As the snow starts to fly, Governor Dennis Daugaard is getting ready to fly south... as is a chunk of our tax dollars. Right after the Western Governors' Association meeting in Palm Springs December 7 and 8, Governor Daugaard heads to San Diego to press the flesh with up to 60 CEOs in hopes of getting them to come do business in South Dakota.
One offer already on the table: Governor Daugaard is offering $20 million in grants and loans to get startup brake engineers PureForge to move to Rapid City.
Alas, we see another example of the failure of South Dakota's low-tax/no-tax policies. One would think that our purported lower cost of living, our lack of income tax, and our lighter regulatory regime would have California businesses flocking here. But PureForge apparently needs a bigger bribe to leave the land of earthquakes for our stable ground.
PureForge is playing the system, of course, warning its California neighbors that "it'll be hard to keep us here" given South Dakota's offer. Governor Daugaard now needs to hope that California or some other richer state won't decide that PureForge is worth a counter-offer. Such is the terrible bidding war to which these big-business grants inevitably lead us.
Did you notice in the PureForge story where they refer to Rapid City, N.D.? Classic. PureForge is probably not even sure which state it is that's offering them incentives.
Welcome to the New World Order.
Wall Street ships our jobs overseas, and like starving jackals, the states fight each other for the scraps. Freedom!
There is more items needed than a low tax environment. Infrastructure is important thing especially for businesses. If I was running a brake plant, I would want it on the coast where I could ship my parts to the Emerging Auto Market in Asia. PureForge will make more money exporting there product from California than the landlocked state of South Dakota. I could be wrong, but I do not think Gov. Daugaard is lobbying the Corps to put in those Navigation locks by the dam as promised back in 1944. Jobs are jobs.
In the end the taxpayers of where ever they go will lose. This is not capitalism as it should be. If we all compete for all the corporations none of them will pay taxes and no one will balance there budgets.
I like Dennis but I have problems with him hiring his son in law Tony V they way he did. And it doesn't look good that they hired his son Chris to work for 50 thousand either in the PUC. Good first job though.
"This is not capitalism as it should be."
California loses the same jobs South Dakota gains as South Dakota spends $20 million. Capitalism is where the governemnt determines winners and losers. That is not a "free market" economy. It is a form of socialism.
Interestingly, infrastructure is becoming progressively less of an issue for many companies unless they intend to do the production at that location. For design, you need good computers for CAD and some place that will build your stuff. This use to be local machine shops or more specialized places. However, with the rise of rapid prototyping technology such as SLA/SLS/DMLS you can upload a CAD file to a prototyping service and they will build it and ship it to you overnight in some cases.
At SDSMT, I am constantly utilizing these services. For simple things that can wait a little while, I use shapeways.com because they are super cheap. For complex things that need tight tolerance (i.e. 0.001") I use solidconcepts.com. I can get stainless steel/titanium/aluminum parts manufactured and shipped to me in less than 2 days.
Shapeways is also particularly neat because they let you setup a "store front" where they will print and sell your parts on demand! You just have to do the design. They will manufacture, ship, and then send you your profit!
If something becomes super popular and you want to volume manufacture them almost all of these services partner will larger companies that will build any quantity of something you desire. This is the future of commerce.
We are doing the opposite: instead of outsourcing work, we are doing more and more things ourselves. It has meant some significant investment, but I like being able to better control the end product and we use better materials to make prints.
Our philosophy of trying to lure out of state businesses with $20 Million in incentives is a lot like trying to find the cheapest whore on the block. As soon as a cheaper whore (better package) comes along, the buyer leaves you (or your state).
If we're truly about growth, our free incentives like lower state sales tax on major purchases, no state income tax, no inheritance tax, reasonable property taxes, low state sales tax compare to other states and property tax incentives if you build a new facility should be enough to lure profitable businesses.
Imagine if Governor Daugaard took that $20,000,000.00 with him as he travels our State, asking our small business owners if they need capital to hire more staff and grow their firms. The dividends would be massive as would State employment growth! If the State's average of $5000 per full-time employee incentive is applied, a $20 Million incentive package helps create 4000 full-time jobs from our existing firms.
We can get the ball rolling, but remember, you build a ball by growing it from the core.
After watching the video of police hosing down some Occupiers at the UC Davis campus with pepper spray, I should think that people would want to flee California like wasps from a hive sprayed with Raid.
I lived in the greater L.A. area for a couple of years, and discovered some things about that place that surprised me. First, the beaches around there aren't sunny all that often; fog prevails right along the coast. (They call it the "marine layer.") Second, the government of that state is authoritarian, their tax department (the "Franchise Tax Board") notorious for their shoot-from-the-hip tactics, and the people in general (in L.A. at least) ready to sue you at the bat of an eyelash.
And all they ever talk about is this movie or that actor or the other television series.
They ain't the free and easy hippies we might imagine them to be.
To top it all off, they have those Africanized killer bees.
Enough generalizations ... but why shouldn't we try to attract some of California's business away from them? It's free-for-all enterprise, eh?
Maybe we should go after Mercedes Benz since Alabama is now arresting their executives from Germany.
http://www.reuters.com/article/2011/11/22/us-immigration-alabama-mercedes-idUSTRE7AL0DT20111122
How about investing in Tanka Bars as a state, finally, something positive working on the reservations...