to Nicholas Johnson's Iowa Rain Forest ("Earthpark") Web Site
Iowa Values Fund Report Card
Des Moines Register
June 20, 2006
Donnelle Eller, Report: Job Promises Being Kept
Seeking State's Assistance
Eight Examples of Results
Note: The full document,
Iowa Department of Economic Development, 12/31/05 End of Year Project
Status Report, Revised, 6/19/06 1:30 PM, is available from http://www.desmoinesregister.com/includes/downloads/ValuesFundFinal.pdf
(If and when it is no longer available from that site contact Nicholas Johnson (coordinates available via www.nicholasjohnson.org) for a copy.)
[Note: This material is copyright by the Des Moines Register, and is reproduced here as a matter of "fair use" for non-commercial, educational purposes only. Any other use may require the prior approval of the Des Moines Register.]
13,506 jobs: total jobs have been pledged by companies who have been awarded money from the Iowa Values Fund
8,013 jobs: total jobs already created and retained in the past 21/2 years by companies awarded money
$37,086: average annual wage of jobs created by companies awarded money from the Iowa Values Fund
$32,315: average annual salary per capita in Iowa
93 percent: of the projects under contract are classified as on schedule or already completed
57 percent: of the projects have gone to companies employing 100 or fewer people
Report: Job Promises Being Kept
Report Notes Economic Successes in 'Amazing' Number of Projects
Most companies receiving state assistance are creating the jobs they have promised, a new report shows, but it's still unlikely to end the debate over Iowa's economic policies.
The report released Monday shows 196 companies have created about 5,300 new jobs in Iowa and invested $1.6 billion in new buildings and equipment over about 2 years. The projects - 93 percent of which are "on schedule or completed" - have retained about 2,700 jobs.
The Iowa Department of Economic Development report also shows that 19 companies have declined incentives from the Iowa Values Fund, and that five companies owe the state about $700,000 after failing to reach their goals, money the state says it is aggressively pursuing. Together, those projects represent 1,757 jobs and $201 million in capital investment.
The study, which used employment and other records to verify the results, was released amid a growing debate over the state's economic development efforts. Critics such as state Rep. Ed Fallon, D-Des Moines, still question whether the state has created the jobs it claims. At Fallon's request, State Auditor David Vaudt has agreed to take a closer look at Iowa's job-creation numbers.
Iowa's economy also is likely to become a political football - both in the gubernatorial election and nationally with Gov. Tom Vilsack's possible presidential bid.
Jim Nussle, the Republican candidate for governor, said the state should focus on lowering taxes and helping small businesses instead of state incentives.
"One only has to look at Electrolux, Maytag and Rubbermaid to see that Iowa cannot afford to rely on a mismanaged government program that simply throws money at big business and doesn't deliver results," Nussle said.
Chet Culver, the Democratic gubernatorial candidate, said the state needs to ensure "taxpayers' money is being used effectively."
"This report is a step in getting more information on the Values Fund's progress, but we need to make information like this more frequently available and more easily accessible to taxpayers," Culver said. "I continue to be concerned about companies that are not living up to their promises."
A Vilsack official said Monday that the report confirms a "change in Iowa's economic landscape," adding that Iowa's job growth is one of the fastest in the nation. Iowa's May unemployment rate was 3.4 percent, far below the national rate of 4.6 percent.
The jobs created pay an average annual wage of $37,086, nearly 15 percent more than the state per capita income of $32,315, the report shows.
"With the jobs we have in the bank and the jobs we have coming down the pipeline, it's a good indicator the economy is turning around," said Vilsack spokeswoman Jennifer Mullins.
Progress Casting Group built its third U.S. factory in New Hampton because of the northeast Iowa town's workers, its local incentives and support from other businesses. But it was the state's $700,000 in incentives that placed Iowa in the race with Minnesota and South Dakota for the $10 million aluminum casting foundry and 150 jobs, Bob Silhacek, Progress Casting's chief executive, said Monday.
"Iowa was very competitive, very competitive with its neighbors," said Silhacek, whose Minnesota-based company makes parts for clients such as Harley-Davidson and Boeing.
Alan Fisher, a University of Iowa professor, said the capital investment and job-creation numbers are "impressive." But he said it's hard for taxpayers to know exactly what they're spending for new jobs because the report fails to take into account all the incentives being used to create jobs.
For example, Progress Casting received a total of about $2 million when state investment in grants, job training and roads are added to local incentives.
Overall, the state economic development agency said it invested $119.2 million in incentives for the 335 companies covered by the report. Those companies have pledged to create 26,240 jobs and invest a total of $4.5 billion.
The state excluded 122 companies that received awards but were too new to have made significant progress toward the jobs and investment goals. Those companies have pledged to create nearly 11,000 jobs and invest $1.5 billion in new offices, plants and equipment.
Several members of the Iowa Economic Development Board said during a meeting Monday in Cedar Rapids that they hoped the Iowa Values Fund report would answer questions about the program's achievements.
"What's really amazing is the number of projects we're working with," said Toby Shine, a board member leading the meeting.
IDED Director Mary Lawyer emphasized that the report could not show an up-to-date tally of projects because of the time needed to verify business reports. The report covers July 2003 through December 2005. "This is our first report, and it was very tedious to put together," she said. "It's a work in progress."
Tina Hoffman, a spokeswoman for the IDED, said the state has supported small and large companies in small and large towns.
The report shows that 57 percent of the nearly 200 companies receiving incentives have 100 or fewer employees. Half of the projects were located in cities with 10,000 or fewer residents.
In New Hampton, slammed six years ago with the loss of 625 jobs at the shuttered Sara Lee bakery, about 800 northeast Iowa residents applied for Progress Casting's first 70 jobs.
Those lucky enough to land jobs with Progress Casting had to undergo about a month of training. Worker lessons have ranged from communications and lean manufacturing to foundry safety, said Silhacek.
Progress Casting, which holds its plant's open house Saturday, is already looking at adding new products to the New Hampton plant. That will enable the company to boost employment over the next two years to meet its job goals.
Silhacek said the plant opening has gone so smoothly - with local companies pitching in to help install and refurbish equipment - that he's nervous about jinxing it.
"Absenteeism is virtually zero, workers are on time and very motivated," said Silhacek. "There are just so many positives - knock on wood - it's exceeded all our expectations."
Register reporter Erin Jordan contributed to this article.
Seeking State's Assistance
A company first must apply to the Iowa Department of Economic Development for assistance, with financial information about the project, the jobs that would be created, and investment in new buildings and equipment.
Department officials work with the company to determine whether the business would qualify for incentives, which can range from tax breaks to grants to loans and forgivable loans. The state would look at issues such as financial stability, other competition, performance on past projects and possible violations with other state agencies.
In return for assistance, the company must meet state requirements on salary and benefits. One measure used is existing salaries in the given county.
The project needs approval from the board that oversees the state agency, but it first must undergo scrutiny by the due diligence committee.
After getting board approval, the company will negotiate a contract with the department — detailing the jobs created, capital investment and “clawbacks,” requiring the company to pay back the money, should the company fail to meet the goals. After the goals are met and verified, the state continues to monitor the company to ensure the jobs are retained. The length of maintenance depends on the incentives provided.
Eight Examples of Results
ON TRACK: Progress Casting
Progress Casting Group Inc., al alumninum casting operation in New Hampton, was awarded $700,000. Above, Mike Shatek works with a machine that makes cylinder heads for Harley-Davidson motorcycle engines.
Jobs/investment pledged: 148/$11.8 million
Jobs/investment actual: 5/$106,473
Average wage pledged: $12.77
AWARD RETURNED: Pure Fishing
Pure Fishing America of Spirit Lake returned its $108,000 award because it invested in new equipment instead of job creation. Above is Kim Wilhelms in 2004.
Jobs/investment pledged: 70/$3.2 million
Jobs/investment actual: 0/$5.1 million
Average wage pledged: $10.76
Phytodyne of Ames received $480,666 from the state. The company folded after failing to get access to a key piece of patented technology. The state has sued to recover the money. Above is worker Jyothi Rajagopai.
Jobs/investment pledged: 83/$17.55 million
Jobs/investment actual: 0/$0
Average wage pledged: $33.20
ON TRACK: TransOva Genetics
TransOva Genetics of Sioux Center was awarded $9.25 million. Pictured above is a calf cloned by TransOva in 2003. The animal was genetically identical to a male banteng who died at the San Diego Wild Animal Park in 1980.
Jobs/investment pledged: 235/$36.2 million
Jobs/investment actual: 17/$3.4 million
ON TRACK: Wells Fargo
Wells Fargo, the consumer and home mortgage services company, was awarded a $10 million grant. The company has locations in Des Moines and West Des Moines. Pictured above is the visitors entrance to the new Wells Fargo west campus building near Jordan Creek Town Center.
Jobs/investment pledged: 2,000/$175 million
Jobs/investment actual: 1,947/$248 million
Average wage pledged: $16.11
WELLS DAIRY: ON SCHEDULE
The maker of Blue Bunny ice cream products, located in LeMars, was awarded $3.3 million.
AVERAGE WAGE PLEDGED: $28.87
NEW JOBS/INVESTMENT PLEDGED: 129/$28 million
JOBS/INVESTMENT ACTUAL: 66/$990,013
BRAIN FINGERPRINTING LABORATORIES
The forensic technology company, located in Fairfield, was awarded a $100,000 loan. The Iowa attorney general’s office called the technology “junk science.” The state has sued Brain Fingerprinting for the return of the loan, saying the company refused to provide financial statements and payroll reports.
JOBS/INVESTMENT PLEDGED:100/$3 million
JOBS/INVESTMENT CREATED: 0/0
AVERAGE WAGE: $30
INTEGRATED DNA TECHNOLOGIES
INC.: AWARD DECLINED
Synthetic DNA manufacturer, located Coralville, was given a $5 million loan guarantee. It later declined the award. The company planned to use the loan to purchase a competitor, but the mid-2004 deal fell through and the company never accepted the money. The company employs 360 at its headquarters and will dedicate a $12 million expansion later this week, which was backed by about $1 million in low-interest, no-interest and forgivable state and local loans.
JOBS/INVESTMENT PLEDGED: 207/$26.5 million
JOBS/INVESTMENT CREATED: N/A
AVERAGE WAGE: $16.89