Thursday, January 28, 2010

Perry Lowers TEF Bar for Carlyle Group Subs

The Fort Worth Star Telegram reported Governor Rick Perry amended Texas Enterprise Fund agreements with 11 firms. Two of the eleven, Vought Aircraft and Authentix, are affiliates of The Carlyle Group, a Washington D.C. based, i.e. politically connected, private equity underwriter (PEU).

For $35 million Vought Aircraft Industries promised 3,000 new jobs by 2009. The company employed 3,350 people in the Dallas area in 2004. Instead of reaching the promised 6,350, Vought eliminated 35 full time positions. As of January 2010, the company doesn't employ that number worldwide. A Vought news release states:

Vought has annual sales of approximately $1.8 billion and about 6,000 employees in eight U.S. locations.

Rick Perry paid $1 million per job eliminated for reneging on stated commitments. Vought suggested it would close its Nashville and Stuart operations, while dangling Boeing Dreamliner production. It did nothing. The Tennessee and Florida plants still operate. Vought took $66.7 million from South Carolina for the Boeing 787 production line, which Vought gunked up due to a liquidity crunch. The 787 Dreamliner flew two years late, mostly due to Vought's tainted operations.

Authentix received a $1 million grant to move from Pennsylvania. The company promised to add 120 new jobs. The grant was awarded in August 2007. The Carlyle Group purchased Authenix in April 2008.

Gov. Perry's TEF press release was issued 1-26-10, a full eleven days after I suggested sending a $35 million invoice to Carlyle's offices at 1001 Pennsylvania Avenue. How were agreements amended? That information is not public.

Pay for performance shifted from number of jobs to pay levels in the Vought deal.

Vought Aircraft’s amendment clarifies that the company will receive credit for compensation and benefits higher than $53,000 per job.
Authentix was given a reprieve, time to meet stage one of commitment:

The jobs fund will hold back a second payment of $250,000 to Authentix, an Addison maker of counterfeit-detection nanotechnology, until 61 jobs are created. In 2007, it had contracted to hire 120 people by 2012.

Behind that charming Southern drawl, Rick Perry is a Corporacrat. The Carlyle Group is most appreciative. University of Texas, not so much. They could use the $35 million.

Update: Perry challenger Kay Bailey Hutchison won't bring this up. Her supporters include James A. Baker, III and President George. H. W. Bush. Both men have ties to Carlyle.

Update 1-24-24:  Carlyle will defend the company in a lawsuit brought by investors over the sale of Authentix to Blue Water Energy LP in 2017.