Statement by John C. Mozena, president of the Center for Economic Accountability, on the reported $1 billion-plus public subsidy for a Ford/CATL battery plant in Marshall, Mich.
Either the Marshall site is the best place for Ford’s proposed EV battery plant with CATL, or it isn’t.
If it is, then Michigan’s taxpayers are getting screwed. If it isn’t, then Ford’s shareholders have some hard questions to ask company management.
Was Ford’s decision on where to build this plant changed by the massive proposed subsidy from Michigan’s taxpayers? If it was, then that must mean there was some other, better place in some other state to build the plant from an operational perspective. That would make the Marshall site a lower-quality option, which seems like a poor business decision for an automaker to make for a mission-critical facility like this. That’s something company management should be asked to explain to their shareholders.
But if Ford’s management believes that the Marshall site is the best place for the company to consolidate its battery operations, then why are Michigan’s taxpayers massively subsidizing something that would have happened anyway?
Some may try to argue that there were two or more equally ranked sites and the subsidy was the deciding factor. That’s just unrealistic in the real world, where deeply complex factors like workforce availability and quality, labor costs, regulatory requirements, energy costs, infrastructure quality and so much more factor into these kinds of decisions. In Area Development Magazine’s 36th Annual Site Selector Survey, “state and local incentives” came in eighth in relative importance. For something as complex as a massive battery plant, were all seven other more-critical business factors really exactly the same at some other state’s megasite? (And if so, what does that mean for everything we’ve been told by Governor Whitmer, among others, about how rare and valuable these kinds of megasites are across the country?)
The reality is that Michigan has thrown billions and billions of dollars of corporate welfare at the automotive industry over the past three decades, so much so that there have been years where automakers got more in tax breaks than the state collected in corporate income taxes from all other companies combined. The return on that investment for the state’s taxpayers is that there are 185,000 fewer manufacturing jobs in Michigan today than there were in 1992.
You don’t need to rely on research studies to demonstrate that in Michigan, subsidizing the auto industry is not a way to create jobs and grow the economy. You just need to have been alive and paying attention over the past 40 years.
We can all hope that Ford and CATL do build this factory in Marshall, that it becomes an important part of that local economy and that it’s a highly successful part of Ford’s EV supply chain for decades to come. But those massive multinational corporations can do all of that on their own, because there’s a lot better things that Michigan’s taxpayers could be doing with a billion dollars.
About the Center for Economic Accountability
The Center for Economic Accountability (CEA) is a nonpartisan and independent 501(c)(3) nonprofit organization that works to advance economic opportunity for all by promoting transparency, accountability and free-market-based reform of state and local economic development initiatives across America. Headquartered in Michigan, the CEA was founded in 2018. For more information, visit https://economicaccountability.org/.