Plenty of questions, no easy answers in Pipestone

If tax breaks and a “business friendly” atmosphere are what it takes to keep businesses in Minnesota, you sure can’t tell by Pipestone, Minnesota.

Gov. Pawlenty’s JOBZ program, which gives tax breaks to businesses in economically-distressed areas of the state, has always been controversial. It’s also been a good laboratory to see to what extent tax breaks will keep big business satisfied.

This week, Suzlon, the India-based manufacturer of wind turbines announced it’s shutting down what’s left of its plant in Pipestone. The Worthington Daily Globe reports the action comes despite the fact local and state officials bent over backwards to keep the company happy:

The JOBZ program designation was for more than 80 acres of land, making Suzlon eligible for hundred of thousand of dollars in tax incentives such as no property, sales or state income tax, no corporate franchise tax and a tax credit for high-paying jobs.

More than $250,000 was invested in the land, and $1 million was put into the infrastructure. The land was sold back the Suzlon for $1. In October 2005, Gov. Tim Pawlenty was on hand to scoop a shovelful of dirt at the groundbreaking ceremony.

Then, in June 2009, half of the workforce at Suzlon was laid off, leaving the community shaken. At one time, there was a peak workforce of more than 500 employees. With Monday’s notice, the plant will employee about 30 people by Jan. 1, 2011.

In the aftermath of the election, Pipestone may serve as a cautionary tale: It’s a long way — and a long time — between a change in economic theory and the effect on the person who wants a job.

On CNBC this morning, curmudgeonly Mark Haines noted a conversation with small business owners, and said two of the three he talked to said “it doesn’t matter what you do with my taxes, I don’t have any demand for my product.”

Suzlon’s announcement comes not long after state and local officials in St. Paul made one last pitch to Ford to keep St. Paul’s truck assembly plant open. They offered a blank check to Ford. Ford said “no thanks.”

The rejection of Minnesota by two large industries is a perfect example of the economy of Minnesota being more complicated than political campaigns would have us believe.

If government can’t create jobs, if tax incentives for Pipestone can’t keep jobs, if nobody wants to buy a wind turbine in Minnesota or a small pickup in St. Paul, what are hundreds of people supposed to do for work, and how long should they wait?

  • bsimon

    fret not, Bob, we’ll just put people to work cutting taxes. If that doesn’t work, we’ll cut taxes some more. And if that doesn’t work? Well, lets just say there’s not time that’s not a good time to cut taxes. Bring ’em on!