Posted on 02/19/2016 5:57:29 AM PST by SeekAndFind
Carrier Corporation garnered national attention last week with a gauche announcement that it would close down its Indianapolis manufacturing facility, lay off 1,400 workers, and move to Mexico -- all this despite receiving millions in federal support to create domestic green jobs.
That Carrier got this federal support was well known. Now, National Review has learned that, under the Obama administration, Carrier's parent company, United Technologies Corporation, also received more than $121 million in tax credits from the Department of Energy through the Advanced Energy Manufacturing Tax Credit, known also as the 48C Program, a stimulus-funded program created for the sole purpose of ensuring that green manufacturing jobs stay in the United States.
The Obama administration gave Carrier a $5.1 million subsidy in 2013 even after two previous awards from the same program yielded disappointing results. In 2010, during the 48C Program's first round of funding, the Department of Energy awarded a $5.3 million tax credit to UTC Power Corp. to open a clean fuel-cell power plant in South Windsor, Conn. Just three years later, United Technologies literally paid another company $48 million to take UTC Power off its hands. The South Windsor plant had never turned a profit, and United Technologies also ended up losing over $200 million as it struggled to get rid of its troubled subsidiary.
The South Windsor plant didn't fare well under new management, either. A month after acquiring it, new parent company ClearEdge Power laid off 170 people, more than half of UTC Power's workforce.
Connecticut's Department of Economic and Community Development launched a valiant effort to save the failing company, offering a $1.4 million loan and promising to forgive $650,000 of that sum if ClearEdge could retain 17 jobs and create 80 new ones by 2017. But ClearEdge turned down the offer, filing for bankruptcy not long afterward and laying off even more workers.
(Fortunately for South Windsor"s workers, Doosan Fuel Cell America Inc., a South Korean company with operations in nearly 40 countries, bought the South Windsor plant out of ClearEdge's bankruptcy. It has since begun hiring back some of those laid-off workers. Notably, a spokesperson from Doosan says none of the prior tax credits carried over, and it has succeeded without receiving any clean-energy manufacturing tax credits since it acquired ClearEdge Power"s assets in July 2014.)
In addition to subsidizing the South Windsor operation, the Department of Energy in 2010 awarded a $110.4 million tax credit through the 48C Program to Pratt & Whitney, another United Technologies subsidiary, to make an energy-efficient jet engine in Connecticut. The tax credit came less than a year after Pratt & Whitney had shuttered two Connecticut plants, a move that cost about a thousand jobs. The work once done in the state moved to Japan, Singapore, and a nonunion plant in Georgia.
The Department of Energy approved the tax credit anyway -- and the Middletown, Conn., facility that received its support quickly began to struggle. Almost immediately, Pratt & Whitney began layoffs nationwide, dropping 1,300 jobs in 2011 alone. And, in a series of layoffs in 2012–13, hundreds more workers lost their jobs, including many at the Middletown facility.
Though the company is more stable today, its employment remains lackluster. In 2009, before the stimulus-backed tax credit, Pratt & Whitney employed 11,000 in East Hartford and Middletown -- but by mid 2015, its Connecticut workforce was down to 9,000, far below projections.
As Pratt & Whitney suffered through a volatile couple of years in Connecticut, United Technologies was also bogged down in another big controversy. In 2012, the company pleaded guilty to a major violation of U.S. arms control.
The United States had forbidden sales of military equipment to China after the 1989 Tiananmen Square Massacre, but United Technologies and two of its subsidiaries, including Pratt & Whitney Canada, had ignored this restriction, selling Beijing restricted military software that it used to build its first helicopter gunship. For its illegal sales and subsequent cover-up, United Technologies ended up paying $75 million in fines.
But neither these illegal sales nor the turbulent performance of other United Technologies subsidiaries that received support from the 48C Program prevented the Department of Energy from choosing Carrier Corporation for a $5.1 million tax credit during its second round of 48C Program awards in 2013. Carrier's announcement last week seems almost inevitable, given how determined the Department of Energy apparently is to throw good money after bad.
-- Jillian Kay Melchior writes for National Review as a Thomas L. Rhodes Fellow for the Franklin Center. She is also a senior fellow at the Independent Women"s Forum and the Tony Blankley Fellow at the Steamboat Institute.
Also, implicit in my last post, is that the government gives “tax credits” for things that do absolutely zero, zip, nada, to improve the functioning, viability, or well-being of a business.
As we see, there are companies that are going to fail for certain, and they get to apply for tax credits, knowing full well it isn’t going to help the company, but might get more money into someone’s pocket before the gravy train runs out.
It is quite different when a well-functioning company has to pay money it could use to improve itself into government tax coffers, and that money goes to companies that should die a natural death.
but since 100% of companies that move to mexico are unionized plants I could be 100% right..
“Connecticut’s Department of Economic and Community Development launched a valiant effort to save the failing company, offering a $1.4 million loan and promising to forgive $650,000 of that sum if ClearEdge could retain 17 jobs and create 80 new ones by 2017.”
More evidence that NR is no longer conservative in any meaningful way. CT under Malloy has repeatedly jacked up taxes for businesses and individuals alike—and then they play this crony capitalism game of trying to bribe specific companies to stay in their terrible business environment. Didn’t work when they tried to buy of GE either.
I get that.
I started at Hamilton Standard and later with UTC Fuel Cells (which was renamed UTC Power)
Fuel cells/Power never made a profit, the CEO was intrigued with the technology and kept as afloat years.
Fast forward to a new CEO who was looking at all the divisions and decided we didn't fit in (not to mention we lost about 80 million dollars a year)
The company went up for sale but who would pay anything for a very unprofitable unit?, enter ClearEdge.
ClearEdge was a fuel cell company with a huge contract with Australia, they couldn't get their stacks (look it up if you desire) to function for months let alone years.
Enter UTC Power, we made Fuel cells for Apollo as well as the space shuttle without any problems.
It wasn't that we couldn't build a reliable, quality unit but that the cost was to high.
Ultimately we were given away (with 48 million in cash) to ClearEdge.
Upon the sale half of the workforce was released within two days.
I worked as an inspector, their were 9 of us and 11 Quality Engineers.
After the fallout their were 2 inspectors and 1 Q.E.
I found employment at another company in just 6 weeks and not only got a pay raise but collected severance for 5 months.
ClearEdge called me to come back a week after I started my new job, I had been in contact with a former coworker who told me the same losers they had running the company were still running it.
I guess you can't fix stupid)
Needless to say I turned down their offer and am still with my current employer.
Most ironic of it all is I am back in the building where I started as a contractor working at UTC Aerospace (new name but the same) as a Quality Engineer.
The bottom line, subsidies, tax credits and loans to private businesses don't work.
Sink or swim should always be the way and if your products are priced to high or the demand isn't there you sink.
In a closing note, the geniuses they hired from MIT (and other higher learning institutions) never fixed a design, never do this.
I am not so spiteful against unions that I'd kill the US economy to prove a point. Carrier had a lot of options, there are many places in the USA that are anti union an very receptive to manufacturing and would have welcomed Carrier with open arms. Those places are mostly in the South but other places too. To go from Indiana to Mexico is a slap in the face to all Americans. I am praying that Mexico unionizes and has many, many strikes. Those companies deserve that. Ha ha.
alright..... I will post this only once..
I have had the priviledge of supervising and having to use union labor...
the skilled trades, millwrights, ironworkers, electricians, pipefitters and the laborors...
were and still are some of the most highly talented, skilled and dedicated personnel I have ever dealt with..
I have nothing but praise for them..
the uaw, machinists, and the other non-skilled trade unions, I hold nothing but disrespect for..
these are the people that companies run to another country over, and until they are dispersed this country is on a one way course to ruin...
and in response to your other inquiry..
the great depression had 3 legs that made it happen..
one of those legs was an isolationist group think and a prohibitive tariff on most imports..
the resulting trade war was one of the three legs of the great depression..we lost and so did the rest of the world..
the greatest threat to the US is not mexico, or the willingness of companies to go there..
it is non skilled trades unions, and their anti-capitalist motives and motivations..
they are either hard core socialists or outright communists.....
end rant
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