Dateline, February, 2004.
Press release from the Office of the Governor:
Gov. Rick Perry today announced a $35 million commitment by the Texas Enterprise Fund to Vought Aircraft Industries, Inc., to assist the companies’ expansion in Texas. Vought, the largest privately owned aerostructures manufacturing company in the nation, will bring 3,000 jobs to the Dallas area by 2009.“With this commitment in Texas Enterprise Fund money, we are doing our part to leverage a major economic expansion by a valuable Texas employer that will bring 3,000 new jobs to Texas, attract additional employers to our state, and provide the revenue we need to sustain important public investments in areas like education and health care,” Perry said.
“Taxpayers can know that this is a wise investment of public dollars because, once this expansion is finalized, the annual return will be more than twice the original investment,” he added.
Vought is planning to bring jobs from facilities in two other states to Texas. The two facilities will be transitioned gradually to the Dallas manufacturing location over the next 18 to 36 months.
“Today Texans have great cause for celebration,” Perry said. “A historic company with deep ties to Texas is taking the next big step, adding 3,000 direct jobs over the next five years and helping to boost the Texas economy, expand opportunity in related fields, and prompt other employers to look to Texas as the model for economic growth and a great place to do business.”
Perry also said that both state and local government are committed to making sure that Hensley Field is open in time so that Vought has access to a 24-hour, private airfield for the shipment of all goods and parts. He also announced that Texas will provide job training assistance through the Texas Workforce Commission.
“The creation, retention and attraction of jobs is one of my top priorities as governor of Texas,” Perry said.
At the time of the announcement, Vought employed approximately 3,350 people according to BizJournals.
The Texas target is 6,350 jobs by 2009. With two months to go, Vought won't make their commitment. Data from the company's website shows:
Dallas (Jefferson Street) with 2,680 employees
Grand Prairie (Marshall Street) having 635 employees
That totals 3,315 workers. Rick Perry gave Vought $35 million to reduce 35 jobs over a five year period? That's $1 million per job cut.
Where did the jobs go? 950 stayed in Nashville, TN in a plant Vought promised to close. The big chunk went to South Carolina, which provided $66.7 million and an influential defense oriented Senator in Lindsey Graham.
Vought's corporate parent, The Carlyle Group, knows how to garner a return on Texas taxpayer money. If they got 10% annually, measly by Carlyle's 25-30% track record, Rick's grant gift provided Vought with $3.5 million a year. That's more than enough to fund the firm's $2 million annual management fee paid to Carlyle headquarters.
Vought gunked up the 787 Dreamliner production line, such that Boeing bought out a joint venture with Alenia and the firm's North Charleston operations, a combined 2,500 jobs. In a Rick Perry like move, Governor Mark Sanford heralded his state's economic development win.
South Carolina wants more, specifically a second Boeing 787 production line. Other potential sites included California, Washington, and Texas (San Antonio). Mark Sanford showed his hand:
The state offered Boeing $170 million in upfront grants for start-up costs, plus multiple tax breaks that would be worth tens of millions of dollars more. But there's a catch -- if Boeing doesn't invest $750 million and create 3,800 new jobs in South Carolina within seven years, all the money from South Carolina to Boeing vanishes, according to the Seattle Times.
What ever Governor Perry offered Boeing wasn't enough. Like Vought, Boeing chose South Carolina.
Vought used Rick's $35 million as a "cash spin off" kitty, but don't worry. They plan to pay it back.
We reclassified $2.1 million related to the Texas grant to the Accrued and Other Liabilities caption in our Consolidated Balance Sheet due to a potential repayment of grant funds in 2010 based on the agreement. The liability reclass is an estimate as no payments are due as of June 28, 2009. (page 14 of Vought's most recent 10-Q)
The Carlyle sub plans to return Texas taxpayer money very slowly. At that rate it will take 16 years for Vought to pay back our $35 million. Who knew a Texas Governor would impersonate a New York financier?