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Goodies can’t hold Hynix or Freightliner

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Monday, December 01, 2008

STATEWIDE The meticulously designed SolarWorld facility that has brought hundreds of new jobs to Hillsboro did not come for free. State and local officials courted the German multinational with a plate heaped with incentives, topped by a $20 million business energy tax credit. Were it not for multiple subsidies, SolarWorld would not be cranking out solar panels in the Silicon Forest and Oregon would not have a booming new sector with seven manufacturers established and more being wooed.

Clearly incentives are useful, even essential, for jump-starting promising industries and attracting new business. But what about their staying power? How much do incentives help in the long run?

Hynix Semiconductor was Eugene’s largest employer when it announced this summer that it would close its plant and eliminate 1,400 jobs. The blow is doubly painful because Hynix benefited substantially from the state’s largesse. Hynix received $58.5 million in property tax abatements from 1998 to 2006. The company also gained from two $250,000 grants for worker training, one administered through Lane Community College and the other paid directly to Hynix.

Hynix was eligible for huge property tax breaks because it operated within one of Oregon’s 59 Enterprise Zones, which enable local governments to waive property taxes to woo businesses. Daimler/Freightliner, which recently announced plans to stop manufacturing trucks in Portland and eliminate at least 900 jobs, also was located within an enterprise zone.

But Freightliner never applied for e-zone tax breaks. The company received $1.45 million in workforce training grants and $207,000 in pollution control tax credits through an environmental program that has been discontinued, but compared to Hynix the company dined lightly at the trough.

The difference between Freightliner and Hynix is, Freightliner was built in Portland and later purchased by a German company, whereas Hynix was lured here. In the end, though, their stories are not so different. No amount of incentives could have kept them manufacturing in Oregon. The decisions were made in Germany and South Korea respectively, and the reasoning had nothing to do with loyalty or government programs. Freightliner is leaving to manufacture closer to its East Coast market and Hynix left to concentrate on more profitable computer chips than it was making in Eugene.

The closure of the Portland truck plant and a similar one in Ontario, Canada, are expected to improve Daimler’s earnings by $900 million per year by 2011.                                   


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