Mo. governor says state must act quickly to sweeten incentives for Ford Motor Co.

By David A. Lieb, AP
Tuesday, June 15, 2010

Mo. gov. wants special session on Ford incentives

JEFFERSON CITY, Mo. — Missouri must act quickly to sweeten incentives for Ford Motor Co. if it hopes to compete for thousands of jobs making its next generation of vehicles, Gov. Jay Nixon said Tuesday.

Missouri’s governor is building a case for a special legislative session that could allow Ford to receive up to $100 million of tax breaks over 10 years if it updates its Claycomo assembly plant near Kansas City for new model lines.

Additional incentives would be available for Ford’s Missouri-based suppliers of such things as axles, seats and steering wheels.

A similar proposal failed last month on the final day of Missouri’s legislative session when it got linked to a separate bill revamping Missouri’s pension systems. Since then, Nixon said other states — notably Michigan, Ohio and Kentucky — have ramped up efforts to lure Ford’s new product lines.

“It’s clear to us that Ford is making decisions right now,” Nixon told Missouri Capitol reporters Tuesday. “They are in the process of deciding where they are going to retool and where they are going to build existing lines as well as new lines. So we’re in a very tight time frame.”

The Claycomo factory has the second-largest work force among Ford’s U.S. assembly plants, trailing only Louisville, Ky. Most of the factory’s 3,700 hourly workers build the Ford Escape and Mercury Mariner midsize sport utility vehicles, working on three shifts per day. The plant also builds the F-150 pickup truck on one shift.

Ford is phasing out the Mercury brand, including the Mariner, by the end of this year, and workers are worried that it will stop making current versions of the Escape when the 2011 model year ends next summer. At present, the plant has been assigned no vehicle to replace it, said Jeff Wright, president of the United Auto Workers local at the plant.

Ford spokeswoman Marcey Evans declined to say whether Ford intends to stop making the Escape or what new product might go into the Claycomo plant.

The Escape, which far outsells the Mariner, debuted in the 2001 model year and was given a small update for the 2010 model. So far this year, Ford has sold more than 64,000 Escapes, up 43 percent from the first five months of last year.

Nixon is considering calling a special session beginning June 28, if there is bipartisan consensus among lawmakers about the incentives and a means to pay for them.

Although targeted at Ford, the Missouri legislation could apply to any manufacturer. Companies could keep half the Missouri employee withholding taxes they normally would pay, if they invest at least $100,000 per full-time employee on factory improvements for a new product line.

No single manufacturer could receive more than $10 million annually for 10 years. The total program would be capped at $15 million annually. Suppliers to those manufacturers also could keep the employee withholding taxes if they expand their payrolls.

To highlight the “tentacles of Ford,” Nixon traveled Tuesday to a Columbia plant that makes axles for Ford. He also was speaking at a regional chamber of commerce meeting in Kansas City, near the Ford assembly plant.

The auto industry has a $4 billion annual economic impact in Missouri, Nixon said.

But it has been shrinking. In 2006, Ford closed a St. Louis area assembly plant that made sport utility vehicles. Last year, Chrysler closed two St. Louis area plants that produced trucks and minivans, and General Motors Corp. indefinitely shut down one of two production shifts at a van assembly plant in suburban St. Louis.

Missouri House Majority Leader Steven Tilley, R-Perryville, said Tuesday he believes there is a consensus for the manufacturing incentives. But he said private negotiations are continuing among the House and Senate on the pension legislation that would help offset the costs of the incentives. That legislation would require new state employees to start paying money toward their retirements benefits.

“We’re hopeful we can get an agreement this week,” Tilley said.

Associated Press writer Tom Krisher contributed to this report from Detroit.

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