Granholm: Workers will repay tax breaks
February 11, 2003
BY JAMIE BUTTERS
DETROIT FREE PRESS BUSINESS WRITER
With $125 million in taxpayer support, Ford Motor Co. will move production of its Mustang muscle car from the Dearborn Assembly Plant, where Henry Ford once built model A's, to the Flat Rock plant it owns with Mazda Motor Corp.
Even though the state is staring down a $1.7-billion budget shortfall, Gov. Jennifer Granholm said the tax breaks will pay for themselves while helping to create up to 1,400 jobs in southeast Michigan for laid-off UAW members.
Flat Rock will begin building a redesigned 2005 Mustang in summer 2004.
"Michigan is still the No. 1 producer of passenger cars, and we're going to keep it that way," she said Monday.
Granholm said the state's $94.9-million business-tax credit and Flat Rock's $31-million tax break would be repaid with $850 million that would come from the additional taxes paid by the plant's 1,945 current workers, the 1,400 more who would be added and the 6,300 jobs that would be indirectly created by the spending of Ford and its employees.
At $90,000 per job created, the package is typical of what Michigan and other states have offered automakers to build or update plants.
General Motors Corp., for example, received $169 million in incentives to build a Cadillac plant in Lansing, or an average of $112,000 per job it is to create. At Ford's Rouge manufacturing complex, tax breaks totaled $234 million to preserve -- not create -- about 6,000 jobs. That works out to less than $40,000 per job, spread over 20 years.
On Monday, in her first auto-plant ceremony since becoming governor last month, Granholm seemed to enjoy herself. As Wilson Pickett's "Mustang Sally" played, Granholm danced to the stage and joked with Ford's North American President Jim Padilla that a Mustang would make a nice birthday present.
While widely expected, the news comes at a time when other one-shift plants are being closed for lack of use.
Ford is trying to shut three assembly plants and eliminate 21,500 jobs in North America after losing $6.4 billion in 2001 and 2002.
But it is also investing $8 billion in plants and equipment this year. About half of that -- $4 billion -- would be spent in North America, Padilla said. The Mustang investment totals $644 million.
For almost 39 years, Mustangs have been made at the historic Dearborn Assembly Plant, which will be torn down as part of the $2-billion Rouge Center redevelopment. The new truck plant there will begin making F150 full-size pickups in mid-2004.
Ford considered building the Mustang at two or three other sites, including at least one outside Michigan, said Roman Krygier, the automaker's group vice president for manufacturing.
The plant in Flat Rock, a Downriver community, belongs to Auto Alliance Inc., a joint venture between Ford and Mazda. Ford controls the Japanese car company.
The plant was nearly home to the Mustang 15 years earlier. In the late 1980s, when the Flat Rock plant belonged to Mazda, Ford planned to redesign the Mustang as a front-wheel-drive coupe and assemble it on the Mazda line.
Mustang fans complained that their icon was being defiled, and Ford called the Flat Rock model the Probe.
"It worked out for the best for everyone," said plant President Ron Muir, who has been at the plant since it opened in 1986.
(Photo)JEFF KOWALSKY/Bloomberg
Jennifer Granholm drives Ford North American President Jim Padilla around at the auto-plant ceremony in Flat Rock on Monday. Mustangs will be made there in 2004.
February 11, 2003
BY JAMIE BUTTERS
DETROIT FREE PRESS BUSINESS WRITER
With $125 million in taxpayer support, Ford Motor Co. will move production of its Mustang muscle car from the Dearborn Assembly Plant, where Henry Ford once built model A's, to the Flat Rock plant it owns with Mazda Motor Corp.
Even though the state is staring down a $1.7-billion budget shortfall, Gov. Jennifer Granholm said the tax breaks will pay for themselves while helping to create up to 1,400 jobs in southeast Michigan for laid-off UAW members.
Flat Rock will begin building a redesigned 2005 Mustang in summer 2004.
"Michigan is still the No. 1 producer of passenger cars, and we're going to keep it that way," she said Monday.
Granholm said the state's $94.9-million business-tax credit and Flat Rock's $31-million tax break would be repaid with $850 million that would come from the additional taxes paid by the plant's 1,945 current workers, the 1,400 more who would be added and the 6,300 jobs that would be indirectly created by the spending of Ford and its employees.
At $90,000 per job created, the package is typical of what Michigan and other states have offered automakers to build or update plants.
General Motors Corp., for example, received $169 million in incentives to build a Cadillac plant in Lansing, or an average of $112,000 per job it is to create. At Ford's Rouge manufacturing complex, tax breaks totaled $234 million to preserve -- not create -- about 6,000 jobs. That works out to less than $40,000 per job, spread over 20 years.
On Monday, in her first auto-plant ceremony since becoming governor last month, Granholm seemed to enjoy herself. As Wilson Pickett's "Mustang Sally" played, Granholm danced to the stage and joked with Ford's North American President Jim Padilla that a Mustang would make a nice birthday present.
While widely expected, the news comes at a time when other one-shift plants are being closed for lack of use.
Ford is trying to shut three assembly plants and eliminate 21,500 jobs in North America after losing $6.4 billion in 2001 and 2002.
But it is also investing $8 billion in plants and equipment this year. About half of that -- $4 billion -- would be spent in North America, Padilla said. The Mustang investment totals $644 million.
For almost 39 years, Mustangs have been made at the historic Dearborn Assembly Plant, which will be torn down as part of the $2-billion Rouge Center redevelopment. The new truck plant there will begin making F150 full-size pickups in mid-2004.
Ford considered building the Mustang at two or three other sites, including at least one outside Michigan, said Roman Krygier, the automaker's group vice president for manufacturing.
The plant in Flat Rock, a Downriver community, belongs to Auto Alliance Inc., a joint venture between Ford and Mazda. Ford controls the Japanese car company.
The plant was nearly home to the Mustang 15 years earlier. In the late 1980s, when the Flat Rock plant belonged to Mazda, Ford planned to redesign the Mustang as a front-wheel-drive coupe and assemble it on the Mazda line.
Mustang fans complained that their icon was being defiled, and Ford called the Flat Rock model the Probe.
"It worked out for the best for everyone," said plant President Ron Muir, who has been at the plant since it opened in 1986.
(Photo)JEFF KOWALSKY/Bloomberg
Jennifer Granholm drives Ford North American President Jim Padilla around at the auto-plant ceremony in Flat Rock on Monday. Mustangs will be made there in 2004.