Posted by
lobo1776 on Wednesday, February 14, 2007 11:57:16 AM
There's an interesting political powder keg about to blow in Kentucky. Today's Courier-Journal reports that legislators in the statehouse want to enact a bill that would offer incentives to the Ford Motor Company to keep it's two plants operating in Louisville open. According to the report, "Bill would allow more incentives" :"Most incentives that the state offers to businesses are restricted to companies that create or add jobs. But this bill would allow the state to offer incentives to companies that agree to keep existing jobs in Kentucky." Now while that is interesting in itself, here is a more interesting note to consider: "Ford, one of the county's largest employers, recently announced that it lost $12.7 billion in 2006, in part because of lagging sales of sport utility vehicles and pickup trucks. The two Ford plants in Jefferson County make such vehicles, and concerns have been voiced about the factories' futures."
Now, see, I have a problem reconciling all this in my mind. I'm an unabashed capitalist. I strongly believe that capitalism works best when competition is allowed to occur unchained and unfettered by external forces, i.e., government interference. To put in simple terms, if I build a better mousetrap than my competitors, than, in a free capitalist atmosphere, I should expect the lion's share of the profits. Conversely, if I build an inferior mousetrap, I can expect to lose money on the deal. So, when looking at this in the context of true capitalism, certain facts begin to surface: 1). Ford Motor Company, for whatever reason, is losing money on it's sales of trucks and SUVs, and, 2). There are two plants in Kentucky making parts for these pickup trucks and SUVS which means these two plants are losing money and might have to close. The answer to this equation problem is simple: we have a nice farewell party for the Ford Motor plants. As cold and cruel as it sounds, if Ford cannot build a product that will allow it to successfully compete in the market place than it must close until it can compete.
In a true competitive arena this cold, hard fact would become a reality. Now enter the external force, the government. To our professional politicians this crisis boils down to two facts: jobs and unions. According to Gov. Ernie's state Economic Development secretary, Gene Fuqua, this bill would: "attempt(s) to allow Ford to recover enough tax credits and enough wage assessments to maintain their operations in Kentucky if they choose to do certain things." If they choose to do what certain things? Like maybe, make a profit or build something somebody might want to buy? No, that wasn't at all mentioned. Consider this quote from Gabby Bruno, Ford's governmental affairs manager: "All of our government partners are stepping up," she said. "Your programs are more focused on job creation or about profit. Such programs are not applicable to Ford's circumstances because it is not making a profit and wants to retain jobs, not add them..." and, finally, "Until incentives for job retention are added by Kentucky, I'd have to say you're not in the game." Ok, let me see if I understand Ms. Gabby correctly. You are operating a company that is losing money for it's parts plants and you want us to bribe you into keeping these plants open?
I can understand the qualms of our politicians in having to face the prospects of the loss of some many jobs in an election year. Gov. Ernie's chances right now are as low as you can get. The two Louisville plants closing would be the final nail in his political coffin. Gov. Ernie's solution is to earmark $10 million of the so-called $401 million surplus for the training of new Ford employees. Training for what? So they can sit around and drink coffee while waiting for non-existent parts orders to come in from Michigan? It will not matter how many millions he pumps into these two plants. If the mother company cannot generate the sales, then there is no need for more parts.
Of course the Demobats have their own problems. Both plants are union and we all know, the Demobats get their marching orders from the unions. After all, both groups believe in socialism. A level playing field. An economic atmosphere where there is no competition, only government subsidies and entitlements. A euphoric utopia where the unions can push and get unreasonable wage demands and the company won't close because it's protected by the government. Just like the way they do it in good, old, Europe!
A powder keg by definition is something that, when ignited, has a tendency to blow up in your face. Right now the fuse is smoldering. Passage of this legislation will set off an explosion in Kentucky the likes of which haven't been seen in years...