Friday, April 3, 2009

State Funds Private Auto Supplier Expansions; Same Suppliers are Privy to $5 Bil Fed Bailout

Auto suppliers in mid-March joined the ranks of companies with their hands in the government till, receiving up to $5 billion in financing under a new program from the Treasury Department.
The Auto Supplier Support Program is meant to give “suppliers the confidence they need to continue shipping parts, pay their employees and continue their operations,” Treasury said in a press release.
The program was created thanks to some strong lobbying by the Original Equipment Suppliers Association and other supplier advocacy non-profits.
We notice, though, that in February some of the state’s brightest economic minds got together for the monthly meeting of the Michigan Strategic Fund Board, one more panel that meets with absolutely zero oversight from the media or public. The panel is there to hand out public money, and this group is particularly charged with giving away money from the Community Development Block Grant(CDBG), a federal program that “works to ensure decent affordable housing, to provide services to the most vulnerable in our communities, and to create jobs through the expansion and retention of businesses,” according to its site.
What the Strategic Fund Board decided to do is give away $260,000 to Berrien County in order to help a private company named Harbor Light Metals, an aluminum producer that provides parts to automotive companies, purchase some equipment. The county was excited, of course, because somehow it is sure that Harbor will provide some jobs. Maybe, maybe not. But wait a minute, didn’t we just fork over $5 billion for companies like this? What happened to buying your own gear, making something people needed or wanted, and then using that revenue to pay back the loan you took our to buy the gear?
The item read on the Fund Board’s minute like this: Harbor Light Metals, LLC, located in Benton Harbor, is a minority owned company producing aluminum alloys sold to automotive, industrial and export buying markets. Its major customers include Alcoa, Toyota, and Briggs & Stratton. The Company has the opportunity to diversify their customer base to include aerospace and defense. To that end, the Company needs to purchase additional machinery and equipment, a total investment cost of $709,000. Berrien County is requesting $260,000 of CDBG funds to assist in the purchase of machinery and equipment by the Company in support of this project.
Done deal. Your money. No problem.
Next, the Strategic Fund Board heard the case of Mahle Engine Components, an international concern with a shop in St. Johns, Michigan. It, too, is an auto supplier and a member of the Original Equipment Suppliers Association. Remember, the group that lobbied for the $5 billion auto supplier bailout? It seems Mahle wants to expand and diversify its piston ring production. Is this a sound move given the direction of the auto industry? Not sure, but a private company is entitled to make its own decision in a free market. But the City of St. Johns is so sure it’s a good idea that it asked for $61,400 to build an additional road so that Mahle can embark on its dubious enterprise.
These are small amounts of money in the scheme of things. But it is alarming to see this public money thrown at companies who are already receiving more than they should. We are for tax breaks and concessions in the spirit of economic competition when conditions are right. But they are not right now, and both the private and public sectors need to stick to a pretty tight game plan, and that is to make money on both ends. This handing over of taxpayer dollars is a crime. And that a board such as the Michigan Strategic Fund Board operates with no public oversight is a travesty.

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