Vermont finds itself in an unenviable position. Rumors that IBM, the stateís largest employer, may be thinking about closing down or selling its chip-manufacturing plant in Essex Junction have persuaded leaders in business and government to do everything they can to entice IBM to stay or, at least, to persuade the buyer of the plant to maintain the current level of 4,000 jobs.
The departure of IBM would be a devastating blow to Chittenden County and the state. Officials say that in addition to the 4,000 employed by IBM, an additional 4,000 jobs depend on the presence of IBM. Keeping IBM here is and will be a high priority for Gov. Peter Shumlin.
And yet there is something unsettling about the bidding war set in motion by those rumors of the companyís possible departure. The Greater Burlington Industrial Corp. has been leading the charge to persuade the company to stay. Frank Cioffi, president of GBIC, has urged Shumlin to use the $4.5 million in the newly created Vermont Enterprise Fund as part of a campaign to keep the company here.
In addition, Cioffi recommends other steps, such as additional working training programs, the purchase of utility infrastructure at the Essex Junction facility, tax breaks, special electric rates and a special designation that would allow for additional benefits.
The Legislature created the Vermont Enterprise Fund this year with IBM in mind. The idea was that the governor needed ready cash to dangle before companies who might be thinking of leaving or of coming here. Critics say it is a form of crony capitalism; another phrase is corporate welfare. In reality, it is the kind of unseemly bidding that occurs among states interested in protecting jobs.
For IBM, $4.5 million would be a tiny drop in the bucket. Even so, large companies have learned that when they pit one state against another, they are able to extract lucrative tax breaks and other benefits.
It puts the states in a difficult position. Giving large companies tax breaks means that ordinary taxpayers have to shoulder an extra burden. Then again, ordinary taxpayers benefit from the jobs and economic activity created by large employers. Clever companies can work the system so effectively that the benefits they get from government constitute their entire profit margin.
That is not the case with IBM, a company with global reach and good jobs to offer. Yet Vermont now finds itself in a poor bargaining position. In fact, there is probably no package of benefits large enough to determine what the company decides on a complex question related to its global operations.
Among the recommendations from Cioffi is that the state create teams focused on the protection of those jobs in Essex Junction the way that Gov. Howard Dean made a dedicated effort to bring Husky Injection Molding to Milton. The idea would be to make sure that either IBM or the plantís successor owner understands that Vermont is a good place to do business and that there are many reasons for keeping the Essex Junction plant in operation.
Vermont needs to do what it must do to protect those jobs, but itís worth noting that one reason for the galloping economic inequality that has taken off in the last several decades is that state governments have become starved of revenues for programs that support the people, even as they ladle out tax benefits to large corporations. IBM can be expected to wring whatever advantages it can from any state willing to open its purse.
Vermont does not have a deep purse, and IBM knows it. What we have is a skilled work force and a beautiful state where employees can live rewarding lives. We hope those rumors about IBMís departure are not true, but if they are, we hope the company will respond positively to the small gestures that the state and the business community are able to make. If that is not enough, we hope that the company is mindful of its importance within the stateís employment landscape and that any decision to sell the plant promises continuing prosperity and innovation for the state that has been IBMís home for so long.MORE IN Editorials
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