The Monroe News-Star has the story this morning of the doings at the Senate Finance Committee, where in marking up the state’s budget bill yesterday Chairman Mike Michot addressed the topic of the $82 million in economic development funds the House had scrubbed. And specifically, the $67 million of that $82 million which is supposed to fund the state’s end of the V-Vehicle/Next Autoworks project.
If Gov. Jindal and his staff were expecting Michot to put that $67 million back into the budget, they were probably disappointed. He doesn’t sound like he’s playing. Michot said that Next Autoworks will have to secure a federal commitment for some $320 million in Department of Energy loans as startup capital before the end of the legislative session, or else they can kiss the state dollars goodbye.
“I support the (Next Autoworks) project,” said Michot, R-Lafayette. “I’ve seen the car and driven the car and believe in it. But we have to have some indication that the Department of Energy is going to support it on the federal level.”
Michot doesn’t have the votes for the state to fund the thing at this point, because even the politicians at the legislature are starting to figure out the fact that Next Autoworks is doomed. Regular folks figured this out a long time ago – these guys have diddly poo for private capital at present, and their business model looks fishy. Selling a fuel-efficient gasoline-powered car for $10,000 sounds terrific on paper; how that’s possible in practice is the problem.
And if they’d really cracked the code, they’d be able to bring investors on board to get the project off the ground. Instead, Next Autoworks has to have $320 million in loans from the feds and another $67 million from Louisiana – and THEN they’ll start making cars in Monroe.
As we’ve mentioned before, it’s impossible to build a car for under $10,000 using union labor. Which means these guys are asking a White House where Richard Trumka is practically a piece of the furniture to stake them in setting up a factory in a right-to-work state where only three percent of the private-sector labor force is unionized.
That’s the same White House which is practically choking on their bailout of GM – the CEO of which company just went public saying “Hey, y’know what would be an awesome idea? An extra $1 gasoline tax so we could sell more Chevy Volts!” Next Autoworks wants this White House to put up $300 million so they can dilute Government Motors’ market share.
Shockingly, for the last two years the answer has been no.
That answer isn’t going to change before the end of the legislative session. Michot knows it, and so does Democrat Sen. Francis Thompson – who has been lobbying the Finance Committee to put the $67 million back onto the table.
“The chairman is sympathetic and supportive of putting the money back in if we can get some word from Washington,” said Thompson, a nonvoting member of the Senate Finance Committee. “But if we don’t get some kind of commitment, it’s unrealistic to expect that we can hold that money.
“Even though (Michot) is the chairman, he just has one vote, and now people are voting with their pocketbooks. It’s easier for them to cut somewhere else than it is for them to cut something back home.”
Yeah – especially when that somewhere else is a deal which is never going to happen.
But there’s some quality material at the end of the News-Star’s piece – Next Autoworks spokesman David Hitchcock is putting as happy a face on this Charlie Foxtrot as he can and says they’re headed to Baton Rouge next week…
“We want to talk to them and provide a face to face update,” said Next Autoworks’ David Hitchcock. “We’re in daily communication with the (Energy Department) on our application.”
Daily communication, which probably looks like this…
Next Autoworks: Hey, about that loan…
Department of Energy: You again? Go away, kid. You bother me.
Next: Well, you know we’ve got some new information…
DOE: Here’s a quarter. Call someone who cares.
Look, if these guys can raise some private capital to get this thing off the ground and the state of Louisiana can do things to help short of just giving away tax dollars we don’t have, we don’t have a problem with Next Autoworks setting up shop in Monroe. It’d be great if the state could expand our manufacturing base, and certainly Monroe’s economy could use another sizable employer.
But Louisiana doesn’t have $67 million lying around. We have a $1.6 billion deficit. When you’ve got a deficit of that size, you don’t throw cash at unicorns. Michot gets that, and so does Thompson. They just don’t want to have to be the guys who finally break the news to Next Autoworks and the Jindal administration that the party’s over.