaricious corporatism.