One step forward, one step back

One step forward, one step back

Partnerships between government and private enterprise have mixed results.

Last year, the city council in Champaign approved a $3.6 million property tax rebate to assist Kraft's plans to build a $38 million, 760,000 sq. ft. warehouse.

Kraft contended that the extra warehouse space would help preserve existing jobs and attract news ones to its North Mattis Avenue facility.

Last week, Kraft announced company-wide job reductions. It's eliminating its private truck fleet and 285 jobs at 10 company sites, 60 jobs in Champaign.

Is the company's decision to reduce costs by shifting to a private trucking contractor an example of bad-faith negotiating? Or is linking Kraft's trucking layoffs to a warehouse construction plan designed to attract new food lines and new employees mixing apples and oranges?

One certainly doesn't have much relation to the other. But the real lesson here is that governmental decisions to assist private business don't guarantee an entirely happy outcome.

Take, for instance, the city council's recent decision to subsidize to the tune of $200,000 DS Volition's expansion of its downtown Champaign offices. One council member said the decision guarantees that DS Volition will remain downtown for another 10 years. Unfortunately, it doesn't do that at all.

Certainly, everyone hopes that it does, but the German-owned company that purchased DS Volition acquired it in a bankruptcy sale.

It's the marketplace — not elected officials or energetic entrepreneurs — that rules.

Kraft made a business decision to build more warehouse space on the site of the former Humko plant, a construction project now underway. Company officials said the new space will free up existing storage space in its current facility that could be used to pursue new food production lines.

The great benefit to the city — in addition to prospective employment — is that the new warehouse is being built on the old Humko site, cleaning up a blighted area that been vacant for six years and was not of much use to anyone but Kraft.

Business decisions cut both ways. Company officials obviously believe they can reduce costs by contracting out trucking services rather than retaining a fleet of trucks and drivers. It's a tough break, particularly in this economy, for those who will lose their jobs. But the marketplace can be as cruel as it is generous.

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Local Yocal wrote on May 05, 2014 at 9:05 am
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Jobs retained + (distant) future collection of sales and/or property taxes + keeping a "job creator" here in town = good investment by the city to relinquish an immediate tax ??????

At some point, it's nearing time to begin a long-term analysis of these tax breaks, redevelopment grants, liquor licenses, and infrastructure amenities the City negotiates to see if the community is actually benefiting from these "competitive giveaways;" or is the community losing funds that could keep our libraries, roads, police patrols, and fire departments up to date with little to show in increased employment, ect.

The short-term analysis is: it's becoming increasingly frustrating to watch profitable millionaire/billionaire companies demand welfare, threatening an entire community with leaving if not provided, and these same companies then supporting politicians promising to cut entitlements, healthcare, unions for the rest of us in order to lower their taxes. Such hypocrites, these bottom-liners are, in their race to get theirs at our expense.