The decision to give away more than $100 million in corporate welfare to lure Electrolux to set up shop in Memphis was so bad it was “the worst such deal in Tennessee history,” according to Bloomberg.com.
In an article released this week, the national financial news website held nothing back criticizing the deal.
As The Tennessee Star reported last month, Electrolux officials announced they will shut down their Memphis plant sometime next year, despite taking all that money from Memphis, Shelby County, and the Tennessee governments eight years ago. The Memphis Electrolux plant employs about 530 people, all of whom will likely lose their jobs when the plant closes.
Despite that, Bloomberg said this disaster still won’t stop other government entities from handing out even more subsidies in the future.
Bloomberg opinion columnist Joe Nocera interviewed Tennessee Department of Economic and Community Development Commissioner Bob Rolfe for his piece.
“When I mentioned to Rolfe the idea — much favored by academics and journalists — that perhaps communities should stop offering subsidies to lure (or keep) companies, he laughed,” Nocera wrote.
“That would be unilateral disarmament,” Nocera quoted Rolfe as saying.
Nocera then opined that “it’s foolish to think that subsidies for corporations are going to go away.”
“It doesn’t even matter that most companies, from Amazon to Electrolux, don’t really need the subsidies. Executives who are looking to expand will always pit one city against another to get the best deal possible,” Nocera wrote.
“The best taxpayers can hope for is not that their city will refuse to offer subsidies — and lose the jobs a company could have brought — but that it will offer deals that make sense given the benefits the city expects to receive. And that will allow the city to recoup some of that subsidy if the company underperforms. For all the furor about subsidies, the good news is that cities and states are getting smarter about it.”
As The Star reported, Electrolux officials plan to consolidate all U.S. cooking manufacturing into an expanded facility in Springfield, Tenn.
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.
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.
As of 2015, Electrolux Memphis had 910 hourly and salaried employees and 483 contract employees.
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.