Should members of the LSU Board of Supervisors disclose who receives their scholarships?|
Story Archives: Next is dead and gone
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|Next is dead and gone|
Next Autoworks' announcement last week that it was pulling the plug on its plans to set up an automobile manufacturing operation in Ouachita Parish wasn't a surprise.
It wasn't a surprise because it was obvious long ago even to a casual observer that the federal government wasn't very hip on helping finance Next Autoworks' foray into the car-building business. To be more specific, it was the U.S. Department of Energy (DOE) that wasn't keen on floating a roughly $320-million loan to Next Autoworks. The loan was intended to largely underwrite the start-up company's plans to turn the former Guide plant in eastern Ouachita Parish into a full-fledged operation to manufacture fuel-efficient cars.
Though Gov. Bobby Jindal, Congressman Rodney Alexander and U.S. Sens. Mary Landrieu and David Vitter lobbied DOE to approve Next Autoworks' loan, Energy said "no" last week, prompting Next Autoworks to call it quits in Louisiana. It wasn't the Thanksgiving message we had hoped to hear at the onset of the 2011 holiday season.
That Next Autoworks had pledged to create some 1,400 new, direct jobs and an additional 1,800 indirect jobs in one of the most impoverished regions in the country apparently didn't sway DOE. If the promise of creating new, good-paying jobs in building fuel-efficient automobiles wasn't sufficient to secure some fat financing from DOE's Advanced Technology Vehicles Manufacturing program, what does it take?
Yet, DOE's decision to deny Next Autoworks the financing it needed to make the former Guide plant useful again raised a question or two.
Was it politics that drove DOE to tell Next Autoworks "no"?
Think about it.
Louisiana is a Republican-voting state these days. Our governor is a Republican. The congressional district in which Next Autoworks would do business in Louisiana is represented by a Republican. One of our U.S. senators is a Republican.
Is it possible that the Obama administration being Democrats that they are instructed DOE to say "no" to Next Autoworks because high-ranking elected officials in Louisiana aren't exactly polite to President Obama?
Or could it have been that Next Autoworks simply was a bad investment as far as DOE was concerned?
My money is on the latter, for Next Autoworks' business plan stunk to high heaven from the start.
Think about that one, too.
Think for a moment and recall that Next Autoworks (formerly V-Vehicle Co.) at one point or another had about $100 million in capital raised from private investors, including some prominent individuals from northeastern Louisiana. Remember as well that Next Autoworks was granted some $130 million in aid and incentives from the state of Louisiana to do business in Louisiana. Remember, too, that Next Autoworks was helped along by a $15-million incentives package courtesy of entities in Ouachita Parish, including the cities of Monroe and West Monroe, the Ouachita Parish Police Jury, Ouachita Economic Development Land Corp. and the Interstate 20 Economic Development District.
And lastly, don't forget about the $320-million loan from DOE. It represented the bulk of the money Next Autoworks was banking on to get its legs firmly planted to manufacture those fuel-efficient automobiles, which would compete with the likes of Ford, General Motors, Mazda, Nissan, Toyota, etc
In the real world, or as I was taught long ago, it's a risky proposition to go into business largely relying on borrowed money to make a go of it. In Next Autoworks' case, the company raised only $100 million or so and was banking on the taxpayers to pony up some $465 million to cover the remainder of its start-up costs.
Does that represent a wise investment of taxpayer monies?
Absolutely not. And the men and women at DOE apparently felt the same way.
That's all water under the bridge now. Next Autoworks is dead and gone as far as we're concerned in northeastern Louisiana.
It's time to move on to something else.