Tuesday, July 15, 2008

Taxes play no role in MillerCoors decision to locate HQ in high cost Chicago

MillerCoors LLC has picked downtown Chicago, despite its higher costs and high corporate tax rates, as the location for its new corporate headquarters.

Metropolitan Milwaukee, already reeling from the loss of 1200 family supporting jobs at Delphi and Midwest's plans to eliminate another 1200 positions, will lose between 150 and 175 jobs as a result of this decision.

In explaining the decision, MillerCoors President Tom Long explained that Chicago was a more attractive location than either Milwaukee or Denver for the marketing talent that MillerCoors needs to be successful. He also sighted the importance of O'Hare International Airport, the world's second busiest airport which offers global air connections. Long said taxes were not a factor in MillerCoors decision!

The WMC and other free market extremists like Scott Walker who have reduced economic development strategy to a one note song of cutting taxes should take note. Access to skilled employees and a world class transportation infrastructure trumped lower cost real estate and taxes. Competitive advantage requires investing in the labor force and in the parks, amenities and communications and transportation systems that make an urban area attractive and functional.

As former Republican Secretary of Commerce and Alcoa CEO, Paul O'Neil told Congress when asked about the role tax cuts play in attracting investment:". ‘As a businessman I never made an investment decision based on the tax code. If you give money away I will take it, but good business people don’t do things because of inducements.”

7 comments:

Dave Reid said...

What is really interesting about his statements about why they picked Chicago is that he specifically made a creative class/quality of life argument. "attractive to marketing talent"...

Anonymous said...

Yes, Miller is picking Chicago to take advantage of the "creative class." But don't assume this type of person has a better quality of life ... just different.

Milwaukee needs to understand that the amenities the area has to offer - easy access to rural living, moderate pricing, small-town atmosphere - appeals to family-oriented people. They thoroughly enjoy working from 7 am - 4:30 pm, spending the evening at a kids soccer game, and then grilling sausages with - gasp - homemade potato salad. They buy milk by the gallon and use cell phones once in a while.

The "creative class" tends to be the 25-35, single urban crowd that jumps every year from apartment to apartment and every night from bar to bar. They work from 10 am to 7 pm. Eating at home means takeout or last night's restaurant leftovers. Milk is found only at Starbucks, and cell phones are used constantly, if not surgically implanted.

So whose life is better? I prefer the former, others - including a glitzy corporation like MillerCoors - might prefer the latter. But there should be room in society for both, and being a region where families flourish, milk flows and people are in bed by 10:00 pm should not be disparaged.

Daniel Cody said...

Anon - I'd disagree with your generalization of "creative class" or the "young professional" demographic that cities are so intent on seeking right now.

My wife and I are both early 30's with kids, educated, grill out, work 9-5, take our kids to activities, and yes, use cell phones.

Amenities for us and our friends who also fit the description above include things like access to high quality mass transit, affordable housing, good schools, and great parks - things that traditional suburbs don't provide.

Jack Lohman said...

So lower taxes wasn't enough? Tell that to WMC.

Jack Lohman said...

And we'll never know, but perhaps -- just perhaps -- Healthy Wisconsin would have kept them here. A 4.5% cut on wages? What would that have saved them?

Anonymous said...

"He also sighted the importance of O'Hare International Airport . . ."

He probably really "cited" . . .

Haymaker said...

"Taxes played no role?" Holy crap. You can you completely ignore the outrageous tax abatements that Chicago had to give to get the HQ? Even the liberalsin Chicago are squealing that the price was too high to pay for the jobs taken.