September 9, 2010
Phantom Jobs:
The Texas Enterprise Fund's Broken Promises
Endnotes:
1 “Recession Pounds Perry’s Job Fund,” Texans for Public Justice, January 27, 2010. http://info.tpj.org/watchyourassets/enterprise2/index
2 Based on improved compliance reports in 2009, TPJ upgraded Comerica and Home Depot, from “troubled” classifications in 2008 to “performing” in 2009. Meanwhile, five projects that TPJ deemed “troubled” in 2008 shifted to “non-performing,” two were terminated and one was amended.
3 It amended the Texas Energy Center’s contract in 2005.
4 The Governor’s Office has released two separate HelioVolt amendments. The 2009 compliance documents filed by Rockwell Collins and Martifer suggest that each of recipients also negotiated two amendments apiece and the Associated Press reported in early 2010 that Vought Aircraft landed a second amendment. At press time, the Governor’s Office still had not released second amendments for these three contracts under the Public Information Act.
5 During the 2003 dot.com bomb, Texas’ unemployment rate peaked at 6.8 percent.
6 See http://www.governor.state.tx.us/files/ecodev/TEF_Listing.pdf
7 “For State, Slump Is Worst in Decades,” Austin American-Statesman, March 18, 2010.
8 “Hutchison Jabs Perry Over Texas Enterprise Fund,” Associated Press, January 28, 2010.
9 These jobs are associated with 51 TEF projects that largely overlap the 50 TEF projects highlighted in this report. By way of exception, TPJ never obtained 2009 compliance reports for four of the 50 TEF projects highlighted in this study (Alloy Polymers, Cabela’s, Sematech and Texas Instruments). Conversely, TPJ did obtain 2009 compliance reports for five recent TEF projects otherwise excluded from this report because they did not face 2009 job targets (Caterpillar, Grifols, McLane Advanced Technologies, Medtronic and Zarges). TPJ counted any 2009 jobs that these companies reported.
10 Alloy Polymers also appears to have sought TEF credit for 32 pre-existing jobs.
11 The Governor’s Office awarded almost $12 million in TEF funds for three projects bereft of job targets. Baylor College of Medicine milked $2 million from TEF for a no-jobs-required proposal to map the genetic structure of a cow. The parties terminated the Baylor deal in October 2009, declaring all its terms met. TEF also awarded $9.8 million to two projects connecting major Texas universities via a fiber-optic network: The Lonestar Education & Research Network (LEARN) and the Texas Internet Grid for Research & Education (TIGRE). TEF treats LEARN and TIGRE as a single grant despite the fact that they signed separate TEF contracts.
12 Allstate, Cardiovascular Systems, Caterpillar, Facebook, Grifols, Hanger Orthopedic, Kohl’s, LegalZoom, McLane Advanced Technologies, MiniMed Distribution (Medtronic) and Zarges Aluminum.
13 This excludes Alloy Polymers, Cabela’s, Sematech and Texas Instruments, for which the Governor’s Office provided no 2009 jobs data.
14 This amounts to a 20-job surplus beyond the 2007 target of 20 jobs—provided that you count the 32 preexisting Amapcet jobs as “new.”
15 “Company Cancels Enterprise Fund Deal,” Austin American-Statesman, September 2, 2010.
16 “Countrywide Plans Deep Cuts,” New York Times, September 8, 2007.
17 “Perry Blasts Washington Inaction On Rescue Plan,” Associated Press, Austin American-Statesman, October 1, 2008.
18 “Gov. Rick Perry’s Remarks Regarding Countrywide Financing,” Office of the Governor, December 14, 2004.
19 That is $7.9 million, or $8.5 million with interest.
20 “$600 Million Countrywide Settlement,” New York Times, August 3, 2010.
21 “BofA To Pay $108 Million in FTC Case,” Wall Street Journal, June 8, 2010.
22 “HP May Cut as Many Jobs As 25,000,” Latin American Herald Tribune, July 19, 2005.
23 “What Are Jobs Worth?” Austin American-Statesman, January 24, 2010.
24 HP’s first job target was a total of 180 new jobs by the end of 2007.
25 Sino shed 77 more workers in 2007.
26 “Reappraising the Governor,” Texas Observer, May 29, 2009.
27 “Murky Land Deals Mark Gov. Rick Pery’s Past,” Dallas Morning News, July 25, 2010. “Rick Pery’s Property Buyer in ’07 Land Deal Was Influential But ‘Invisible,’” Dallas Morning News, July 24, 2010.
28 “If the Horseshoe Fits,” Austin Chronicle, August 3, 2010.
29 “Sino Swearingen Lands New Investor,” San Antonio Express-News, September 25, 2007.
30 The exception is Motiva, which appeared to comply with the 2009 job targets contained in its original TEF contract.
31 Cabela’s Vice President David Roehr letter to Texas Economic Development Executive Director Jeff Moseley, November 13, 2003.
32 The state also kicked in $20 million in work on the I-35 interchange near the Buda store. See “Cabela’s Sought Big Incentives From State,” Austin American-Statesman, November 22, 2005.
33 The contract stipulates that the Cabela’s jobs offer an average annual gross compensation of at least $23,000.
34 “Dalhart’s Dairy Boom,” Dairy Today, June/July 2007.
35 “Behold the Power of Cheese,” Texas Dairy Review,” January 2006.
36 “What Are Jobs Worth?” Austin American-Statesman, January 24, 2010. “Samsung Tax Refund Bid Wins Council’s Support,” Austin American-Statesman, August 27, 2010.
37 “Texas-Size Stakes: Austin Lands Samsung’s $4 Billion Fab,” Site Selection Magazine, May 4, 2006.
38 “Samsung ‘Holding Breath,’” Austin Business Journal, January 29, 2010. “Booming Demand for Flash Memory Drives Renovation of Austin Complex,” Austin American-Statesman, February 8, 2010.
39 Including 275 direct hires and 100 contract workers.
40 284 direct hires and 194 contractors.
41 Several days before Samsung completed its 2008 compliance report a local paper reported a modest layoff of fewer than 20 of Samsung’s 1,800 local employees in response to “a severe global downturn in demand for semiconductor products.” See “Samsung Reorganizes Austin Subsidiary,” Austin American-Statesman, January 27, 2009.
42 “Samsung Austin Semiconductors Plans To Cut 550 Jobs,” Austin American-Statesman, August 12, 2009.
43 “Samsung Lays Off Hundreds for Project,” KXAN Austin, August 14, 2009 (updated August 15, 2009).
44 “Samsung Giving $1 Million To Local United Way Today,” Austin American-Statesman, September 1, 2010.
45 “Samsung Investing $3.6 B in Austin,” Austin Business Journal, June 6, 2010.
46 “Samsung ‘Holding Breath,’” Austin Business Journal, January 29, 2010.
47 “Report Details Reworked Jobs Deal,” Austin American-Statesman, January 28, 2010. Cryer told the Statesman that this total adds up to about 3,000 workers.
48 “Perry Makes South Korea Stop to Visit Samsung,” Austin American-Statesman, June 23, 2010.
49 “Samsung Giving $1 Million To Local United Way Today,” Austin American-Statesman, September 1, 2010.
50 A similar variant of the agreement is dated November 1, 2003.
51 The deal also calls for Sematech to spur 4,000 indirect jobs by 2014.
52 “International Sematech Agrees to Locate Headquarters at University at Albany Nanocollege,” Governor Eliot Spitzer press release, May 9, 2007.
53 The funds can only be used for “capital pursposes.” The parties formally approved this deal on May 12, 2010—before the expiration of the seven-year black-out period in Sematech’s TEF deal.
55 The first paragraph of the agreement says that it is between the State of Texas and “Sematech, Inc., doing business as International Sematech, a not-for-profit membership consortium incorporated in the State of Delaware (‘ISMT’).”
56 “Is Sematech Slipping Away to New York?” Austin American-Statesman, May 23, 2010.
57 “Chip Alliance Sematech Again Taps IBM For Chief,” Austin American-Statesman, November 18, 2009.
58 Sematech May Sell Austin Lab,” Austin American-Statesman, October 12, 2007. “Sematech To Sell Chip Facility,” Austin American-Statesman, December 4, 2007.
59 Sematech May Sell Austin Lab,” Austin American-Statesman, October 12, 2007.
60 Including “direct hires, assignees and guest researchers.”
61 In its January 2010 TEF report, TPJ erroneously reported a different figure: 437 jobs instead of 277. The source of that error was a compliance report that said Sematech had 480 Austin employees for 2004-2005. Although this meant that Sematech had 480 employees in the fiscal year beginning in 2004 and ending in 2005, TPJ wrongly took it to mean that Sematech had 480 employees in both of those calendar years. Instead, Sematech reported 640 employees in 2004. This suggests that Sematech had 277 employees in 2008, to yield its reported average of 477 for the years 2004 through 2008.
62 “Where Are Sematech Jobs?” Austin American-Statesman, May 25, 2010.
63 Superior reported 78 new jobs in 2006 and 65 in 2007.
64 “Airplane engine firm to hire 114,” Midland Reporter-Telegram, August 23, 2006.
65 “Revving up the economy,” Odessa American, April 23, 2007.
66 “Who’s Funding Workforce Development?” The Policy Page, Center For Public Policy Priorities, April 4, 2005. The Texas Workforce Commission administers the Skills Development Fund.
67 This followed a reported surplus of 63 jobs in 2008.
68 “Tyson Foods Illegal Immigrant Lawsuit Thrown Out,” Associated Press, February 13, 2008.
69 “Tyson Foods Settles Wage Case With U.S.,” Wall Street Journal, June 14, 2010.
70 The Governor’s Office has released two separate HelioVolt amendments. The 2009 compliance documents filed by Rockwell Collins and Martifer suggest that each of recipients also negotiated two amendments apiece and the Associated Press reported in early 2010 that Vought Aircraft landed a second amendment. At press time, the Governor’s Office still had not released second amendments for these three contracts under the Public Information Act.
71 The exception is Motiva, which appeared to comply with the 2009 job targets contained in its original TEF contract.
72 Allied is a subsidiary of Titan Tank & Vessels LLC.
73 The company said it had invested about three-quarters of the $16.3 million that it had promised to invest in Texas.
74 Fidelity’s 2008 tally includes six employees who worked at company subsidiaries that were not covered by its TEF agreement. The Governor’s Office said that it agreed to expand the agreement to cover additional subsidies.
75 “Fidelity Expansion Is a Go,” Dallas Morning News, February 8, 2007.
76 “HelioVolt Corp. Puts Off Growth,” Austin Business Journal, February 5, 2010.
77 It reduced these damages from $1,396 per missing job to $1,340. The preamble to the December 2008 amendment suggests this tweak was “due to the timing of the initial disbursement” of TEF funds. According to TEF records, this first $500,000 payment occurred the following month in January 2009.
78 “HelioVolt’s First Solar Materials Plant Prepares To Fire Up in Austin,” Austin American-Statesman, October 23, 2008.
79 “Report Details Reworked Jobs Deals,” Austin American-Statesman, January 28, 2010.
80 TEF reports that HelioVolt paid $45,560 in penalties, an amount commensurate with just such a shortage. The $45,560 clawback divided by the amended penalty ($1,340 per missing job) equals 34 missing jobs.
81 Including at least 300 direct hires and no more than 300 jobs through Orion-project subcontractors
82 This included 495 direct hires and 208 Orion subcontractors.
83 The compliance report that Martifer filed in January 2010 says that it had just signed a second TEF amendment.
84 “Shell, Motiva Cut Jobs in St. Charles Parish, Other Plants,” Times-Picayune, July 17, 2009.
85 The original deal required 4,000 jobs by the end of 2012; the amended deadline is the end of 2015.
86 This amendment dropped the pre-agreement baseline from 947 Rockwell employees in Texas to 932 Texas employees.
87 With the lower jobs baseline adopted a month after Rockwell filed this report, this deficit presumably would drop to a shortage of 113 jobs.
88 The Center reported that it had a hand in creating the most jobs at EMS Pipelines Services, Inc. (817 jobs), Sunoco Logistics Partners, LP (228) and Schlumberger Technology Corp. (115).
89 “Beneficiary of State Grant Has Links To Perry,” Houston Chronicle, August 7, 2005. The contributing stockholders were Robert McNair, William McMinn and Gordon Cain’s family (Gordon Cain died in 2002).
90 “Of Mice and Men,” Texas Tribune, May 10, 2010.
91 The agreement also counts jobs at concerns in which Lexicon owns 50 percent or more.
92 The Texas Workforce Commission credited Texas jobs in these industries to the A&M Institute: Wet Corn Milling; Soybean Processing; Other Oilseed Processing; Ethyl Alcohol Manufacturing; All Other Basic Organic Chemicals; Cellulosic Organic Fiber Manufacturing; Nitrogenous Fertilizer Manufacturing; Phosphatic Fertilizer Manufacturing; Fertilizer (Mixing Only) Manufacturing; Agricultural Chemicals Except Fertilizer; Medicinal and Botanical Manufacturing; Pharmaceutical Preparation Manufacturing; In-Vitro Diagnostic Substance Mfg; Other Biological Product Manufacturing; Electromedical Apparatus Manufacturing; Analytical Laboratory Instruments; Irradiation Apparatus Manufacturing; Surgical and Medical Instrument Mfg; Dental Equipment and Supplies Mfg; Ophthalmic Goods Manufacturing; Dental Laboratories; Testing Laboratories; Research and Development in the Physical, Engineering, and Life Sciences; Medical Laboratories; and Diagnostic Imaging Centers.
93 Under the original deal Lexicon already would have had to create 1,550 new jobs by then. Lexicon reported in 2009 that it had created no new jobs.
94 The original agreement requires claimed jobs to have an average annual gross compensation of $60,000—or $15,000 per quarter. The Workforce Commission divides quarterly payroll wages in the selected industries by $15,000. If aggregate compensation exceeds the floor amount, A&M gets extra job brownie points.
95 Triumph Group, a Pennsylvania-based maker of aircraft parts, purchased Vought from the politically connected Carlyle Group in March 2010. “Triumph To Acquire Vought Aircraft for $984 Million,” Wall Street Journal, March 24, 2010. “Vought Eager To Grow as Part of Triumph,” Dallas Morning News, August 31, 2010.
96 “Vought’s Grant Has an Escape Clause,” Dallas Morning News, May 15, 2006. “Vaught’s Plans Up In Air,” Dallas Morning News, June 13, 2005.
97 “Three More Enterprise Fund Companies Fall Short on Jobs,” Austin American-Statesman, May 21, 2010.
98 “Washington Mutual Lays Off 255 Employees,” Associated Press, November 2, 2006.
99 “J.P. Morgan Chase To Cut 2,800 Jobs at WaMu,” Dallas Morning News, February 27, 2009.
100 “Failed Thrift’s Execs Defend Banks Actions,” Dallas Morning News, April 14, 2010.
101 In 2006 WaMu claimed a 30-job surplus beyond its target of 1,200 jobs.
102 WaMu reported that the new facility accounted for 1,855 of these employees.
103 “Enterprise Fund Companies Allowed to Count Part-Time Jobs,” Associated Press, April 17, 2009.
104 General Electric has no job-creation targets.
105 Dr. Kenneth Shine letter to Texans for Public Justice, December 22, 2009.
106 “Finally Chip-Shape: Plant Built in ’06 To Begin Production,” Dallas Morning News, September 30, 2009.
107 “TI To Cut 191 Jobs,” Associated Press, September 10, 2007.
108 “Texas Instruments Wins $51 Million Tax Credit for Richardson Plant,” Dallas Morning News, January 9, 2010.
109 “Chip Maker Seeks To Grow On the Cheap,” Wall Street Journal, April 27, 2010.