While state officials battle to make Michigan the international home of self-driving vehicle production, a deal made by the state to give $8 million in taxpayer subsidies to Google, one of the wealthiest corporations in the world, is raising eyebrows.
The pact announced last week paves the way for a so-called light-manufacturing facility to be located in southeast Michigan by Waymo, the Google parent company’s autonomous vehicle subsidiary. The Michigan Economic Development Corporation (MEDC), a quasi-government agency, said the agreement could mean $13.6 million in investment and 400 jobs.
But, as Chad Livengood of Crain’s Detroit Business pointed out, under the MEDC subsidy “Waymo’s taxpayer assistance will be $20,000 per job if the company creates 400 jobs, but they’re only obligated to create 100 jobs under this deal with the MEDC.”
If Waymo only produces the minimum 100 jobs, the state subsidy would amount to $80,000 per job created.
According to the Midland-based Mackinac Center for Public Policy, Waymo will locate “vehicle integration” operations in southeast Michigan at a location yet to be determined. MEDC officials say the factory will be the first of its kind, mass producing autonomous vehicles which require no driver attention whatsoever within mapped-out areas.
Waymo says it will hire engineers, “operations experts and fleet coordinators” in the region to assemble the self-driving vehicles.
Supporters of the subsidy say that state vs. state competition for new employers, fueled by tax subsidies, has become standard procedure over the past several decades. Tax breaks are expected by the corporations searching a location for a new investment project.
Michael LaFaive, senior director of the Morey Fiscal Policy Initiative at the Mackinac Center, argues that Waymo likely would have located in Michigan without a subsidy.
“There were many reasons for Waymo to pick Michigan: talent, location to suppliers … winter test grounds and more,” LaFaive said. “The subsidies they received just look like taxpayer icing on their location choice cake.”