Manistee's MasTech Promised Green Jobs, Took Green Money, Gave No Mas Jobs

[XLFD]

Many regular people are finally getting the idea that corporate welfare just doesn't work.  We've looked at the problem locally here at the Ludington Torch with the Mason County Growth Alliance and their pet projects one of which was to take several million dollars, reconfigure a natural area just out of the city as a new industrial park, and then watch it sit idly for years and years as an almost completely vacant industrial park.  The uneven playing field corporate welfare (grants and abatements) poses by effectively using public funds to prop up certain businesses over others in the community has been challenged by me since I've embarked on my speaking tour at the city council.

Manistee has recently been flimflammed by a company named MasTech who came into the city promising quite a bit of jobs and a lot of potential.  Were those promises made in good faith with the people of Manistee County or were the made in order to secure millions of dollars in public funds by the company?  Some of those funds never materialized, a Federal program rejected the possibility for up to a couple of million dollars; however, a block grant from the Michigan Economic Development Corporation (MEDC) for $400,000 did.  

                                                MasTech Operations Manager Holcomb standing beneath a Windspire

Along with the Strategic Development Fund (SDF), the MEDC sends millions throughout the State of Michigan for 'economic development', with the express purpose to enhance the pot for companies who want to establish businesses in Michigan.  Some of these grants are applicable if they establish their operations in non-traditional business areas like the west Michigan shoreline.  For every success story achieved by the use of millions of tax dollars to get these companies started up, there are tens of failures achieved by the use of tens of millions of dollars.  Mas Tech was one of those failures, though not completely so since they still have around a dozen full-time employees at last count.  Here is their story.

I must give a lot of credit for this story from Real Manistee, a Facebook-based watchdog group from Manistee (Facebook: Real Manistee).   They related most of the timeline of events as gleaned from the City of Ludington Daily News (COLDNews) and the Manistee News Advocate newspaper archives.  I have attempted to flesh out the sequence of events by linking to the appropriate COLDNews articles and introducing a couple of fresh sources and revised job goals and tallies.  When there is no link or source After the timeline there is brief analysis and interpolated statistics for the reader's reference. 

But first, an introductory video featuring Governor Granholm and a few other local politicians of the past telling us about all the jobs and tax abatements used here.

CASE STUDY: How Michigan Economic Development Corp (MEDC) & MasTech wasted Michigan money and fooled Manistee residents--

(NOTE the change in employment numbers and that the City gave MasTech a tax abatement from Dec. 31, 2008 through Dec. 31 2012.)  The grant was issued in 2008 with certain stipulations that had to be met. Manistee Alliance for Economic Success (AES) director Cyndy Fuller informed the commissioners that everything was done to meet the requirements. "One of the stipulations of the grant was they had to hire 51 percent of those employees from low to moderate income people, and they did meet that goal." She said they will be filling out the proper paperwork, and reporting it to the state over the next several weeks.

2008

August 25 - At a recent city council meeting, an industrial development district was approved for MasTech Manufacturing at 100 South Glocheski Dr., in Manistee. This designation is part of a two-step process toward getting tax abatement for the purchase of machinery and equipment. This was all part of an incentive package for Mariah Power. This deal is expected to bring 41 jobs to Manistee in the first year, 27 in the second year, and 48 in the third year.

In this Sept 12, 2008 UpNorth Live report,  MasTech Operations Manager Holcomb says:  "projections are that MasTech would add 40 jobs within the next six months.  As we continue to ramp up the volume as the sales warrant it, which right now it appears they do, this could mean in 3 years an additional 120 jobs or maybe more here in the community."  He added " "We need (the MEDC $400K grant) in order to be able to borrow the additional private funds so we can at least get this project off the ground."

Sept 17- MasTech Manufacturing will create 40 immediate jobs, and over a three-year period that will expand to 116 jobs that will be added to the local economy. One of the things in the CDBG grant application is that 51 percent of the jobs will go to people who are presently in low-to moderate-income levels.

Oct 2008 News Release from Governor/MEDC:   A $400,000 grant is being made available by MEDC.  The project is expected to create 141 new jobs and $1.8 million in new capital investment.  Manistee-based Alliance for Economic Success Executive Director Renee Ihlenfeldt said.  "This partnership between Mariah Power and MasTech is a win for everyone, Mariah Power, MasTech, Manistee County and the state of Michigan.  Mariah Power has teamed with a best-of-class manufacturer, and northern Michigan is getting in on the ground floor of a new leading-edge industry.  We will celebrate this win and immediately look for ways to leverage this industry to bring additional business and jobs to our area."

December 17 COLDNews- MasTech will not pay local taxes for five years on machinery it buys. The company’s tax abatement would last from Dec. 31, 2008 through Dec. 31 2012. …company officials expect to have 116 full-time employees by September 2011. MasTech submitted a list of $3.7 million of projected equipment purchases over the next six years and the total loss of $213,000 in tax revenue during the five-year tax abatement, with $114,000 of that lost tax revenue attributed to the city. Michigan Economic Development Corp. reached an agreement with MasTech before the company received (the) $400,000 grant and the agreement calls for the company to create at least 68 full-time jobs by Aug. 31, 2010.

2009

January 13 - MasTech representative, Mr. Holcomb has said up to 125 new workers may be hired at the Manistee plant during the next three years.

March 27 COLDNews article - MasTech is currently operating with 20 employees and Holcomb expects to hire another 20 in April. He has previously said the company will have 116 full-time employees by September 2011, but changed that projection Thursday. “The 116 may come sooner than that,” he said.

July 28, 2009 COLDNews Article:  Holcomb said. “We were down to fewer than 10 people and things were looking bleak. But when we partnered with Mariah Power to make the Windspire, everything turned around for us. Our 30 employees are making 150 Windspires a month now, and we’re still growing. Renewable energy has made these jobs possible for these former autoworkers, and with this plan, there’s no place to go but up.”

August 12 - Tim Ervin appeared before the committee on behalf of the Alliance for Economic Success (AES) to lay out what was being applied for with this grant from MEDC. Ervin said the funds will allow for future expansion at the Manistee MasTech site.
"This would be used over five years and the funding would allow them to purchase equipment that would ramp up production and create 382 new jobs," said Ervin. "You will recall we earlier received a $400, 000 MEDC on Sept. 16, 2008 that was instrumental in creating 41 jobs for them." Ervin said production has really taken off on the Windspires. This grant would allow them to expand it even more, and create many new job opportunities in the process. "They started with about eight to 10 employees and are up to about 30 right now. They expect to be at 40 to 41 employees by the end of the year."

In a Dec 2009 Free Press update they note, "From a high of 43 employees, MasTech is down to 35, many of whom worked in the auto industry."   At this point Governor Jen Granholm touted the facility on Meet the Press.

Governor Granholm (8:10 in)  "Part of the stimulus allowed for us to reconfigure our whole training system and it made something like 'no worker left behind' for us, where people are being trained for specific emerging sectors in the economy."  

2010

In this Jan 2010 article in Crain's Detroit, Holcomb said:  “We have been building 65 to 100 wind turbines per month, and we expect by the middle of next year to produce 250 to 300 per month, which is the capacity of our plant.  The demand for small wind turbines nationally and in Michigan is expected to allow 46-employee [16 of those in Sterling Heights] MasTech Wind to hire another 250 or more workers over the next five years."

February 11 - Mastech Manufacturing’s Manistee plant is currently shut down while the company works out a dispute with its partner, Mariah Power. The Manistee plant employed 27 workers before the recent shutdown. Mastech Operations Manager John Holcomb had said the state government put together an incentive package for Mariah if it would build in the brownfield of the industrial park. He said the brownfield incentive is for 12.5 percent of the company’s investment up to a total of $1.4 million in tax credits.

March 19 COLDNews article- The plant is currently operating with 16 employees, however it hit a low in January when only four people were working. In Holcomb's six years at the Manistee location, the most employees he's had was 39. He said his personal goal is to have 100 employees in the plant by the end of next year, which will create a need for three shifts.

April 8 COLDNews Article - Mariah Power has changed its company name to Windspire Energy. The Manistee plant had an employment high of 28 but had to lay off workers during the winter. There are now 16 or 17 people working there again from a low of three in February.

2011

No newspaper articles could be found for the entire year. Grant application says 116 full-time employees by September 2011.

2012

January 16 - Closure of $400,000 Michigan Community Development Block Grant (MCDBG). Manistee Alliance for Economic Success (AES) director Cyndy Fuller: “At their peak, MasTech employed 27 people and they still employ 13 people right now.”
 

FINAL ANALYSIS:  The black line in the graph is the actual annualized employment garnered through the news sources, the other lines are various projections of jobs by the MasTech staff and Economic Development staff made at various times.  The difference is noticeable, and yet not unexpected when you consider the government grants that had been at stake.

[Willy]

Nice work X. Multiply Mas Tech by thousands and we have only a drop in the bucket of Government waste of our tax dollars. Ludington's own money pit, Consumers wind monsters, is a perfect example. It took tax dollars to get it going, tax dollars to pay off bribes, tax dollars to build it and more tax dollars to keep it running. When will it ever stop?

[XLFD]

Never, unless we start getting people seeing that big government is not the solution and candidates to run that will hold this as their objective.  Ray Franz has ran as a "conservative republican" in the last four elections, the last three successfully, but in his four plus years of legislating he generally follows the party line which has been led by Snyderites and moderate forces, which have been content in raising revenues and government power-- likely because the Republicans in Michigan are in charge, and benefit therefrom. 

Most people don't vote Republican just to see their taxes go up and their new laws become even more onerous, that's what we have Democrats for. 

[shinblind]

Shame on the Ludington Daily News and the Manistee News Advocate for not following through on this.

Hell of a thing when  private citizens have to do the job that real small town newspapers used to provide.

I guess they are too busy patting themselves on their backs for winning some phony "award" as opposed to

rolling up their sleeves and doing any real reporting. 

[XLFD]

The COLDNews and the Manistee News Advocate are both just small parts of two much bigger corporate media.  The MNA is part of the Pioneer Group, six papers through northwest lower Michigan based in Big Rapids.  The COLDNews is even more impersonal and remote, being part of townnews.com which has news concerns in all 50 states.  Controversy over complex political ideas like 'economic development' doesn't originate in such petri dishes as this very often. 

The Mackinac Center for Public Policy, a conservative think tank group from Michigan, consistently hit this topic with common sense and research showing the almost incontrovertible truth that corporate welfare doesn't work and is a waste of tax dollars.