Bombardier good news, but tempered

Yesterday’s announcement by aviation manufacturer Bombardier LearJet of an expansion creating 450 jobs is welcome news in Wichita, but the reality under the covers of the deal is more than a little sobering.

First, this is not exactly news, as both the City of Wichita and Sedgwick County had already voted to participate in the subsidies that made the announcement possible. The news from yesterday is that the State of Kansas decided to contribute the last piece of the subsidy puzzle was necessary — purportedly — to make the deal work.

As reported in November (Bombardier Learjet should pay just a little), Bombardier said that after existing government subsidies are subtracted from the Wichita project cost, there was a gap of $16.1 million. Bombardier LearJet asked the State of Kansas to fund this gap, and the state complied.

Bombardier LearJet financing plan. Later the document states “Requesting State of Kansas support to help find gap of $16M.”

So now, of the proposed site expansion costs of $52.7 million, all is being paid for by various forms of government subsidy. And that’s not all. Bombardier is also expected to receive millions in property tax abatements.

Besides this, the Bombardier affair is another example of state, county, and local government engaging in the “active investor” approach to economic development, instead of the dynamic “embracing dynamism” approach. See Kansas needs a dynamic economic growth policy for more.

Last week David Kensinger, Chief of Staff for Kansas Governor Sam Brownback, said that based on governor’s announcement yesterday — and subsequent announcements — “you will see Kansas, and Wichita, and Wichita aviation employment grow.”

We’ll have to hope for two things: That subsequent announcements hold new news, and that the state, county, and city won’t have to pay as much as they have for these jobs. We simply can’t afford much more of this type of news.

4 Comments

  • Any positive news about good paying jobs for Wichita is great news, whether new or old. We should not care who takes the credit but that our community is improved. Lets be less petty about comments that don’t add anything new to the discussion, but the same old liberal democrat playbook.

  • These are the exact same moves that were made with Boeing, and look where it got us. Insanity to do the same thing again.

  • Yeah, seems like this is how it goes now. Just recently, Montreal lost the electrolux plant because Tennesse gave them a bunch of money to move there. This is different but in the same game. Seems like everyone is doing it now. It’s a race to the bottom. Whoever started this way of doing things is definitely pushing capitalism too far. Or is it? I’m not sure. Bottom line, we’re all paying to have the opportunity to get jobs. In the end, maybe the regular joe taxpayer is the biggest loser in this? Or is this good capitalism in the sense that whoever (economic region) wants it most wins? Even if that means bidding for it? Could we get into a “NY Yankees” situation where whoever with the most money takes away whatever they want from other economic regions. And then some regions, low on cash, just can’t pay anymore to get people to move in? A spiral down to the Detroit level?? For sure, in the end its the company itself that wants to go there. There has to be great reasons to go to Wichita, it’s an amazing aeronautical cluster. But if the price is low enough, like in Querratero and Morocco (where Bombardier is opening new plants), it’s worth for them going there for the lower labour costs. For sure, some high tech stuff has to be done in existing highly technical (engineering, etc.) high wage areas (Seattle, Wichita, Montreal, Toulouse, etc.). But parts assembly, etc. ? I think experts need to look into that. For sure Bombardier is investing in Wichita because of all the great minds there. But in the end, are we all better off leaving this way of doing things as it is (whatever region wants it most [pays] wins) OR is this a practice that should be curtailed through legislation? I’m tempted to say leave it alone and let capitalism decide. On the other hand, when it’s tax money paying for it, we have to make sure the benefits outweigh the costs and that this is the best use of the local tax money. I bet, in this case, it is. I’m worried of the NY Yankees situation though. Could this happen? For example, Dubai just paying off companies to move there. Would that be against World Trade rules???
    Pierre (from Montreal)

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