Michael Van Beek, Mackinac Center for Public Policy
“Gov. Whitmer wins major economic deals” declared the Michigan Economic Development Corporation in a December 2022 press release. It described a “transformational investment” in Escanaba. State officials had found favor with a Swedish paper company’s plan to expand and awarded it a 15-year exemption from property taxes, worth nearly $30 million.
The Development Corporation praised Gov. Whitmer the next month for signing legislation that gave the company an additional $200 million subsidy. It was called a “historic investment,” a “truly historic opportunity,” a “generational investment” and a “historic transformation” that “will help ensure [the paper mill’s] continued prosperity for generations to come.”
But it never happened. Even with massive taxpayer support, the company canceled its plans to expand in Escanaba. The MEDC canceled its payments to the company and rescinded the special tax breaks.
State experts, the governor and a bipartisan collection of politicians got out over their skis and got this all wrong. But does it matter? The public officials and bureaucrats who heralded this deal won’t issue a mea culpa or retract their grandiose statements. They promised the moon and delivered nothing.
The media mostly fell for the hype — there are dozens of news stories fawning over the deal. They feature politicians and other government officials singing the praises of this wise investment. Most articles extolled the benefits of the paper mill’s expansion uncritically; only a few noted it was not a done deal yet.
Here are some examples:
• TV6 in the Upper Peninsula said the project “will act as a catalyst for additional revitalization of the community.” It claimed the “economic incentives are a critical component to achieving the financial foundation for the project to be successfully implemented at Escanaba.”
• MLive.com quoted an MEDC official: “It’s going to be a transformational intergenerational project, especially for that area.”
• The Sault News quoted Quentin Messer, CEO of the MEDC, who spiked the football on the deal. He said the company’s “transformational investment in their Escanaba Mill … secures a critical win as we continue working to promote longterm, sustainable investments across the state.”
• Another MLive.com article described the investment as “secur[ing] the future.”
• Another TV6 article quoted elected officials, who called it “a monumental victory for the Upper Peninsula ... that will keep the mill running, and set it up for generations to come” as well as a “transformational, generational investment that will reaffirm our timber industry.”
The award for jumping the gun on this deal must go to InvestUP, a local economic development organization. At an event in February 2023, it handed out awards to 13 people who “were really difference makers in helping secure that investment.” InvestUP CEO Marty Fittane announced, “Without their incredible, tireless effort, that investment wouldn’t have happened.”
I wonder what became of those awards. What does one do with a trophy won for achieving what never happened?
This episode is a good reminder that many politicians and public officials overestimate their ability to steer the state’s economy. It would have been great if Escanaba got an expanded paper mill and a bunch of new jobs, but lavish government handouts could not make it happen. The realities of the market are not so easily overcome. Remember that the next time the headlines trumpet the next big corporate subsidy deal.
—————
Michael Van Beek is director of research for the Mackinac Center for Public Policy.
The Development Corporation praised Gov. Whitmer the next month for signing legislation that gave the company an additional $200 million subsidy. It was called a “historic investment,” a “truly historic opportunity,” a “generational investment” and a “historic transformation” that “will help ensure [the paper mill’s] continued prosperity for generations to come.”
But it never happened. Even with massive taxpayer support, the company canceled its plans to expand in Escanaba. The MEDC canceled its payments to the company and rescinded the special tax breaks.
State experts, the governor and a bipartisan collection of politicians got out over their skis and got this all wrong. But does it matter? The public officials and bureaucrats who heralded this deal won’t issue a mea culpa or retract their grandiose statements. They promised the moon and delivered nothing.
The media mostly fell for the hype — there are dozens of news stories fawning over the deal. They feature politicians and other government officials singing the praises of this wise investment. Most articles extolled the benefits of the paper mill’s expansion uncritically; only a few noted it was not a done deal yet.
Here are some examples:
• TV6 in the Upper Peninsula said the project “will act as a catalyst for additional revitalization of the community.” It claimed the “economic incentives are a critical component to achieving the financial foundation for the project to be successfully implemented at Escanaba.”
• MLive.com quoted an MEDC official: “It’s going to be a transformational intergenerational project, especially for that area.”
• The Sault News quoted Quentin Messer, CEO of the MEDC, who spiked the football on the deal. He said the company’s “transformational investment in their Escanaba Mill … secures a critical win as we continue working to promote longterm, sustainable investments across the state.”
• Another MLive.com article described the investment as “secur[ing] the future.”
• Another TV6 article quoted elected officials, who called it “a monumental victory for the Upper Peninsula ... that will keep the mill running, and set it up for generations to come” as well as a “transformational, generational investment that will reaffirm our timber industry.”
The award for jumping the gun on this deal must go to InvestUP, a local economic development organization. At an event in February 2023, it handed out awards to 13 people who “were really difference makers in helping secure that investment.” InvestUP CEO Marty Fittane announced, “Without their incredible, tireless effort, that investment wouldn’t have happened.”
I wonder what became of those awards. What does one do with a trophy won for achieving what never happened?
This episode is a good reminder that many politicians and public officials overestimate their ability to steer the state’s economy. It would have been great if Escanaba got an expanded paper mill and a bunch of new jobs, but lavish government handouts could not make it happen. The realities of the market are not so easily overcome. Remember that the next time the headlines trumpet the next big corporate subsidy deal.
—————
Michael Van Beek is director of research for the Mackinac Center for Public Policy.
