The Orascom Deal - Two Views from Illinois
A couple of Illinois newspapers are editorializing on the recent announcement that Orascom Construction Industries will build its $1.4 billion fertilizer plant in Iowa, and not in Illinois.
The Chicago Tribune says "Bye Bye Jobs:"
This is a terrible loss for Illinois. Once it's built — the biggest capital investment ever in Iowa — this massive fertilizer plant can't move. It is a long-term bet for Orascom, and a long-term source of jobs, related commerce and tax revenues for the Hawkeye State.
But (Orascom CEO Nassef) Sawiris is making a rational choice.
Illinois government leaders need to make rational choices, too, if this state's business climate ever is to improve.
The dithering in Springfield over pension reform has got to end. Illinois' unfunded pension liabilities — $83 billion if you're optimistic — grow by more than $12 million every day. With the massive debts facing today's taxpayers, and the fear that means big tax increases tomorrow, the Nassef Sawarises of the world will keep passing through en route to Iowa, Indiana or Wisconsin.
But the Peoria Journal Star is less glum:
Perhaps (central Illinoisans) shouldn't feel too down, as the jury is still out on whether Iowa "won" or not. That's because corralling the plant will cost governments in the Hawkeye State collectively more than $250 million - more than $1.5 million per job - in various tax incentives, which even in the 21st century is still a nice chunk of change. Wish our neighbors to the west well - even though their governor called us "the poster child of debt, unfunded liability and corruption," which smarts, true though it may be - but time will tell whether it produces the expected return on investment.
Do the 165 full-time jobs really materialize and remain for any length of time? How long will it take those workers to earn $1.5 million each? What if the spin-off development state economic development officials are counting on does not occur? What if those supporting businesses want subsidies to open their doors, too? What protections are built in for taxpayers if the Egypt-based company, Orascom Construction Industries, doesn't do well, or gets a better offer down the road and flies the coop?