Take the Money and Run

July 28, 2008

For an economic development official, getting a semiconductor plant to locate in your community is seen as winning the jackpot. The high-tech jobs that go along with such a facility are considered a ticket to the economy of the future. Knowing this, companies such as Intel and Advanced Micro Devices get states and localities to pony up large sums in tax breaks and other subsidies.

Officials in Eugene, Oregon, who played that game with South Korean chipmaker Hynix Semiconductor, have just learned that the future does not last forever. Hynix


last week that “because of short- and long-term market conditions,” the Eugene plant (photo), which opened in 1998, will be closed, putting more than 1,000 workers out of a job. Of course, the company’s statement did not mention the

$66 million in property tax abatements

it had been granted by the city, presumably to offset “market conditions.”

The shutdown announcement has brought varied responses. Some residents are angry that the company took the money and is now running. “This community gave Hynix tens of millions in tax breaks,” local activist Bern Johnson told me on the phone, “What we really bought is 1,200 people being laid off.”

The local mainstream newspaper, the


, on the other hand, is doing its best to foster feelings of appreciation for the ten years that Hynix gave Eugene. It published an


from the head of the local economic development agency headlined “Hynix Always a Good Citizen of the Community.” It concluded by saying “we should wish Hynix the best.” This struck me as the equivalent of advising a women whose long-time husband just left her so he could marry a young “trophy wife” that, rather than being angry, she should be grateful to him for the years they had together.

It’s bad enough that communities feel they have to kowtow to companies when they are luring an investment. The idea that they should also be deferential when a company departs is too much to bear.