Wisconsin Incentives Seal the Deal for the PentagonDecember 10, 2009
When the Pentagon decided to move the production of Army trucks from Texas to Wisconsin after 17 years, Texas officials were caught flat-footed. Now the state's Republican governor, Rick Perry, and the State senate are scrambling to keep BAE Systems in Texas. The announced exodus would result in BAE Systems losing a $2.6 billion deal and a loss of about 10,000 direct and indirect jobs. The Wisconsin-based Oshkosh Corp. undercut BAE Systems' bid by about 10%, according to the Houston Chronicle, and was helped by generous incentives offered by Wisconsin Gov. Jim Doyle and the support of the predominantly Democratic congressional delegation that helped Barack Obama reach the White House. Texas, meanwhile, appears to have taken for granted that the Pentagon would keep production in the state and did not provide any incentives, according the article. The finger pointing has started in Texas with people raising questions about overconfidence and loss of political clout. Yet, such incentives are never the best long-term strategy, says Jerry (Yoram) Wind, a marketing professor at Wharton. "If their products are expensive and non-competitive, the solution is re-examining their design, manufacturing and service processes, and reinventing them to be competitive," says Wind. "Political lobbying and asking for taxpayer money to subsidize their inefficiencies is not a viable long-term solution." Wisconsin offered $35 million in tax breaks and economic assistance over 12 years. BAE Systems has appealed the Army's decision to contract with Oshkosh and the congressional watchdog, the Government Accountability Office, is expected to make a decision in mid-December, according to the Chronicle. |
|
