The City of New Orleans and its business partners sit on one of the leading Ports in the United States for import and export traffic that moves through the Port of New Orleans. Because of this location, manufacturing companies enjoy a lower transportation cost to move their raw and finished products due to water, rail and truck transportation available at their fingertips. That is a huge advantage over inland manufacturing plants that have no access to cheap water transportation and must pay higher rates for rail and truck service.
Yet, some companies that are here and want to expand and other who might express interest in locating here look for handouts from the government in the form of tax rebates, financing and other incentives. The latest is Folger's Coffee Company who announced they will expand production and capacity at its New Orleans manufacturing plants and distribution located on old Gentilly road and Chef Menteur highway. In an article by Jaquetta White, business writer in the Times Picayune of March 25 reported as follows.
The company will receive almost $6 million in incentives from the state as part of its plan, that includes a $2.1 million refundable state tax credit for capital investment. The performance based incentives would require that the company retain both its 450 current jobs and the 120 additional jobs it is projecting and increase its payroll from $26.1 million in 2011 to $31.2 million in 2020. Folgers must also make its capital improvements by December 31, 2012.
The parent company of Folgers, the J.M. Smuker Company said the move to expand in New Orleans was part of a plan to cut cost and improve long term efficiency nationwide. Plant closures would take place in Sherman, Texas and Kansas City, Mo. Maribeth Badertscher, Smucker spokeswoman said, the Missouri plant is located in multistoried downtown Kansas City, a landlocked area, while the Texas location just does not have the desired supply chain benefits.
Badertscher also said, because New Orleans is where the coffee beans come in there's significant supply chain savings in having our manufacturing factory there instead of transporting beans for manufacturing. New Orleans also has our largest facilities that can accommodate future growth. There are expansion opportunities.
So here we have a spokeswoman for the parent company of Folgers talking about the natural advantage their plant at New Orleans has over their other facilities and that New Orleans is the place to be. Expansion is no problem at the facility here and there is significant supply chain savings in having their plant here. Yet, they will receive from the state $6 million in incentives. All at a time when the governor is cutting health care, higher education and other area's because of a short fall in state revenues. Another give away to business at a time of state budget deficits, loss revenue, increases in college tuition and other fees. And $6 million of tax payers money for a company who is logistically and economically situated in an area where they should be.
The give away makes no sense concerning this particular expansion. Our political leaders and Folgers leaders should be ashamed of themselves. Is there any wonder why the $1 billion surplus left by the previous administration has vanished.
2 comments :
When governments give up revenue its always bad news for the average citizen because they are the ones who are most affected by budget cuts. A business can always get along without government incentives because the tax structure is geared in their favor. Plus businesses have more resources and options.
There may be times when governments should help business but there should be strings attached. Any financial help should be paid back to the government and taxpayers.
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