Mo. House backs incentives for automakers, other manufacturers that improve existing factories

Mo. House backs new incentives for manufacturers

JEFFERSON CITY, Mo. — The Missouri House endorsed new tax breaks Tuesday that would reward manufacturers for making factory improvements — an attempt to stave off competition from other job-hungry states.

The bill’s foremost target is Ford Motor Co.’s factory in the Kansas City suburban of Claycomo, which employs nearly 3,700 people to build trucks and sport utility vehicles. But the legislation also could apply to other Missouri manufacturers and their suppliers.

“The bottom line is Ford Motor Co. is under a full-out assault from other states with incentives,” said Rep. Tim Flook, chairman of the House Job Creation and Economic Development committee.

“We can’t wear white gloves and pretend that we’re above the competition that goes on between the other states,” said Flook, R-Liberty. “If you want to be above that, your state will be in decline as other states use incentives to cannibalize your existing businesses.”

Ford manufacturing spokeswoman Marcey Evans said Tuesday that there are no plans to shutter or scale back the Claycomo factory, which employs the second largest number of people among Ford’s U.S. assembly plants behind only a Louisville, Ky., factory.

But Evens said she could not discuss Ford’s future production plans for the F-150 truck or the next generation of the Ford Focus and Mercury Mariner, which are produced in Claycomo.

The Missouri legislation — given initial House approval by a 143-6 vote — would allow manufacturers to keep half of the withholding taxes they normally would pay if they invest at least $50,000 per full-time employee on factory improvements for a new product. The incentives could last for 10 years.

Suppliers to those manufacturers also could qualify for three-to-five years of tax incentives if they add at least five new jobs with salaries that meet the industry average and provide health insurance.

The legislation, which needs to pass another House vote to move to the Senate, comes after a bleak decade for Missouri’s auto industry.

In 2006, Ford closed an assembly plant that made sport utility vehicles in the St. Louis suburb of Hazelwood. Last year, Chrysler closed two plants in the St. Louis suburb of Fenton that produced trucks and minivans, and General Motors Corp. indefinitely shut down one of two production shifts at a van assembly plant in Wentzville.

Missouri officials want to make sure the state remains in Ford’s long-range plans.

On Jan. 22, Gov. Jay Nixon and Missouri’s economic development director traveled to Detroit to meet with Ford President and CEO Alan Mulally. Nixon said the purpose was to stress Missouri’s advantages for producing vehicles.

“Over the next few years, Ford Motor Company will undoubtedly be changing various product lines to satisfy consumer demands for next-generation automobiles,” Nixon said in a written statement praising Tuesday’s House vote. “I am committed to working in a bipartisan way to ensure that Ford makes the cars of the future right here in Missouri.”

The proposed tax breaks for manufacturers would differ from most of Missouri’s existing incentive programs by rewarding employers for keeping jobs rather than for expanding payroll. The legislation would allow up to $35 million annually of withholding tax incentives for manufacturing businesses.

To qualify, a manufacturer would have to derive at least 10 percent of its sales revenues from international exports or 20 percent from products sold outside of Missouri. The business would have to continue manufacturing a new product for at least five years. If it failed to comply with the bill’s requirements, a business could have to repay the state incentives with 5 percent annual interest.

Incentives bill is HB1675.

On the Net:

Legislature: www.moga.mo.gov