General Dynamics (which own Bath Iron Works - BIW) is embarking on a statewide public relations campaign to ask the state legislature in Maine for a $60 million tax break over the next 20 years for their Navy shipbuilding operation in Bath.
They claim that in order to stay competitive they must have state financial support - what I'd call corporate welfare.
Already over many years General Dynamics has received more than $197 million in state and local tax breaks for BIW. In 2013 BIW asked for another $6 million tax break from the City of Bath. I worked with a small committee that organized a local campaign to oppose the tax cut and in the end a very reluctant city council voted to cut the request in half giving General Dynamics/BIW $3 million. That meant that citizen intervention saved the community $3
million that could be used for other local needs like salaries for firefighters,
police, and for fixing crumbling infrastructure.
Now they dare to come around to an already financially strapped state of Maine with their corporate silver cup in hand asking for another $60 million.
On top of this I recently discovered an article in the Providence (Rhode Island) Journal entitled Defense firms spend big on lucrative stock buybacks. The article reports (as shown in the photo above) General Dynamics spent $9.4 billion buying back its own stocks during 2013-2016.
In the article William Lazonick, an economist at UMASS-Lowell and an expert on stock buybacks says, "I think, as taxpayers, we're being taken for fools. At a minimum, I would have a rule saying, 'You're not getting any subsidies if you're doing buybacks. You're showing us you don't need the money.' "
The article also suggests that buybacks are bad for workers and average shareholders because the real beneficiaries are savvy traders who can time their sales and corporate brass with pay packages linked to stock performance and earnings per share.
In fact the top CEO at General Dynamics, Phebe Novakovic, last year made $21 million ($5 million of which was bonuses). It was Novakovic who accelerated General Dynamics stock repurchases since taking over the corporation in 2013 - so her bonuses are likely due to these fiscal shell games.
Novakovic netted $49 million in take-home pay in her first four years as General Dynamics CEO, with an annual average of 43% of her total compensation coming by way of stock-based pay. So essentially this whole thing is a scam to bleed the taxpayers.
What is most disgusting is how they play one state against another saying that if they don't get more tax breaks in Maine then they can't maintain their operations because a similar shipyard in Mississippi gets tax breaks from their state. So the poor in Maine are pitted against the poor in Mississippi and all the politicians - Republican and Democrat alike - get on their knees and give these thieving corporate pirates everything they want.
Of course some of the politicians get a kick-back too in campaign donations for having played the Wall Street game. It's sick.
General Dynamics, like most weapons corporations, get the vast majority of their operating funds from the federal treasury. The taxpayers are paying the freight from the start. But then the military industrial complex adds another twist – a strategy to extract even more profit from the taxpayers by going to the states and even to small cities like Bath demanding additional tax breaks.
We all should demand that our
state legislators oppose this corporate welfare giveaway. Before General
Dynamics gets anymore state taxpayer dollars they should be required to begin
a transition process to build commuter rail systems, tidal power and offshore
wind turbines to help us deal with our real problem - global warming.
We have the right, and the responsibility, to speak out and demand this nonsense stops now. We are handing a collapsing nation, facing the ravages of global warming, to our children and grandchildren. The least we can do is call upon on state legislators to go to Augusta and say no to General Dynamics. Enough is enough.
Let General Dynamics take back some of the extravagant pay increases and bonuses from their top executives before they come poor mouthing to our already financially barren state treasury.
Bruce
Very well written piece. The CEO Novakovic worked at the Pentagon during the Clinton administration and then passed through the revolving door to the defense contractor. She is one of the few women to lead a major defense firm. Had a meteoric rise in her career. GD stock has performed very well in the past twelve months rising about 16%. It has a market capitalization of nearly $60 billion. As you correctly point out, all of it is basically taxpayer money. It is amazing how our legislators cannot explain such simple facts to their constituents when and if they decide to say NO to such corporate greed. For all the tax breaks they get, the companies should be forced to give back the State's money in the event they close a plant like the BIW.
ReplyDeleteit's paying the corporation for the privilege of working for them. Then there's this consideration, if they want to actually take their crapfest going at another location, like Mississippi, where are they going to find that many steel workers with the requisite clearances to staff the new location? And would that also have the cost-effective deficit of buying the land (trick question, they'll strongarm Mississippi to GIVE them the land and probably pay GD for taking the land), development etc... will that be a lot more bread the corporation would have to pay than the still-not-in-their-hand extorted money they're asking? Will they therefore soak Mississippi with the bill for that as well?
ReplyDeleteBack to the notion of paying for the privilege of working for them, and since there's bound to be a lot of empty in the way of having available labor (with skills, experience and especially clearance) are they going to get as many workers as they can bamboozle into packing up their belongings, families and lives and going to start all over again, just because de massa told them to do it? We have the same position here in Colorado Springs, the workers have to pay municipal fees and taxes but the death mongers have their plants planted right across the city limits? While those of who both live in and pay taxes in Colorado pay their water and drainage fees and the roads leading onto their workplace, police, paramedics and fire protection... We're supposed to feel honored to pay for their stay in our community. It's like Dilbert's boss with the pointy hair giving employees pieces of lint as a reward and calling them Warm Fuzzies. Mall Wart has the employee of the day wear a super hero cape.