When Milwaukee Tool and the state of Mississippi announced in 2021 that the company would be building a new plant in Grenada, it created concerns 30 miles away in Greenwood.
People wondered what that might mean for the company’s operations here.
There was some comfort in the terms of the state’s agreement with the manufacturer. In exchange for the $26 million the state was putting up for the $60 million project, Milwaukee Tool was promising to create 800 jobs at the Grenada facility and another 400 at its other locations in the state. Maybe Greenwood would get some of those 400.
It hasn’t turned out that way. It’s been just the opposite. Most of the jobs created so far in Grenada have been at the expense of Greenwood.
First, the sawzall manufacturing was moved up the road. And now Milwaukee Tool has announced it will be moving this year the hole saw production — and its 400 jobs — as well, leaving the company with no manufacturing presence in Greenwood, only its service operation.
A year ago, Milwaukee Tool employed close to 900 people in this city. When the manufacturing shift is completed, that number will be down to around 225. Coincidentally, that’s the same number presently employed in Grenada.
The economic development community in Greenwood should be ticked, both at its counterpart in Grenada and the Mississippi Development Authority.
There is an unwritten rule among economic developers that you don’t poach jobs from your neighbors. It is one thing to go after a company located in Ohio, and something quite different to go after one 30 miles away in your own state.
Matthew Harrison, the lead industrial recruiter in Grenada, may be good at what he does, but he was misleading in a television interview when he said the relocation of the manufacturing jobs from Greenwood was purely a real estate decision.
He said that because Milwaukee Tool owned the shiny new building off Interstate-55 in Grenada, while it only leases the three buildings it occupies in the Greenwood-Leflore Industrial Park, it made economic sense to make the move.
“It’s no different if you were leasing a home or renting a home, and then making the transition to a house that you were building and saving that cost from a lease to a purchase.”
What Harrison didn’t say is that Milwaukee Tool has a sweetheart lease-purchase agreement with the city of Greenwood on those three buildings, two of which have been used for manufacturing. The lease payments the company has been making merely repay the money the city borrowed to buy the buildings. Once the note on a building is retired, the company has the option to buy the building for $1. It already has that option on one of the two manufacturing buildings, and the other will reach that stage in a couple of years.
In other words, although Milwaukee Tool doesn’t technically own its three buildings in Greenwood, it could begin taking ownership, should it want to.
The Mississippi Development Authority acknowledges that when it agreed to bankroll more than 40% of the cost of the new plant in Grenada, it knew that some jobs might be shifted from other Milwaukee Tool locations in the state. The state’s interests, though, were supposedly protected because the company’s overall job growth in Mississippi would have to total 1,200 to keep clawback provisions from kicking in. The company has until October 2029 to live up to its end of the bargain.
One has to question, though, the wisdom of the deal from the start. Why did the state strike a bargain that, at least initially, is mostly cannibalizing jobs? The $26 million of taxpayers’ money spent on the Grenada plant has killed jobs in one Mississippi community in order to create them in another.
If there is another way to see this, maybe Gov. Tate Reeves or his MDA leadership can explain.
It’s not as if Greenwood and Leflore County have been miserly hosts to Milwaukee Tool. They have granted about every tax break the company has requested since relocating most of its Wisconsin manufacturing operations here 23 years ago. Last year alone, the company received from the two governing entities a nearly $900,000 break on property taxes on equipment and inventory.
Granted, Milwaukee Tool, like many companies in the Delta, has been complaining for several years about the difficulty of finding enough dependable employees to meet its workload needs. Moving 30 miles to Grenada, however, is unlikely to solve that. It could even make matters worse, since some of the employees who work on the factory lines in Greenwood may be unwilling or unable to commute an hour or more round-trip to Grenada.
But even if this business strategy pays off for Milwaukee Tool and leaves Greenwood as the only loser, it illustrates the underlying problem with industrial incentive programs. The state uses the public’s money to pick and choose the winning companies and the winning communities.
The unfairness is obvious here, because one company is using its government subsidy to shift jobs from one town in Mississippi to another. This happens less obviously, though, with nearly every economic development deal the government strikes with a private business. The grants, tax breaks and other incentives don’t really create all that many jobs. They mostly just move them from companies that aren’t subsidized to those that are.
- Contact Tim Kalich at 662-581-7243 or tkalich@gwcommonwealth.com.
