Electrolux of Memphis, which Took More Than $100 Million in Corporate Welfare, Calls it Quits

Electrolux officials announced Thursday they are shutting down their Memphis plant sometime next year, even though they took more than $100 million in corporate welfare from the city, county, and state governments eight years ago.

The Memphis Electrolux plant employs about 530 people, all of whom will likely lose their jobs when the plant closes, according to The Memphis Commercial Appeal.

In a press release, U.S. Rep. Steve Cohen, D-Memphis, said the “Swedish appliance maker failed to live up to its job-creation promise.”

“I’m very disappointed that the employees of Electrolux learned today that Memphis’ economic development investment in one company’s future apparently won’t pay off,” Cohen said.

“The company’s abandonment of Memphis will mean potential financial hardship for its employees and suppliers, and should result in more careful review of promises made by corporations about local job creation in the future.”

Electrolux officials plan to consolidate all U.S. cooking manufacturing into an expanded facility in Springfield, Tennessee, according to The Commercial Appeal.

The article not did specify why Electrolux officials are pulling out of Memphis, but it did cite unnamed company officials complaining about “challenges they face in today’s global economy.”

Tennessee officials announced in 2011 that Electrolux would receive about $137 million in incentives to set up shop in Memphis where it was supposed to bring up to 2,000 jobs.

As of 2015, Electrolux Memphis had 910 hourly and salaried employees and 483 contract employees, according to The Commercial Appeal.

‘It’s pretty sickening’

Former Republican Gov. Bill Haslam pledged $97 million in taxpayer money to the company, while Memphis and Shelby County officials offered an additional $20 million.

Members of the Beacon Center of Tennessee, a Nashville-based free market think tank, criticized the arrangement and called it “a prime subject” for their 2011 Tennessee Pork Report.

As The Tennessee Watchdog reported that year, some Shelby County commissioners said they had mixed feelings about government subsidizing big business — but they also said they had no other choice but to go along. If they had not, Electrolux would have built their factory elsewhere.

At the time, former Shelby County Commissioner Steven Mulroy, who voted for the deal, said “we should just approve this [proposal] — and hope for the best.”

Mark Herbison, who was then senior vice president for the Memphis Regional Chamber of Commerce, helped persuade most commissioners to vote in favor of the corporate welfare.

“Local support in investment is what we like to call it,” Herbison said.

“If you don’t have that kind of investment from local and state government then you don’t get to sit at the table. This [Electrolux] is a company being courted by states all over the country. This is a competitive type of incentive that communities across the nation are putting on the table.”

Former Commissioner Henri E. Brooks, who voted in favor of the idea, still referred to the deal as ‘a welfare check.’

“This is a welfare check — that’s what it is,” Brooks said.

Wyatt Bunker, meanwhile, was the only commissioner to vote no.

Bunker no longer serves on the commission.

“Government can’t give you anything it doesn’t first take from someone else,” Bunker said to commissioners at the time of the vote.

“When we subsidize things like this [then] we make it difficult for small businesses to create jobs or expand their existing businesses in communities surrounding us. If we vote on our principles then we lose state and federal money. We are either voting on principles or bringing jobs in our community. It’s awkward. Is there a price tag on my principles? I don’t know how I can vote for this and maintain the principles of the free market.”

Bunker made many of the same remarks in an interview with Tennessee Watchdog.

“This is not a Republican or a Democrat problem [of government subsidizing business]. It is a problem that crosses party lines — and it’s pretty sickening,” Bunker said.

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Chris Butler is an investigative journalist at The Tennessee Star. Follow Chris on Facebook. Email tips to [email protected].