Handouts for green field manufacturing are common as states look to lure investments and jobs to their home turf, but the challenge has always remained over how, and if, they can hold these businesses accountable for providing what they say they will.
New York’s Syracuse.com recently reported on a situation guaranteed to draw the ire of any state resident who’s paying attention. According to the report, the development arm of SUNY Polytechnic Institute had worked out a deal with an LED bulb manufacturer out of California – Soraa – to build a factory for them in the town of DeWitt.
The deal was pretty sweet. Soraa would be able to lease the factory for ten years for a paltry $1 per month and, in exchange, they’d create 250 full time jobs and “encourage Soraa contractors and suppliers to create another 170 jobs in Central New York.”
The deal included $90 million in state funds to build the factory, but what it didn’t include was any money from Soraa, or any requirement that they actually occupy the factory or create the promised jobs.
My guess is you can see what’s coming…
In October, Soraa asked the state to add tens of millions in investments to help equip the nearly completed facility. When New York declined, Soraa said ‘see ya!’ and walked out on the deal, abandoning the state-of-the-art factory it had invested nothing in and slinking back to California having created none of the promised jobs. New York’s state development arm called the decision “mutual.”
Luckily, the state appears to have landed another tenant, though it now needs to spend an additional $15 million to equip the plant with tooling for the new manufacturer. This time the agreement is a little more ironclad, and NexGen Power Systems – a producer of semiconductors – will invest $40 million of its own money into the project and be required to return grant money if it doesn’t reach its hiring goals of 290 full-time, high tech jobs.