Tag Archives: Globalfoundries

When Republicans Attack!

Hey, how’s everybody doin’? Been out in California for the last several days, which explains the relative lack of blogging.

Thanks to the Internet, however, I was able to enjoy the sad spectacle of our two Republican candidates for governor tossing insults back and forth.

Starting with Bruce Lisman’s latest missive that, once again, ties Phil Scott to the Shumlin administration. Quite accurately, it must be said. After all, Phil did spend roughly four years as a member of the Shumlin cabinet — a gesture of cross-partisan generosity on Shumlin’s part that cost him a fair amount of criticism. From me, among others; I thought it was a bad idea to help burnish Scott’s moderate, unpartisan credentials.

Guess I was wrong, not only is Our Lite Gov not using his credential, he’d prefer we all forgot about it. In fact, he’d slip it into a Vermont Yankee storage cask if he could.

Lisman did stretch the truth in depicting Scott as “support[ing] Governor Shumlin’s failed health care exchange.” As far as I can recall, Scott never actually supported Vermont Health Connect; leader that he is, he didn’t actually take a stand on the idea. That is, until he started thinking seriously about running for governor himself.

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The sun sets on the Vermont Enterprise Fund

Hey, remember in January, when the state Emergency Board approved two grants from the Vermont Enterprise Fund? GlobalFoundries was given $1 million, and $200,000 went to BHS Composites. Well, turns out those will be the last VEF grants ever awarded. During its recently concluded session, the Legislature rejected Governor Shumlin’s bid to add new money to the Fund — and decided not to extend the program.

The Fund is empty, and in the absence of legislative action, the program will sunset at the end of the fiscal year.

“It’s disappointing,” says Shumlin spox Scott Coriell*. “The Enterprise Fund has been a useful tool, but we do have other tools at our disposal.”

*Say that five times fast.

There was some funny business around those January grants that may have sealed the fate of the two-year-old program.

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GlobalFoundries: Too big to fail?

Chittenden County is blessed — and a little bit cursed — by the presence of a large high-tech employer: GlobalFoundries, formerly d.b.a. IBM. The Essex facility is a major driver of the area’s economy, and the entire state’s economy for that matter.

And GlobalFoundries knows this, and they seem to know they have us over a barrel.

This is my inference based on a new report by the Associated Press’ master gardener Dave Gram, who has used public-records requests to discover the extent of GF’s demands on the state.

We already knew about the questionable $1 million from the Enterprise Fund. Gram now brings us tidings of a $17 million highway project that GF wants fast-tracked. It would involve improvements on Route 22A, which happens to be the most direct route from the Burlington area to New York State. (22A goes straight through downtown Vergennes. Hope you like your new highway, Vergennians!)

But otherwise it’s of little utility to intra-state traffic. For general transportation, trade and tourism puposes, improvements to US-7 would be more efficacious. But I have a feeling that what GlobalFoundries wants, GlobalFoundries will get.

(Now, if GF can convince New York State to build a decent highway from the Vermont border west of Rutland to I-87, then that would be a great benefit to the western Vermont economy as a whole. If they can do that, then our investment in 22A would be a worthwhile tradeoff.)

GlobalFoundries also wants state backing for “payments to GlobalFoundries from the Regional Greenhouse Gas Initiative, a multi-state pact that spins off money to states with a low carbon footprint.” Gram’s report doesn’t go into the reasoning behind GF’s request; in the absence of more information, I have a feeling that there are more pertinent uses for the money.

But hey, GlobalFoundries is a yoooge employer, and its loss would cripple Vermont’s economy. We may not have much choice.

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The million-dollar greeting card

Okay, here’s my promised post about the Vermont Enterprise Incentive Fund.

It’s garbage. It stinks. It’s an insult to everyone, liberal or conservative, who believes in good government.

It needs to die. Or at the very least, it needs a complete overhaul. Strong words, but I can back ’em up.

The Enterprise Fund, for those just joining us, is a program of state grants for businesses moving to, or making significant investments in, Vermont. It is meant to be used in “unforeseen or extraordinary circumstances.” Those are Governor Peter Shumlin’s own words, quoted from his own press release.

The Fund was most recently deployed last Friday with a $1 million grant to GlobalFoundries, in support of a $72 million investment in its Essex Junction facility. In a number of ways, this grant seems at odds with the Fund’s stated purpose. Let’s start with this: GlobalFoundries announced the investment in October. By November, it had already invested $55 million of the money.

So, absent a time machine, how could an investment made in October be contingent on a state grant approved three months later?

Even if you ignore that anomaly, if the investment is already well underway, how in the world can you classify it as “unforeseen or extraordinary”?

Well, you can’t. In the words of State Auditor Doug Hoffer, this grant was “basically a thank-you note.”

A million-dollar thank-you note. Next time, maybe just go to Capitol Stationers. They have a very nice selection.

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Is there a fight brewing over the Enterprise Fund?

Earlier today, VTDigger broke the news that the state Emergency Board (four top lawmakers plus the Governor) had met on very (VERY) short notice to approve two state grants from the Enterprise Fund: $1 million to GlobalFoundries and $200,000 to BHS Composites. And I commented that this is the kind of thing that makes some see the Governor as a slippery dealmaker.

Well, here’s something you didn’t know. TheVPO has learned, as they say, that 50 state lawmakers wrote a letter to the Emergency Board asking it to postpone action on the grants.

The plea fell mostly on deaf ears, as the Board approved the grant on a 3-1 vote.

One of the letter’s signatories was Rep. Chris Pearson (P-Burlington). Via email, he explained the reasoning:

It was my hope that we could consider using the money to help fill the [FY 2017] budget gap or, more urgently, the [FY 2016] budget adjustment challenge.

The letter was written before the EB’s agenda had been publicly warned — which happened only yesterday afternoon. Pearson adds:

Now that it’s clear the money was for Global Foundries it’s puzzling how a company that was given $1.4 billion to take over the plant could find $1 million much of a game changer.

You and me both, but more on that in a moment. First, the political ramifications of this letter.

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This is the kind of thing that makes people mistrust the Governor

Yesterday, State of the State Address: Governor Shumlin introduces a variety of people whose stories illustrate the impact of his policies. They include two executives from GlobalFoundries and two from BHS Composites. The latter was a surprise entry; Shumlin sprang the news that BHS had decided to open a facility in the Northeast Kingdom, creating an estimated 70 jobs.

Today, the state’s Emergency Board met on very short notice to approve state grants to both companies: $1 million for GF and $200,000 for BHS. VTDigger has the deets:

The Emergency Board, which includes the four chairs of the Legislature’s money committees and Gov. Peter Shumlin as the chair, voted at a largely hush-hush meeting that started at 8:30 a.m.

The Shumlin administration did not formally announce the morning meeting until Thursday afternoon, following his State of the State address.

The information in the meeting’s agenda packet, which was printed on Dec. 29, was considered confidential.

Hm. The agenda packet was printed eleven days ago, and the meeting wasn’t warned until yesterday afternoon — less than 24 hours beforehand.

Okay, so the administration sat on the news so the Governor could make a splash. Great. But if Shumlin ever wonders why he has a reputation as a slippery dealmaker, well, here it is.

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Here we go again

When IBM paid GlobalFoundries $1.5 billion to take its chip-making operations off its hands, including the Essex Junction facility, Vermont breathed a sigh of relief. All the drama, all the domestic cutbacks by IBM, the rumors, the questions… we could put all that to bed.

Right?

Not so much.

Multiple media reports say a state-owned Chinese chip manufacturer has been sniffing around. The Albany Times Union:

Anxious to grow its semiconductor industry and secure a stable supply of microchips for its high-tech economy, the Chinese government is reportedly looking into buying GlobalFoundries…

Mubadala Development Co., the Abu Dhabi government investment fund that owns GlobalFoundries, may be under increasing pressure to consider any offers for its chip-making unit as the plunge of global oil prices has put enormous pressure on the oil-rich emirate’s finances.

Hoo boy. Out of the frying pan.

Makes me wonder two things. First, was GF’s “purchase” of the IBM operation merely a cash grab? A large-scale industrial version of “Flip This House”? Second, all of GF’s assurances to Vermont officials are worth exactly the paper they were written on. Assuming they were ever written down in the first place.

If the GF transaction turned Essex Junction into a pawn in a global game, a Chinese takeover would turn Essex Junction into a zit on a mega-corporation’s ass. I mean, if you think the Chinese wouldn’t close Essex Junction in a heartbeat if they could save a nickel by moving the whole shebang to Shanghai, I’ve got a bridge in Brooklyn you might be interested in.

And it’d have nothing to do with Vermont. In the face of Chinese strategic considerations, our policies and “business climate” are insignificant. That wouldn’t stop Republicans and business types from slamming the Democrats, but it’d be pure substance-free political posturing.

This is far from a done deal. The Times Union says that even if a sale is agreed to, it’s certain to face opposition in Washington. Specifically, powerful New York Sen. Chuck Schumer “has vowed to block the sale of any U.S. technology companies to state-owned companies in China until the government opens up its markets to U.S. firms and stops stealing U.S. intellectual property.”

Which raises an interesting philosophical point. Since IBM dumped its chip business onto GlobalFoundries, is it a “U.S. technology company” anymore?

Well, that wouldn’t keep the politicians from making their hay with some juicy election-year China-bashing. They might even succeed in blocking a sale, or sufficiently fouling the waters that China decides it’s not worth the trouble.

But here’s the larger point. Even if China doesn’t buy, this certainly shines a new and unflattering light on GlobalFoundries as a “partner” to Vermont. To paraphrase the Psalmist, “Put not your trust in global corporations…”

The nice and the necessary

Congrats to the House Republican Caucus, which finally came up with something like a budget plan, on the very day the House Appropriations Committee passed a budget. Three observations to begin:

— The committee vote was 11-0. Even so, the Republicans were lambasting the budget even before the vote was taken. Are the committee’s Republican members hypocrites, or is it harder to be a simple-minded partisan when the rubber hits the road and you’re in a small room with your Democratic colleagues, than when you’re facing the camera with fellow Republicans?

— The Republicans clearly didn’t take the budget-writing process very seriously, since they waited until Approps had finished its work before offering a single specific cut. Even worse, during the process Republicans frequently objected to cuts proposed by Democrats — again, without suggesting alternatives.

— The Republicans’ budget plan is unworkable on its face. Its major initiative is a call for zero growth, but that’s (a) impossible because some programs are growing, like it or not (Lake Champlain cleanup, for instance), and (b) an abdication of the Legislature’s responsibility to draw up a budget. The responsible course, as Approps chair Mitzi Johnson has pointed out, is to fulfill the legislature’s duty and make the hard choices. Across-the-board slashing is the coward’s way out.

The GOP caucus did identify some cuts they’d like to make — finally. Most of them are short-sighted as well as mean-spirited:

The cuts [House Minority Leader Don] Turner put on the table Monday include eliminating grants to substance abuse recovery centers, scrapping a childcare subsidy for poor mothers, cutting funding for state colleges by 1 percent, and taking $5 million from a fund that would otherwise provide college aid to Vermont students.

Republicans also say spending reductions on items such as the renter rebate, financial assistance for health insurance and the Vermont Women’s Commission are preferable to increasing revenues that would otherwise be needed to fund levels recommended for those programs in Gov. Peter Shumlin’s budget.

Okay, let’s make it harder for addicts to get clean, harder for poor mothers to hold down a job, make higher education less affordable, and make health insurance less accessible. All those cuts would save money in the short term, but cause even more expensive social damage in the long term. The Democrats are trying to walk a fine line, and craft a budget that’s not fiscally irresponsible while still helping to make Vermont a better place to live.

Which brings me to something that Senate Minority Leader Joe Benning said last Friday on The Mark Johnson Show. I don’t have the exact quote, but the gist was, “There are things that are necessary, and things that are ‘nice.’ At a time like this, we cannot do the things that are ‘nice.'”

That sounds good and responsible, but the devil is in the definitions.

Do you think low-income heating assistance is nice or necessary?

How about broadening access to health care? A social obligation, or an extra?

Let’s talk substance abuse treatment, at a time when Vermont is in the throes of an addiction epidemic. Necessary or nice?

The good Senator apparently believes all these things fall into the “nice” category. Many of us don’t agree.

Okay, now let’s look at some items that aren’t on the Republican cut list — and weren’t on the Democrats’ either, for that matter. Necessary or nice — you make the call!

— The state giving $2.5 million to GlobalFoundries, a move that will do nothing to keep the company in the state. On a worldwide corporate scale, that’s nothing. It amounts to a burnt offering meant to propitiate the corporate gods. And it takes a big leap of faith to think it’ll have any effect whatsoever. Necessary?

— The state continuing to let unclaimed bottle deposits go to bottling companies. That’s a $2 million item, I’ve been told. Is that a necessary giveaway? Hell, I wouldn’t even class that one as “nice.” “Noxious” is closer to the mark.

— When ski resorts purchase major equipment, they don’t have to pay sales tax. That’s another $2 million a year. Is that necessary, in any definition of the word?

— For that matter, we’re letting the ski industry make a fortune thanks in large part to bargain-basement leases of public lands. The industry is understandably loath to reopen the leases, but there are ways to get it done. Instead, we’re letting them ride. Necessary? Hell no. Nice? Only for the resort owners.

— Vermont is one of only a handful of states that exempts dietary supplements from the sales tax. Nice or necessary?

In addition, the state gives quite a bit of money in small grants to private and corporate groups. Here’s a few examples:

— The Vermont Technology Alliance gets a $52,250 grant. Why?

— The Vermont Captive Insurance Association gets $50,000 to pay for “promotional assistance.” I realize the industry is a strong positive for Vermont, but the grant is certainly not necessary.

— The Vermont Ski Areas Association gets $28,500. This is the same group that refuses to reopen the leases. Why are we rewarding their intransigence?

That’s just a few I happen to know about. I’m sure there’s lots more. Are grants to industry “necessary” or “nice”? If we’re asking the poor and downtrodden to take major hits to the social safety net, couldn’t we ask our industries to accept at least a haircut?

And if we want to promote business in Vermont, why not take back all these penny-ante grants, put part of the money into a coordinated statewide campaign (like the one proposed by Lt. Gov. Phil Scott’s economic-development crew) and bank the rest?

Also, the state Senate is considering a bill that would make Vermont’s economic development incentives easier to access. Supporters, such as Republican Sen. Kevin Mullin, posit the bill as an investment in Vermont’s future. 

Which is fine. But so is increasing access to higher education, providing child care for working mothers, and helping addicts get clean. Those social programs aren’t just “giveaways,” they are investments in a safer, healthier, more productive Vermont.

Unfortunately, they are investments on behalf of Vermont’s voiceless. LIHEAP recipients and working mothers and addicts and prison inmates can’t hire lobbyists or mount a PR campaign. So we too often fail to invest in them, while we’re more than happy to invest in corporations that might or might not use the money productively — but in either case, it’s definitely in the “nice” category, not the “necessary.”

So you see, Senator Benning, I agree with you. I just have different definitions of “necessary” and “nice.”

Talk about a waste of money…

Governor Shumlin appears to have his knickers in a knot over Vermont Information Technology Leaders’ decision to buy ad time during the Super Bowl.

Bear in mind we’re not talking about a Budweiser-level national buy; VITL bought one spot on channel 5 at a cost of $13,000. A waste of money? Arguably, perhaps; but VITL is trying to raise its public profile, and that 13K was part of a $195,000 marketing campaign.

Shumlin told the Vermont Press Bureau’s Neal Goswami that he was “disappointed” by VITL’s move. Well, he put it more grandly: “Many Vermonters joined me in being disappointed that state and federal funds were being used for an advertising buy during the Super Bowl.”

Yeah, “many Vermonters.” Why, just the other day I heard the folks at Coffee Corner’s front table griping about that waste of $13,000.

Not.

And then Shumlin got to the real meat of his objection.

“This should highlight the need for the Green Mountain Care Board to regulate VITL’s expenditures,” Shumlin said Sunday.

Aha, the penny drops. VITL is currently an independent nonprofit organization that “helps health care providers adopt and use IT systems.” Shumlin wants GMCB to have authority over VITL spending. And now he’s publicly scolding VITL for its horrifically wasteful use of… ahem… $13,000.

Smells like a power play to me.

Now, I’d love to have an extra 13 large. It’s nothing to sniff at. But as part of a sizable organization’s marketing campaign? Certainly not worth the Governor’s attention. Let’s say, hypothetically, that GMCB already had the authority. Would it be micromanaging VITL’s budget to that extent? I don’t think so.

Besides, if you want to talk about wasting money, let’s look at the taxpayers’ $2.5 million donation to GlobalFoundries, as ordered by our provident Governor.

GlobalFoundries, you may recall, “bought” IBM’s computer chip operations, including the facility in Essex Junction, for a whopping negative $1.5 billion. Last month, Shumlin announced he intends to hand over $2.5 million in state incentives to GlobalFoundries. That’ll clean out the Vermont Enterprise Fund, which was created last year at Shumlin’s behest. It’s supposed to help encourage large employers to remain or relocate in Vermont, and spending it is a gubernatorial prerogative.

As VTDigger’s Carolyn Shapiro reported, it’s unclear “how the money will be used and what conditions, if any, GlobalFoundries will have to meet.”

If any. Snort.

The Governor said the money “will help the state build a relationship” with its new corporate occupant.

Think of it as a $2.5 million corsage for a prom date.

Because when you’re talking about a giant corporation that does business in billions, $2.5 million is nothing but a gesture. Will it do anything to keep GlobalFoundries in Vermont or get them to expand? No. Corporate decisions will be made with global concerns in mind. On that scale, $2.5 million is a rounding error.

The Governor might as well have taken that money, in bags of small bills, to GlobalFoundries’ front gate and set fire to it, in hopes that the sweet, sweet smoke would appease the corporate gods.

The fundamental problem is, Vermont can’t move the numbers significantly enough to affect decisions at that level. We will always be at the mercy of large employers, and we’ll be playing with a short stack against bigger states (and countries) that can offer much bigger incentives. We’d be better off taking that $2.5 million and investing it in something that might actually make a difference — say, in a revolving loan fund for startup businesses.

Or here’s an idea: A revolving loan fund for students pursuing two-year degrees in technology fields. Why, just the other day one of IBM’s top executives said that GlobalFoundries “is struggling to fill positions because they can’t find enough workers with a two-year technical degree.”

You want to keep them in Vermont and simultaneously grow opportunities for Vermonters? Access to education is much more relevant to GlobalFoundries than a burnt offering at their front gate.

Just spitballing. My point is that there have got to be better, more effective, business-friendly ways to spend that $2.5 million. And that’s a lot bigger waste than VITL’s $13,000 Super Bowl ad.

Gee, Phil, are you running for something?

Bit of a dick move by professional Nice Guy, Lt. Gov. Phil Scott today. After IBM announced it was dumping its semiconductor business to GlobalFoundries, Governor Shumlin held a quick news conference.

Behind you, Peter!

Behind you, Peter!

And there, over Shumlin’s right shoulder, was Phil Scott, well within camera range.

I thought it was a little odd that the Governor would give him the spotlight, seeing as how he endorsed Dean Corren and all. Well, that endorsement was a long time ago, and the Governor hasn’t visibly done anything to expand on it. No joint appearances, no further kind words. No criticism of top Democrats like, say, John Campbell, who’ve gone out of their way to back Scott.

Well, how did Nice Guy repay the favor?

By subtly, but clearly, criticizing Shumlin Administration policy. VTDigger:

Lt. Gov. Phil Scott said Monday morning at the news conference that the sale clears the slate to change the way Vermont does business with large companies.

He stopped short of saying that the state could have done anything to prevent IBM’s exit, but he took the opportunity to say it can do more to work with GlobalFoundries.

“We need to establish policies that make the business climate more conductive to growth for large employers such as IBM,” Scott said.

Mighty white of him to stop short of blaming Shumlin for IBM’s departure. After all, he could have rolled out that old “Shumlin called an IBM lobbyist a liar eight years ago” canard. Instead, he slipped the knife, ever so slowly and ever so politely, into Shumlin’s back. After all, “make the business climate more conducive to growth” is a favored Republican dog whistle. And, as we all know, Vermont’s business climate had nothing whatsoever to do with IBM’s departure.

Next time, put Phil in the back of the room. Or leave him out in the car with the doors locked and the windows cracked. Wouldn’t want him to overheat.