Did Mississippi help tire firm squeeze states for subsidies? Muriel Kane

Published: Wednesday February 11, 2009





Print This Email This When Mississippi Governor Haley Barbour signed into law last week a $19 million package of incentives designed to keep Cooper Tire from closing its Tupelo, Miss. plant, he touted it as a victory for his state.



"People ask me all the time, 'What does the state do about job losses?'" Barbour announced at the signing. "Well, the first thing we do is we've got to do is keep the jobs we've got."



Barbour's job-retention strategy for Mississippi is in sharp contrast to President Barack Obama's proposed stimulus plan, which Barbour has condemned on the grounds that it "includes excess spending and impedes states' abilities to manage their own programs." Barbour has even indicated that he might refuse federal funds if they come with strings attached, to the dismay of many of his state's own legislators.



However, the Cooper Tire deal appears questionable on a number of grounds beyond that of political ideology, with one blog even describing it as a form of extortion.



"In a grim variation of the subsidy game that may become more common in a tanking economy," writes Clawback.org, "Cooper Tire last month successfully squeezed over $66 million in subsidies for plants in three states, pushed down union wages and benefits, and eliminated one plant altogether. ... The real lesson is how easily Cooper Tire could compound the pain of a plant shutdown in one state by extracting wealth from workers and taxpayers in three others."



Cooper Tire's search for government subsidies began last October, when the Ohio-based firm announced that it would be closing one of its four US manufacturing centers, due to increased competition from abroad. It invited local governments and unions to help it decide which plants to keep open by offering packages of incentives and employee concessions.



That invitation immediately set off a scramble for advantage, with all four states attempting to outbid each other for Cooper's favors. Mississippi began by offering $30 million in incentives -- $19 million in state subsidies and tax credits and the rest to be generated locally -- which put pressure on other states to do the same. Georgia came up with a $32 million package, while at Cooper's unionized Ohio and Arkansas plants, worker concessions on wages and health care were added to financial incentives.



On December 17, four days after it had reached a deal with the union in Arkansas, Cooper announced that it would be shutting down its plant in Albany, Georgia, even though that state had offered the most generous incentives.



Both the speed of the decision -- which was revealed a month before it had been expected -- and Cooper's explanation that it had determined that production costs were highest in Georgia, even factoring in the incentive package and low non-union wages, immediately raised questions.



An editorial in the Albany Herald began tactfully, "Based on the information that has come out, it may have been the right decision for Cooper, though it is a devastating blow to a region that is already the ninth-poorest congressional district in the United States. ... Losing the half-billion dollars a year that Cooper meant to the regional economy will make the hole deeper and harder to climb out of."



The Herald went on to note, however, that "what makes the already bad situation even worse for many is the suspicion that the decision was made long before the study was conducted. In mid-November, The Albany Herald received anonymous correspondence from a source that purported to be Cooper employees at Findlay, Ohio. The letter bore a Findlay postmark. Verifying the contents of the letter was problematic, but in retrospect the contents proved to be remarkably prescient. 'It is with a great degree of certainty that we know Cooper plans to close the Albany plant,' the letter stated. 'Unfortunately, the facility study is a ploy to fleece the other states out of any financial assistance they can offer.'"



If the letter received by the Herald is authentic, suspicion has to fall not only on Cooper Tire itself, but also on Mississippi for setting off the incentive bidding war. Although Raw Story has not found any evidence of deliberate collusion, there is no doubt that Mississippi officials have been particularly supportive of Cooper.



Cooper Tire donates to politicians in all the states where it has plants, but it has been particularly generous in Mississippi. For example, it donated $2000 to Governor Barbour's 2007 reelection campaign. However, the Mississippi politician most favored by Cooper is Senator Roger Wicker, who resides in Tupelo, where Cooper's Mississippi plant is located.



When Wicker ran for re-election to the House of Representatives in 2006, Cooper donated $4000 to his campaign. In the 2007-08 campaign cycle, Wicker received $7000 from Cooper -- most of it following his appointment by Governor Barbour in December 2007 to fill the Senate seat that had just been vacated by Trent Lott. This is more than twice as much as Cooper donated to federal campaigns in either Ohio or Arkansas, and more than three times as much as it donated in Georgia.



On November 14 -- prior to the formulation of Mississippi's incentive package -- Wicker participated in a "Cooper Proud" video on behalf of the Community Development Foundaton, the local affiliate of the Chamber of Commerce.



In the video, Wicker stands before a sign reading, "We're committed to keeping you in Tupelo!" and tells local residents in pep rally style, "We are determined to retain Cooper Tire. ... Your congressional, state, and local public officials are working with Cooper Tire. ... I'm Cooper Proud -- and I hope you are too."



Along with his support for Cooper Tire, Wicker is known for being strongly pro-business in general. He opposes the Employee Free Choice Act, which would make union organizing easier. According to his Senate website, "He has been honored by the National Association of Manufacturers (NAM) for supporting policies which 'recognize manufacturing's pivotal role in the U. S. economy.' He received NAM's Award for Manufacturing Excellence in 2006 for support of pro-growth, pro-manufacturing initiatives in the Congress."







