Governor Dennis Daugaard will be holding "Capital for a Day" activities in Aberdeen next Friday, August 16. "The community is invited and encouraged to participate in the events."
An event everyone who used to work for now-bankrupt corporate welfare recipient Northern Beef Packers should attend is the community roundtable on workforce, recruitment, and training at the Brown County Fairgrounds Clubhouse from 1 p.m. to 2 p.m. Laid-off slaughterhouse workers can test Governor Daugaard's ability to give straighter answers than his Department of Labor officials.
Or maybe they could just ask the state to take its past propping up of Northern Beef Packers to its logical conclusion, buy the plant, and start a state-owned beef operation. South Dakota wouldn't have to get into the beef business permanently. We could socialize the plant short-term to put 400 Aberdonians back to work, boost the economy, and prove to potential buyers that a local slaughterhouse producing South Dakota Certified Beef really can succeed.
One thing's for sure: Aberdeen workers can't count on Northern Beef Packers to put them back to work. NBP has mismanaged more than $152 million into oblivion and can't get itself off the floor:
“We didn’t have the capital necessary to ramp up operations,” said Bob Wright, Northern Beef’s chief operating officer.
Now, with $138.8 million in liabilities and just $79.3 million in assets, according to court documents, the plant has laid off most of its employees and halted production.
Since May, Northern Beef executives have been working with Lincoln to find either a buyer or additional investors to help it purchase enough cattle to turn a profit.
Stradling said new investors were weary of putting in money because there would be so many investors in line ahead of them.
“It was an unfavorable investment, ultimately, when you do the math,” he said [Dirk Lammers, "Beef Plant Looking for Buyer," AP via that Sioux Falls paper, 2013.08.08].
Aberdeen libertarian blogger Ken Santema urges folks to grill the Governor about NBP as well. Santema sees an analogy between NBP's failure and the fate of Detroit:
I am betting if Daugaard will answer questions about the beef plant failing (after being built and supported with corporate welfare) the answer will involved the “free market” and make it sound as if nobody could have foreseen this tragedy. Sadly that may sound like the “truth” to someone who loves to use taxpayer dollars for subsidizing favored special interests. However, those of us that care about fiscal responsibility can see this situation, just as with Detroit, has nothing to do with “market forces”. In this case an inept management team being supported by government bureaucrats (backed by elected officials coming with gifts of taxpayer dollars) were the only real “forces” that are to blame... [Ken Santema, "Will Governor Daugaard Mention the Beef Plant Corporate Welfare When Aberdeen Is ‘Capital for a Day’?" SoDakLiberty, 2013.08.08].
Since Ken brings up Detroit, let's go there: Detroit like Aberdeen has suffered because of a right-wing big-business agenda focused on corporate welfare and tax cuts for the rich:
That brings us to how this all plays into the right’s push to enact ever more regressive tax cuts, protect endless corporate welfare and legislate new reductions in workers’ guaranteed pensions.
These latter objectives may seem unrelated, but they all complement each other when presented in the most politically opportunistic way. It’s a straightforward conservative formula: the right blames state and municipal budget problems exclusively on public employees’ retirement benefits, often underfunding those public pensions for years. The money raided from those pension funds is then used to enact expensive tax cuts and corporate welfare programs. After years of robbing those pension funds to pay for such giveaways, a crisis inevitably hits, and workers’ pension benefits are blamed — and then slashed. Meanwhile, the massive tax cuts and corporate subsidies are preserved, because we are led to believe they had nothing to do with the crisis. Ultimately, the extra monies taken from retirees are then often plowed into even more tax cuts and more corporate subsidies [David Sirota, "Don't Buy the Right-Wing Myth about Detroit," Salon.com, 2013.07.23].
Ken and I invite your post-mortems (I know it's wrong, but I itch to say post-morta) on Detroit and NBP. But let's not waste Governor Daugaard's time with such exaggerated arcana. Let's focus on the immediate problem of selling NBP. The state's corporate welfare for NBP has failed miserably. NBP's managers have made the project look like a boondoggle that no one wants to buy. The only way to sell it may be to prove that the business is viable. The only way to prove NBP is viable to is to start it up again and make it work.
And the quickest way to do that is a state takeover. The workers are there; the beef is there; heck, even the capital is there. Let's turn NBP into SDBP!
Exactly. South Dakota or Brown County should use eminent domain to condemn, own, and run the plant, and like the former state cement plant, when it's profitable then sell it with stipulations its run for 50 years. There is nothing wrong with government entering the market place as we do it all the time: liquor stores, golf courses, swimming pools, utilities, etc. The first step in running the plant is firing the previous board and senior managers. Failure is essential in our capitalist system; they failed and need to go elsewhere. Government ownership of the plant is not a permanent solution, but is a interim measure to achieve its and the region's economic health.
The corporate welfare here is disturbing.
It is a tradition, but often the older the tradition, the more ridiculous it is.
If anybody wants my support for the Governor's race, they will have to support decriminalization of marijuana in SD as well as reforming the criminal justice system.
Legalize it!
Cory, you suggest state government buy the NBP. How much should we be willing to pay? How long and how much money will it take to become self supporting? Should we gear up to full capacity of 1,500 head of cattle slaughtered per day? How many employees should we hire? How much money will we need to buy the cattle, and pay the employees? Do we sell the beef on 30 day credit or do we demand cash from the beef buyers? How much should we be willing to lose if expenses are greater then revenue? Are you okay if the buying of the plant and the running of the plant reduces the money available for education and taking care of those who are unable to take care of them self?
Senator Novstrup, South Dakota taxpayers have already poured millions into NBP, in real cash as well as political support. We've already made a down payment on half of the plant; we should be able to take precedence over any outside bidders with half the bid. Once we get it, go ahead, pour this year's surplus into ramping the plant up to full production. That's our challenge and our motivation: make it work and prove up to a willing buyer before the surplus runs out. I wonder: how long could sufficiently motivated owners run NBP on $47.8 million? You guys in Pierre aren't going to spend that surplus on anything good, anyway, so get with me and bring some pork (er, beef) home to Aberdeen! We keep over 400 people at full employment for the year, we add value to a private property that the owners have run into bankruptcy... this looks like a no-lose situation to me!
Cory, I don't think there is a law that says there the state can buy the plant for "we should be able to take precedence over any outside bidders with half the bid." Are you suggesting that the legislature pass a law that says, "we should be able to take precedence over any outside bidders with half the bid."?
Should be have a special session at a cost of $30,000 or should we wait until January?
If we buy 1,500 cattle per day at $1,000, we have enough money to buy cattle for 31 days. How do we pay the employees and the light bill? It might take $100 million to run the plant. Is the South Dakota Education Association okay with your plan to invest $100 million dollars in the beef plant?
Senator Novstrup, essentially you're arguing that beef packing plants can't be profitable, I wonder if anyone has broken this news to IBP or Tyson? But don't worry, Cory's plan will never come to fruition because the Republican majority in the legislature would rather see one of the established giants of the packing industry buy the plant for pennies on the dollar. A corporate presence like that would be good for thousands in campaign contributions to their favored candidates each and every election cycle.
It's blighted property, or will soon become so. In its current state it is a target for vandals and others interested in copper and other materials and equipment inside the plant. If they can't pay the workers, you have to wonder how effective any security they have will be. It will cost law enforcement a lot of time and effort to assure this plant doesn't just walk away piece by piece. Better for the locals to condemn and take it and let the locals benefit either through bringing in another operator or selling it off.
Some wizards better have a marketing plan for the butchered beef. That apparently was missing.
This is a horrible situation for the state and especially Aberdeen. State ownership would make the situation even worse. A packing plant as a stand alone entity is a hard business model to make profitable. The reason is because they are producing an un-labeled, run-of-the-mill product that another meat/food company will purchase. NBP's customers will/would not be consumers, but other food processors. These processors will buy meat at the cheapest price. They will not pay a premium just because they come from good-old-SD. Most packing plants operate at a 1-3% profit margin. In order to even get close to making money that plant would have to run at 100% capacity. As Mr. Novstrup mentioned, at full capacity you would be burning through nearly $2 million per day just in cattle cost, let alone the rest of the overhead costs. Then there is the storage, the logistics, the sales, etc. I would estimate a plant that size would take around $3 million a day to get off the ground and running.
NBP was a bad idea from day one. Back before bankruptcy, EB-5 programs, Korean Investors, the loans from the SD Board of Economic Development. It's been a bad project going back to 2005-2006 when Dennis Hellwig first floated the idea. South Dakota just doesn't have enough of the right economic conditions to make a plant like that work.
Now, here's the part that is tricky. As an elected official, you are approached with an idea for a value-added, ag related project (in my mind slaughtering doesn't really add value. I'd say that it gets the dirty work done). It's going to be built in a town that could use some economic development. It's being headed up by Dennis Hellwig, a for-the-most-part respected cattle guy (you can't please everyone). The local government and the public are in favor of the project. How do you say, "No. Bad Idea!"?
If I remember correctly, Feickert took some heat for voting against the TIF when he was on the county commission.
In the end, it's too bad. Over seven years of planning, all the promises, the fanfare, and especially all the money down the drain. My guess is that the plant won't even be sold, and if it is, it will still end a mess. I'd be suprised if one of the big 3 packers were to buy it. My bet is that it is dismantled and demolished without ever making it to max capacity.
P.S.
Hey Nick, IBP and Tyson are the same company. Tyson bought IBP probably 10 or so years ago. The big four meat companies today are Tyson, JBS Swift (JBS USA) Cargill, and Smithfield. A Smithfield buyout by Chinese company Shuanhui Int. is in the process.
Nick, you said, "essentially you're arguing that beef packing plants can't be profitable".
Nick, slow down and reread my comments. I did not argue that.
I am suggesting if we ignore the acquisition cost, the negative cash flow in the first year could be $100 million dollars and although Cory supports taking $100 million dollars away from education and those who can't help themselves, I don't think Cory will find support for this among the Democratic legislators, the Republican legislators or the public.
Cory, thanks for your vote of confidence that the government of SD could run a beef plant at a profit, but I doubt it. Government intervention in the market place can cause more problems then it solves. Think Solyndra and the vaporized $535 million.
I am amazed that Donald Pay doesn't understand Property Rights within our US Constitution. Donald, how about we condemn your house and take it for the greater good? Don, are you suggesting we violate the US Constitution?
Hmmm. Solyndra? This plant is the SD GOP's Solyndra. How much did the taxpayers throw directly at this plant or spend on infrastructure and various other costs for this plant, Senator? Let's quantify it here and now. Were you on record as opposing that "government intervention in the marketplace" when this was happening in Aberdeen, Senator? Maybe you were against it. I don't know. Just looking for some consistency.
I think you are right about a lot of things, Senator Novstrup, but I'm not clear what your position is regarding this plant either in the past or right now. All you are doing here is shooting down ideas without expressing any of your own.
Al obviously doesn't understand US Constitutional property rights. Everything belongs to we the people - the sovereign. What we think of as property ownership is merely a title to limited conditional first lawful use. Think of rent - the property title essentially must be renewed annually via property taxes or we the people will condemn it and re-sell the limited conditional title to first lawful use at a sheriff sale. We individually "own" title, not the property. Title may disappear with the fall of a gavel.
The sovereign people of Brown County or South Dakota could condemn the plant anytime. The only issue is "just compensation" and since the plant is bankrupt lacking funding or buyers it's likely worth salvage value. Read, Kelo v. New London, 545 US 469 (2005) - a property rights decision by the most conservation Supreme Court in 80 years.
Senator Novstrup, I think you're confusing me with your colleagues. I don't need to check in with SDEA or any lobbying group to decide whether I should advocate for what I think is a good idea. I can think for myself.
There is no law entitling us to a lower bid. But you know what? A special session at $30,000 that would enable the state to acquire NBP at a bargain price and work to restore its value would itself be a bargain compared to the $4.9 million NBP says it needs to pay out-state financiers White Oak to arrange its own auction.
But forget the special session or a new law. I think we can make the pitch of our entitlement to a lower bid to the bankruptcy judge. Can the state make a bid in the auction? We could easily bid up the price to ensure that NBP does not go for pennies on the dollar. A higher sale price ensures that NBP can pay back more of its creditors (and workers who didn't get paychecks should go to the front of that line), an outcome in which the state should have a keen interest.
Donald makes an excellent point about blight. NBP doesn't have the money to keep a security guard on hand. The bankruptcy judge today denied NBP's request for more credit. With no buyers in sight, no credit to keep the place going, the state could make an argument that eminent domain applies here. Forget the auction: these guys failed, they blew state money, their property is now blight... the state could just take it and pay the fair market value tomorrow. And if some packer is waiting to take the plant for pennies on the dollar, then pennies on the dollar is fair market value. We can keep the property from going so cheaply, get some work out of it, and sustain and increase its value for future buyers with a board appointed by the Governor to run it who will be highly motivated not to make the Governor look bad. As John says, condemn it!
The plant never got close to 1500 head per day. What market forces would stop the state from finding 1500 head a day and from selling that processed beef? NBP has had its year of negative cash flow. We can pick up close to where they left off. If the supply is there and the demand is there, we can do it: that one month of cash flow will turn into one month of sales and profits that keep the plant running. (And don't forget: we're socialists here, so the state can run NBP on a thinner profit margin.)
This takes us back to Ken's post: if "market forces" really are responsible for the demise of NBP, then no one is going to buy it, because no one can make money with it. Do we have a market or not, Al? Does anyone who buys NBP have a chance of making it work?
Government intervention: go big or go home!
The Senator is always right. How dare we respond to The Annointed when what He perceives is what is right and He says you say is not what you actually said. His righteous point is free enterprise is superior and the state is incompetent by comparison. And since free enterprise failed in Aberdeen then nobody can run a beef plant inside the God Almighty State of South Dakota.
...I guess we are going to have to respectful disagree. I would be opposed to the government buying or taking (legal or illegal) the beef plant.
Cory and a few of his fellow posters are in favor of the government buying or taking (legal or illegal) the beef plant.
How about letting the legal system (bankruptcy) work as it was intended without eminent domain or a buy out or bail out from the government?
Is there any kind of report card that is simple to read, that is audited, and tells us when taxpayer money was invested well and when it wasn't?
How many big investments have we made that didn't have any return on investment?
Aren't they trying to sell the gateway building.
Senator Novstrup this state gives foreign companies power to condemn here so whats wrong with taking a property that we have already dumped millions of our tax dollars into?
Agree to disagree? Horsehockey! Let's do something to prevent the state's investment in NBP from going to waste. You guys are fine with eminent domain to take South Dakota landowners' rights and hand them to a Canadian company (Keystone pipeline). Let's put it in reverse, use it the way the Constitution intended, take back NBP from the foreigners into South Dakota hands, run it right, and make money for ourselves, our ranchers, our workers, everybody in the state. We can wrap this bankruptcy up right now with better results for the workers. Solve this problem!
Bret, Are you ready to drop $100 million in with the possibility that it will be lost? So if we lose a penny in a deal, then we should put a dollar at risk in an attempt to recover the penny? It is possible, Northern Beef has paid more in taxes than it ever got in grants, loans or workforce development. I don't have the numbers yet but I bet the state of SD is very close to break even on Northern Beef.
Cory, I don't believe the government is up to the challenge of competing in the free market with Tyson, JBS Swift, Cargill, and Smithfield. Show me an example, where a government has succeeded against Tyson, JBS Swift, Cargill, and Smithfield?
If expenses are greater than revenue, do we cut education, nursing homes or do we go back to the taxpayers and take more from them?
Valley Road has given the most concise, accurate summation of such a product I've seen. Corey, the cash flow commitment to run the plant as you propose would be breathtaking. To buy cattle, pay salaries, finance accounts receivable, etc. would require, by my guesstimate (and you know I've done this kind of project many, many times) , cash working capital of about $100 million. The capital invested by the state in the hard assets to date pales in comparison to the working capital it would require to make the place viable. Operating losses on a near $100 million state operating line would make the state's loss on the physical plan to date seem like a bargain.
As VR said, bad concept from the beginning. All the incentives in the world notwithstanding, meatpacking is still one of the toughest, lowest margin businesses there is. This place had a very, very small chance of success from the get-go. I'll leave to others to debate whether the chance it would work was worth the risk.
I've no philosophy problems at with taking the place back (eminent domain? Bull, just foreclose: they owe us like any lender) but, making it work after we own it is just beyond impossible.
Sugar beat plant just north of the border. Cement plant in our border.
This has been a most interesting discussion. I haven't paid much attention to it until I read this blog entry, but the one talking point that keeps making me want to scream in frustration is that Senator Novstrup seems to think the only way the state could possibly pay for this type of project (buyout) is with money from education or senior care funding. Are you telling me the only way this state can get anything done is to cut education and senior care funding? We have no other funding sources. No wonder our education/senior care systems are on the brink of total devastation. Looks to me that we need to find some better representatives for our children and elderly, and those that are willing to look to other funding sources or projects (businesses) to help our state become more viable for the greater good of all of its citizens.
Corrine, 37.6 % of the state budget goes to taking care of the young, the old, and the poor's medical needs. 44.5% goes to education. 8.8% goes to our safety (courts and prisons). Over 91% goes to taking care of those in need, education, and our safety. So if you are going to fund a new programs such as the Beef Plant, it is very difficult to find the money in the 9% that funds roads, and other departments and agencies within state government. Corrine, please review the budget and let me know where you plan to find $100 million in the $118 that is not spent on goes to taking care of those in need, education, and our safety. My math says that you are will to cut the other programs 85%. Could be painful and impossible.
All the talk of finances and interpretations of government authority ignore the real bottom line: more than 400 people were left holding empty bags. All the talk evades the fact that a large group of humans were dismissed as dispensable and inconsequential, and those who presume to govern them were willing and vociferous parties to the scheme that rendered them so.
As for NBP, the idea behind it is sound and is working in other parts of the country for small packers who deliver anti-biotic-hormone-free beef to restaurants and savvy consumers. The problem with NBP is that it put itself in the hands of people who posture as entrepreneurs and executives, none of whom had the knowledge, the skill, or the established the contacts to develop a market for the beef. Every business decision was a disaster from site selection to marketing.
One area that was developed, largely by individual farmers and producers, was the supply. Those who aligned their production to supply NBP are also left hanging and twisting in the winds generated by governing windbags. Who will, by the way, retreat into the bromide that all enterprise is a risk.
David, you're telling me the market is there, the business plan is sound. Could the state run NBP as a socialized enterprise well enough to make those workers and suppliers whole?
I am Illinois right now which is home base to a lot of big agra. I hear many questions about NBP in regard to the 160 EB-5 investors, the majority of whom are Chinese. One of the questions relates to the proposed acquisition of the Smithfield pork business by the Chinese firm Shuanghui International Holdings Ltd. As some acquainted with doing business with China have pointed out, Chinese business ventures are vetted closely by the government, which has an interest in seeing that business ventures in the U.S. come to fruition for the Chinese. The question is what role the Chinese investors or representatives of the government might play in the bankruptcy proceedings.
Cory, Mark Bittman, the food writer ("How to Cook Everything") for the NY Times turned columnist on food, has been tracking the organic trend. There are distributors in the east (livestock producers strove to serve that "fancy trade in the east) who are successfully supplying the growing market for organic, actually meaning unadulterated, meat to restaurants and consumers. NBP had a plan to serve that market as well as the boxed beef market. In its pre-operational promotions, it talked about its ability to track beef from conception to cut. But that feature was dropped somewhere along the way.
The big problem with NBP was that it fell victim to the MBA syndrome--all the seeming arcane business theory and ego-inflation that contends that all of society is dependent on a few divine entrepreneurs, similar to the idea that our freedom derives from those brave souls who tote firearms and are willing shoot the shit out of anyone they take a nation to (i.e. George Zimmerman). The original NBP plan had a sound concept of the product it wanted to produce and it had the plant to produce it. It did not have any business people who could go out and introduce the actual product to the public and to vendors. In other words, it had no one who could do that essential act upon which sound, sustainable businesses are built. It had only the glib advocates who were looking to make a quick fortune by starting up a company for the purpose of selling it off as soon as a good offer came in.
Cracking the meat-monopoly is tough but not impossible. And developing a market and serving it with quality at a good price is something that both investor-owned and socialized companies can do. The problem in South Dakota is that there are no people capable and willing to go out and create and develop a market.
The North Dakota Farmers Union (recall that the SD Farmers Union was invested in and was involved in NBP while its progenitors were dillying around Flandreau) seems to grasp the idea of what it takes to develop a market for agriculture. It owns and operates restaurants in the D.C. area that feature its state's products.
If NBP ever becomes a socialized company, I think it will be run out of Hong Kong.
I definitely disagree with the state stepping in to buy the place. The taxpayer dollars (direct and indirect) used on NBP are sunk costs; any decision going forward cannot take those sunk dollars into account. It is simply unlikely the taxpayers will recover any of those dollars. Continued state intervention would allow any future managers of the plant to ignore market forces. It is easy to spend other peoples dollars (especially the taxpayers).
It will be interesting to see who will buy the plant. Or if they will buy the plant to be used again. I've spoken to many of contractors that worked on the plant and there is much out there that should give pause to anyone wishing to purchase the property. Parts of the construction were done by Koreans. Those workers were following the wrong code for building (especially things like electrical and plumbing). Many of these construction items had to be "fixed" before they could pass inspection. As a buyer I would not have a lot of confidence when purchasing the property.
On the other hand the article Cory pointed to from Salon has some good points. I disagree with the NAFTA stuff and that the right-wing is wholly to blame. It took bi-partisan efforts from both Democrats and Republicans to cause the city to fail. The corporate subsidies in Detroit were unbelievable. The elected Republicans of the state were just as fiscally irresponsible with taxpayer dollars as the Democrats. That is why we need to get government OUT of the market.
As a taxpayer I would rather my money to go infrastructure and education than corporate welfare (beef up our state education funding so well can the federal DOE to get lost).
Read "John"'s comment again. The SCOTUS decision not only made it possible for governments to seize property for public good, but for private gain. They demolished houses and now the people forced out can look at empty lots since the project apparently was never finished.
The conservatives who howl loudest for property rights are usually not howling about the property rights of the poor or middle classes. They also believe that property (if a corporation) has the same rights as living breathing humans.
There is much yet to be done and much yet to be undone.
I'm still not sure what Senator Al's position is on corporate welfare. Is Solyndra/Northern Beef - style corporate welfare bad across the board? Or is it o.k. when Republicans do it and just bad when Democrats do it?
Senator Al. If you're at the ALEC convention on the taxpayer dime, then enjoy your vacation! I understand you might not have time to read this until you get back.
Rorschach, I am in South Dakota working and paying taxes.
Selective outrage is a GOP badge of honor, R.
Ah, I bet you're driving one of those little cars around the track. Just making sure it works right. Better try the next one too. Man, you got yourself a good gig. And probably without a big government subsidy. Why must we subsidize the big, rich companies when the little guy can make it without a handout?
Prof. Newquist, South Dakota farmers are too lazy to raise organic food.
Rorschach, I prefer the government does the least amount of picking winners and losers. I trust the buyers to pick the winners and the losers. I am opposed to the Obama concept of "reward your friends and punish your enemies". (see Solyndra).
Sonydra lost $535 million in tax payers money. Sonydra had connections to Obama donors. There are over one million hits if you Google it.
It is possible that the government actually made money or broke even on the Northern Beef project with income tax, property tax, sales and use taxes collected. Lets wait for the final totals before jumping to conclusions.
Solyndra is one that went bad. If you look at GM the opposite is true. It saved a company and many jobs.
The less government the better but there are times when the government needs to intervene for the sake of the country.
The Tea Party answer to no government at all just isn't right.
I'm still not sure what Senator Al's position is on corporate welfare. Is Solyndra/Northern Beef - style corporate welfare bad across the board? Or is it o.k. when Republicans do it and just bad when Democrats do it?
When my job got sent to India through no fault of my own I was lucky enough to qualify for a government program called Trade Adjustment Assistance (TAA) Extension Act of 2011.
This program paying for my retraining. Without this I'd be working at some low paying job.
So as you can see Senator Al the government stepping in for me is a big thing and a good thing for others in my situation.
Senatory Novstrup,
You write, "I am opposed to the Obama concept of "reward your friends and punish your enemies". (see Solyndra)."
Were you also opposed to the K Street Project and other efforts that Bush/Cheney undertook to award their friends and punish their enemies? Neither party has a monopoly on using the perks of office to reward friends and or punish enemies.
I see two extremely important conservative statements above:
Libertarian Ken Santema: "As a taxpayer I would rather my money to go infrastructure and education than corporate welfare...." Oh my! Santema for State Senate!
Republican State Senator Al Novstrup: "I prefer the government does the least amount of picking winners and losers...." Then I expect Senator Novstrup, seeing the havoc NBP has wrought on his community, will charge into the 2014 session carrying legislation to end South Dakota's involvement in the winner-picking EB-5 visa program (including shutting down SDRC Inc.) and repeal the corporate welfare of this year's Senate Bill 235, the economic development omnibus bill that Senator Novstrup mistakenly voted for this year.
Kal Lis quite properly questions Senator Novstrup's sincerity in saying "I am opposed to the Obama concept of "reward your friends and punish your enemies." I challenge the accuracy of the statement—it is most certainly not a concept invented by or unique to President Obama—and ask how Senator Novstrup can make that statement with a straight-face in a South Dakota still living in the shadow of Bill Janklow.
Senator Novstrup, by your own logic, Solyndra mmust have been good for the government with the increase federal income taxes that could be collected, the new technology created, the property taxes in the area, etc?
By the way: Ken, Korean contractors following the wrong code? Good grief! Whose stupid idea was it to contract out to Korea?
Ken, you say "Continued state intervention would allow any future managers of the plant to ignore market forces." I think you mistake the level of socialism I'm proposing. I'm not talking about continuing this petty fire-and-forget crony capitalism in which South Dakota gives NBP some handouts to benefit their friends (Al! pay attention here!), lures in some remote foreign investors who are more interested in green cards than plant operations, and then leaves NBP to sink or swim. I'm talking about full-tilt socialization: take over, directly hire the management team, dictate that they follow the sensible business plan and good marketing practices David talks about, and tell them, "Make this sucker work or you're fired!" I don't think the folks who ran the cement plant for the state for decades were somehow unaccountable to the market; they did pretty good business, didn't they?
I think you could understand I wouldn't support a full socialized takover of the plant. I've heard both good and bad about the cement plant. But, in the end the R's in this state are not putting for an opinion of what to do. (besides Sen N, but saying that as a comment on a blog is not the best method).
Right now I have no faith the State won't try to step in and do something. Daugaard is not a friend of the free market from my viewpoint. I don't think he would go for a full takeover like you suggest, but I do think he will try to push for more corporate welfare.
As I understand it they saved a lot of money using their Korean contractors. And they did a good job, when it was done right. There are just too many differences between their code and ours that caused a lot of re-work. That would just make me nervous as a potential buyer of the facility.
Sometimes saving money up front doesn't save money long-term, does it?
I will oppose further corporate welfare for NBP. We handed over enough money for someone else to pour down a hole. If we're going to intervene, we should do so fully, full socialization, with maximum control and accountability for the use of our tax dollars.
No matter how much NBP has generated in tax revenue (and remember, NBP is delinquent on property taxes and city utility bills), state and local governments would have come closer to breaking even (a pretty poor policy goal) or coming out ahead if they had put no money into the project or if they had gone whole hog, built a wholly taxpayer-owned enterprise, and taken revenues directly.
Senator Novstrup and Governor Daugaard seem to hit the sweet spot—or should I say sour spot?—for mixing the worst parts of socialism and capitalism. They throw taxpayer dollars into the enterprise, but they don't take charge and hold the users of that money accountable.
If NBP isn't a sure enough business venture for the state to buy and operate à la the cement plant, then the state shouldn't have invested our money into it in the first place.