State Senator Kills Tax Giveaway to Ford; Bully for Him!
|Great company, but can Missouri really afFord it?|
In January 2009 I purchased $500 worth of Ford stock. It was the first time I ever purchased individual shares of a company, and I did so as a vote of confidence, of sorts. Back then, Ford was trading at around $5 and the company had just announced that -- unlike GM and Chrysler -- it would not take a government bailout.
I appreciated that and figured Ford stock couldn't get any lower than it was. I'd show Ford my thanks and maybe make some money while I was at it. Thus far, it's been a fruitful relationship, with Ford now trading at just over $10. (Yes, I'm rich beyond my wildest dreams.)
Now -- counter to what first attracted me to Ford -- the company is lining up for government aid, asking Missouri tax payers to provide some $150 million in incentives.
The money would go to upgrading the company's Claycomo plant outside Kansas City. Governor Jay Nixon is a big proponent of the aid and last week called legislators back to Jefferson City for a special session to pass a bill to help Ford -- and possibly other automakers in Missouri.
"We suck at economic development," Purgason tells the Post-Dispatch. "Apparently we don't understand that what we've been doing isn't working, and our answer is to keep doing the same thing. That's also the definition of insanity."
I've got to agree with Purgason, even though as an owner of Ford, his effort could impact my bottom line.
Here's the deal, though. It's not even clear that Ford will keep its Claycomo plant in operation regardless of anything the state legislature does. Speculation is rife that the company plans to move production of its Escape SUV from Claycomo to a Kentucky assembly line next year. And Ford has not given any assurances that it will find continued use for the Claycomo plant even if Missouri does give it tax credits.
As I mentioned in a post last week, the state threw $32 million at Chrysler earlier this decade to keep its Fenton plant open. As anyone who's driven by that rusting and shuttered eyesore on I-44 will tell you: "A lot of good that did."
Furthermore, what makes Nixon think that $150 million in incentives over 10 years ($15 million annually) is going to have any significant influence on Ford -- a company whose market cap last year exceed $5 billion -- with a "b"?
As Purgason and other will tell you, that's as "insane" as someone with $500 worth of Ford stock saying he owns the company.