By Staff
A year later, layoffs
It was just about one year ago that state legislators convened a special session to consider whether or not to override a gubernatorial veto. The General Assembly had passed a bill that would have had the state pay for a portion, about $40 million worth, of the cost of upgrading a Goodyear tire manufacturing plant in Fayetteville. Unlike the most recent special session on big boats in which the governor’s veto was overridden, last year the General Assembly and the governor struck a compromise. The final agreement yielded a bill wherein the subsidy to Goodyear was reduced slightly to $24 million, but a company that hadn’t even asked for a subsidy (Bridgestone-Firestone) also received a state subsidy worth $22 million for its plant in Wilson.
Now comes word that, only a year later, Goodyear has announced temporary layoffs of the 3,000 Fayetteville plant workers because of the slumping economy’s effects on sales. The layoff should only last a few weeks, and workers will be paid most of their wages. But isn’t this supposed to have been a strong company that was planning to invest and grow its presence in North Carolina? That’s what company representatives and lobbyists claimed last year when they asked the state for support.
The subsidy agreement marked the first time that the state succumbed to threats by a corporation to move jobs out of North Carolina. One key element of the debate over the subsidy at the time it was passed concerned the fact that Goodyear would be allowed to reduce employment at the Fayetteville plant and still receive a subsidy, although the prospect of temporary layoffs was not addressed.
The recent announcement of temporary layoffs at the Fayetteville plant is another signal that government should not be in the business of picking winners and losers in the private economy. The appropriate role for government in the private economy is to provide infrastructure like good roads and clean water, as well as law enforcement and a healthy and educated work force for private businesses to tap into. Investing directly in private corporations, particularly ones that are not growing, is risky business best suited to private investors who are risking only their own capital.
The irony inherent to the practice of subsidizing specific corporations is that the state is almost assuredly propping up and supporting many companies and industries that are not destined to survive in the long run — at least not in current form. Most thriving companies and industries do not need or seek government handouts. It is not the job of public officials to predict which corporations will survive and grow over time. It is their job, however, to provide the high quality public services that enable all businesses to compete.
Let’s hope that as we go forward, the recent news from Goodyear reinforces this simple and straightforward message: the best way for public officials to help business is by sticking to theirs.