Thursday, May 13, 2010

Doyle offers to help Italian shipbuilder land a huge navy deal.

Doyle offers Italian shipbuilder land a huge navy deal.
Gov. Jim Doyle's cabinet is offering $50 million in benifits to help an Italian shipbuilder land a U.S. Navy deal that would create more than 1,000 jobs in Marinette and thousands of additional jobs in the region.
If Marinette Marine Corp. wins the deal and accepts the state benifits, the package would be the second largest ever provided by the state, which is making an attempt at keeping jobs in Wisconsin, even if it means the the majority of the money will go overseas.
Contracts like these, which is apparently larger than the agreement between the USA and Oshkosh Truck, will keep many in Wisconsin working for years to come.
Fincantieri Marine Group, an Italian shipbuilder is the company which is located in Marinette and they will learn in July whether it has won a deal for the Navy's next 10 littoral combat ships costing several hundred million dollars per vessel. That work alone would take five years to complete, employing several thousand people at Marinette Marine and about 7,000 people in the region - including suppliers and vendors.
The Italians will have some competition as well, General Dynamics is a player in this too and they are no nuub’s when it comes to government contracting.
"No question, it would be a significant economic blow to the region if we don't get" the deals, McCreary said.
As part of a series of meetings and phone calls by Doyle and state officials with company executives, federal officials and Michigan Gov. Jennifer Granholm, the State of Wisconsin offered the benifits in February. In March, Doyle traveled to Italy to meet with Fincantieri executives.
The benifits committed by Doyle directly to Marinette Marine include:
An estimated $28 million over seven years in so-called enterprise zone tax credits to help cover payroll, training and investments in a plant or equipment. The state tax credits are refundable, meaning that the state could pay all or part of them to Marinette Marine in cash if it has no remaining state tax liability.
Nearly $1 million in help from the state Department of Workforce Development and the regional Bay Area Workforce Development Board, mostly to train and recruit workers.
$250,000 from Northeast Wisconsin Technical College to buy a training facility to help prepare workers.
At least $20 million in federal new markets tax credits that would be • issued by the Wisconsin Housing and Economic Development Authority. Those tax credits would depend on Marinette Marine's actual investment but would cover about 20% of the expenses for investments in buildings and equipment.
$1.4 million for worker training that is being pledged separately by the State of Michigan.
Doyle said Marinette Marine would receive the state tax credits only as it spends money to hire workers and upgrade its plant - an investment that could reach $100 million.
The project could cut unemployment 16% in Marinette County, where the unemployment rate stands at 12%, the Commerce Department estimates. Salaries for the union jobs being created at Marinette Marine would average $45,000 a year, Brandon said.
Marinette Marine has built one of the ships, the USS Freedom, and is building a second one that's scheduled to be launched in 2012. The Freedom is based in San Diego.
General Dynamics also has built one of the ships and has another under construction in Mobile, Ala.
Ship design and price will determine whether Marinette or General Dynamics wins the deals.
The General Dynamics ship design is too wide to get out of the Great Lakes, through the St. Lawrence Seaway, and into the open seas. So if Marinette Marine and its design don't win the deal for the next 10 ships, the company could not build future ships using the General Dynamics model.
The General Dynamics ship has an enormous flight deck for landing helicopters.
Politics also could be a factor because both Wisconsin and Alabama - where the General Dynamics ships would be built - have a lot to gain in jobs and economic benefits.
There is $4.3 billion in federal money appropriated to build the 10 ships. The Navy is expected to award the first phase of the deal between July and September.
The USA is the world’s largest employer and spends the most money of any other organization on earth, both companies involved have reputations for quality and success, so the deal will no doubt come down to pricing, in a time where pricing is well…everything.