Update on Inside Story about General Dynamics Corporate Welfare

On the Skowhegan bridge here in Maine over the weekend - even the snow creatures are not pleased with the plan to give $60 million to General Dynamics

We are still waiting for a bill number to be assigned to the corporate welfare bill in Augusta that would give $60 million to the well-endowed General Dynamics Corporation - the 5th largest weapons company on planet Earth.  The sausage making process seems to be a bit slow - maybe the growing public push back has forced bill sponsors Rep. Jennifer DeChant (D-Bath) and Sen. Eloise Vitelli (D-Arrowsic) and General Dynamics lobbyists back to the drawing room table.

One critic wrote me today about the $60 million corporate gift from the very poor state of Maine and said:

If you take the statements made by General Dynamics' brass over the years to their logical conclusion, they are essentially positing that Bath Iron Works is not a viable business without the assistance of Maine taxpayers, which is essentially a ludicrous claim, right?

This is a quote from then CEO Nicholas Chabraja in 1997, as reported by the Portland Press Herald:

''When we first analyzed the modernization as a standalone investment by General Dynamics, we found it didn't make economic sense for either our company or our customer, the Navy,'' he said. ''But, when BIW management proposed teaming with the state of Maine and the city of Bath, it became a plausible, sensible and affordable plan that benefits everyone.''

So, are we to believe one of the largest shipbuilders in the country is not a feasible business without subsidies from the state of Maine? Why on earth then would General Dynamics purchase BIW in 1995 if it were such a shitty company? (Pardon my French)

In addition we've learned that a report prepared for the state of Maine has recommended to get rid of this Shipbuilding Tax Credit because it is not the best way to encourage economic development.  The report concludes:

In its January 2016 comprehensive evaluation on behalf of the Maine Department of Economic & Community Development, Investment Consulting Associates recommends the following course of action be taken on the tax credit, which was tailored in 1997 to specifically benefit the Bath shipyard:

“Eliminate Program or significantly alter it so that it applies to a broad selection of Maine’s shipbuilding community.”

Page 68 of the report goes on to point out that the credit “only applies to very large shipbuilding facilities with more than 5,000 employees…[that] make more than [a] $200,000,000 investment.”

The 2016 recommendations are consistent with suggestions previously made by the consulting firm, which provides analysis biennially to the state.

In a 2014 report, analysts suggested state officials eliminate the shipbuilding facility credit, and modify their economic development strategy to focus more on helping a wider range of businesses.

“[P]rovide a series of programs that are available more broadly and which may be utilized by companies who are looking to start up, grow, or locate in Maine, regardless of industry or technology sector,” the report advised.

 So the bottom line is that the state has repeatedly been told to focus their economic development efforts on small business where tax subsidies would have more job growth impact.  The facts reveal that even though General Dynamics (GD) has received $200 million in tax subsidies since 1997 from Maine they've reduced employment at Bath Iron Works (BIW) largely because they used the money for modernization and mechanization.

Translation means the state has subsidized BIW/GD to cut their work force.  People should be alarmed to hear that news.

Please be sure to contact your state representative and state senator about this bill.  https://mainelegislature.org/

Bruce