* Phil Rosenthal has the best reality check column on ADM that I’ve yet seen…
Yep. A company with a $24 billion market cap is haggling over a $24 million, 20-year incentive from a state that’s teetering on the edge of insolvency. Then again, that’s how she got rich, dearie.
“ADM has been minding its pennies and nickels and dimes over the years in order to make sure we remain competitive, because in the commodity business, it is extremely, extremely competitive,” Ray Young, the former General Motors exec who has been ADM’s chief financial officer since 2011, told state legislators at a hearing in Chicago last week. “We’re talking about pennies and nickels per bushel in terms of being able to make money or lose money. So from our perspective we need to be competitive in every aspect of our business.
We’re talking about a company that had 2012 net income of $1.2 billion on sales/revenue of $88.92 billion. That’s a super-thin 1.3 percent. Then again, the net profit is a thousand times higher than one year of the proposed state tax break.
“It is essentially blackmailing the state,” Currie said. “It essentially is saying if you don’t jump to, if you don’t go do this for us, we might think about going somewhere else.”
Actually, that threat comes from the EDGE requirements themselves, which force companies seeking that particular tax credit to actively consider locating the new jobs in another state. It is the equivalent of a sign around your neck telling passersby you will only give them money if they put a gun to your head. It does tend to encourage such behavior.
Yep. But it can also be a decent tool to help companies expand. Ford is a prime example of that.
The numbers tossed around concerning Archer Daniels Midland’s relocation of its headquarters to Chicago have Decatur keeping 4,400 of the 4,500 ADM jobs it now has, with 100 moving to Chicago or wherever the new headquarters ends up and another 100 new jobs to staff the proposed accompanying tech center.
But ADM had 4,800 workers based in Decatur at the end of 2011, before the head count was reduced through a combination of retirements and layoffs. Across the state of Illinois, the number of ADM workers went from 6,400 then to a little more than 6,000 today.
The trend is most definitely not our friend.
* A bit of history from the Decatur paper…
It does seem unsettling, at first glance, that any company wants incentives to move jobs from one community in the state to another. However, Illinois would be the loser if ADM were to relocate its world headquarters to another state.
And the politicians complaining about ADM’s request really have no one but themselves to blame. The state gave massive tax incentives to Boeing to lure their world headquarters to Chicago, a move that created, at most, 500 jobs. The state also gave incentives to Tate & Lyle to keep executive jobs in the state. Those jobs were moved from Decatur to Hoffman Estates. The state also has awarded incentives to other major corporations to stay. ADM is merely following the trail others have paved.
Past incentives don’t excuse this one, but why single out ADM when other companies have been at the state trough much longer?
* On the other hand…
• In the fiscal year ended June 30, 2012, ADM gave a total compensation package to CEO Patricia Woertz worth $9.4 million — nearly eight times the size of the annual tax break it is seeking.
• In February, ADM’s board voted to increase the company’s dividend payout to shareholders by 8.6 percent to 19 cents per share. On an annual basis, that would equal about $500 million.
• ADM’s bottom line has remained in the black even though over the last decade it paid more than $500 million in fines and legal settlements in a price fixing scandal that sent three top executives to prison. One of them was a key government whistle-blower in the case whose bizarre exploits were chronicled in a best-selling book, “The Informant,” and a hit Hollywood movie by the same name starring Matt Damon.
* Even so, some Republican gubernatorial candidates have offered support. Bill Brady…
“We have to face reality. We can’t be populist in this. The reality is because the governor has raised taxes so high, there are other alternatives (for ADM to relocate) out there,” Brady said in an interview on WGN-AM 720.
Quinn also vetoed lawmakers’ paychecks pending a plan to deal with the unfunded pension liability. A Cook County judge ruled the governor’s action unconstitutional, a decision Quinn has asked the Illinois Supreme Court to review.
“You don’t tie ADM to another issue that the governor’s failed on,” Brady said of the pension issue. “We need a governor who will move away from the populist point of view and do the right thing in each instance.”
Actually, the tax rate doesn’t really have much of any impact on ADM here. As I’ve pointed out time and time again, ADM pays little to no state income tax.
* Kirk Dillard…
“The workers compensation costs for ADM or Caterpillar or Illinois companies is 3, 4, 5 times higher than it is in surrounding states,” Dillard said. […]
“The governor has been the governor for five years. He’s had a legislature that’s completely controlled by his political party. Pension reform should have been done a long time ago,” Dillard said.
“The governor is pretty good at playing the hostage game these days,” Dillard said, referring to his failed attempt to withhold lawmakers pay until they passed a pension bill.
* Dillard’s running mate Jil Tracy is also on board…
When asked about the possibility of Archer Daniels Midland Co. receiving tax credits to move its global headquarters from Decatur to Chicago, Tracy said if ADM qualifies for the tax breaks then there’s no reason to oppose it.
“I think it’s important to listen and see if help is needed,” she said. “We have to be engaged, especially if other states are offering tax breaks.”