Goodyear Agrees State Aid Deal to Retain Topeka Jobs

In the US, Goodyear agreed on Friday to a ten-year guarantee on the 1,400 jobs situated at its Topeka, Kansas plant in exchange for $14.2 million in state financing. The additional funds are to be used to support the refurbishment of the outdated production machinery housed at the plant. Previous reports had put the figure requested by Goodyear at $37.5 million, with the tyre maker wanting to invest $250 million in the proposed refitting.

The commerce secretary David Kerr – who had voiced concerns at the size of the initial figure – stated to the Topeka Capital-Journal that the Kansas state Impact programme would support the issuance of incentive bonds for Goodyear’s benefit. The debt will be repaid through revenue generated by the company’s state payroll tax, he said.

The deal has been welcomed by governor Kathleen Sebelius, who said that cooperation between the state department and Goodyear meant “hundreds of good-paying jobs here in Kansas” would be saved (the salary of the retained jobs have a salary of $50,000). Goodyear announced after its 2008 financial results that it would be looking to cut 5,000 jobs in aggressively tackling the general economic crisis. “Goodyear is looking to the future,” Sebelius continued. “Their proposed upgrades are an important investment in our state and will keep Kansans working.”

Goodyear plant manager Tim Davis said the arrangement was a welcome turn of events in the company’s effort to modernize production of an off-road line of tyres at the 64-year-old plant: “The availability of Impact funds to support a potential investment is a very positive development, and we look forward to further discussions with state officials as we refine our future investment plans.”

Kerr said Goodyear was among the state’s largest manufacturers and a model corporate citizen. He expressed gratitude for the company’s willingness to work on a strategy to “maintain a financially viable operation here in Topeka.”

“Through the use of existing programmes,” Kerr said, “this collaboration again demonstrates the state’s business-friendly environment.”

Goodyear officials converged this week on the House and Senate to lobby for inclusion of incentives for the company in a bill designed to attract wind and solar energy firms to the state. Senate Bill 108 was promoted as a vehicle for job growth.

Joan Wagnon, secretary of the Kansas Department of Revenue, said the proposed $37.5 million package for Goodyear could eventually cost the state $116 million once principal and interest on bond debt was repaid. She questioned why Goodyear was included in the Senate bill because the company wasn’t offering to expand employment in Kansas.

Senate Minority Leader Anthony Hensley, D-Topeka, said the arrangement announced Friday avoided a difficult battle in the Statehouse over allocation of state resources to Goodyear.

“The Department of Commerce has really stepped up to the plate,” Hensley said. Hensley said the agreement obligated Goodyear to repay the $14.2 million if the company failed to retain up to 1,400 jobs during the 10-year period.