I knew it. I don’t know it, of course. Not officially. Still. But that’s only because of all the usual bafflegab from all the usual sources.
Let’s backtrack. Start with this Saltwire headline from last Tuesday: “Michelin to Spend $300 Million to Expand, Modernize Nova Scotia Operations.” In smaller print, there was this subhead: “Tire maker’s investment comes with help of a recently enhanced provincial tax credit.”
But the story, by provincial reporter Francis Campbell, didn’t wend its way back to that sine qua non subhead tidbit — or many other pertinent facts — until Paragraph 19.
Before that, all was gush and mush.
- “The environmentally friendly and efficient rubber meets the road…”
- “‘It is my privilege to announce…’ surrounded by thousands of tires and hundreds of plant employees…”
- “… 70 new jobs in Bridgewater, is part of the $300-million overall investment at the three provincial Michelin sites…”
- Alex Garcin, president, Michelin North America: “We recently celebrated our 50 years of investing in manufacturing in Nova Scotia…”
- Justin Trudeau, prime minister of Michelin Canada: “I want to thank all of the incredible Michelin workers here…”
- Tim Houston, premier of Michelin, Nova Scotia branch: “Fifty-two years ago, Michelin made the decision to establish their very first manufacturing facility in North America here in Nova Scotia and we are very, very proud of the relationship we’ve had, and you continue to be a major employer, investing in the province.”
That tax credit? Oh, yes, don’t your worry your pretty little brain about that.
Let’s first revisit that misspoken “Michelin to spend $300 million” headline.
Let’s minus what others — us — are contributing to that total.
The government of Canada, through its Strategic Innovation Fund, is writing a cheque to the company for $44.3 million. And the Nova Scotia government, through its Capital Investment Tax Credit (recently “expanded”), is contributing $61.3 million so that Michelin can “modernize and expand its operation in Bridgewater, enabling the plant to produce in-demand tires for the rapidly evolving electric vehicle market, which are more energy efficient with less greenhouse gas emissions, as well as larger rim size tires.”
So… 300 million minus this… minus that… equals, let me re-check… Michelin’s $300 million “spend” is now $194.4 million.
Not chump change, to be fair, but then again, Michelin, the secretive, anti-union French-founded privately controlled company, is the second largest tire manufacturer in the world.
It could — can/should — afford its own damn expansions and modernizations.
By why would the company do that when it has always been able to put its hands in our pockets for more than 50 years?
I once tried to keep up, but I’ve long since lost track of the millions of dollars in “loans, grants, incentives, payroll rebates, forgivable loans, forgotten loans, grants by other names and the full fantasy spectrum of inventive financial fandangoes” we’ve come up with to keep our Michelin masters happy.
My colleague, the veteran business journalist Jennifer Henderson, tried to make sense of last week’s funding announcements by asking the right questions to the right people.
Herewith her right questions with the resulting non-answers. Accompanied by the usual trenchant editorial commentary from Editor Tim:
Jennifer Henderson contacted the federal government to ask the obvious questions:
“Is the $44 million a contribution/grant to Michelin North America’s Bridgewater plant or is it a repayable loan? Did the company request/ apply for some assistance?”
The answer she received from Laurie Bouchard, a spokesperson for Minister of Innovation, Science and Industry François-Philippe Champagne: “The terms of the agreement are commercially sensitive and can’t be disclose [sic].”
Translation: it’s public money, but it’s none of the public’s damn business.
The province attempts but fails to cover that enormous and engorged $61.3 million subsidy with the fig leaf of the Capital Investment Tax Credit, which itself was fluffed up by redefining the credit:
The tax credit rate increased from 15 to 25 per cent, the cap from $30 million to $100 million for all applicants and extended the time period from 2025 to 2029.
So again, Henderson asked the sensible question:
“The policy change to the Capital Investment Tax Credit was made last October. Although this will apply to all companies making a large investment in equipment or a manufacturing process until 2029, is it accurate to report the policy change was made at the request of Michelin North America so Michelin would consider Bridgewater in its internal competition to choose a site for this EV tire production line? If there was no request from Michelin to expand the Capital investment tax credit, why did the province make the change?”
She received this response from spokesperson Steven Stewart, a spokesperson for the Department of Finance:
“As we work to grow our economy, the provincial government increased the Capital Investment Tax Credit to encourage companies to continue to invest in Nova Scotia and grow their presence here. The tax credit helps Nova Scotia companies expand by providing an incentive to invest in new equipment. The credit was expanded so many sectors and companies could take advantage of this incentive. It is open to any company making large capital investments.”
We’ve asked Michelin for comment, but it hasn’t yet replied.
The next day, Jennifer followed up with a fascinating — and revealing — excavation of the process that led to the passage of that legislation to expand the Capital Investment Tax Credit in November 2022, and why its official passage was backdated to October.
You should definitely read the entire piece, but here’s the Cliff’s Notes version.
During the debate, Finance Minister Allan MacMaster refused to answer Liberal leader Zach Churchill’s question about the rationale for backdating the legislation, or whether “there is a current deal or a promise that happened before this legislation has actually passed.”
So, we may not be able to officially confirm that the “capital investment tax credit [was] bumped up to 25 percent so the province could offer Michelin a significant incentive to locate its new production line of EV tires here,” and we may never know for sure whether Michelin “requested financial assistance” from the government…
But we know.
It has been ever thus, starting with the fact taxpayers contributed two-thirds of the first $100 million needed to build Michelin’s first two Nova Scotia plants in 1971.
There have been eight provincial governments since, and every one of them has grovelled at the feet of the Michelin Man.
Darrell Dexter’s NDP came closest to standing up to the tire giant. Although Dexter had refused to repeal the controversial “Michelin Bill” that made it impossible for a union to organize its tire plants — “I have no interest in fighting battles that happened 30 years ago,” he said — his government did introduce mildly labour-friendly legislation to protect the rights of newly organized workers against recalcitrant employers after winning the 2009 election. In response, Michelin mounted a massive, hysterical public and private campaign against the bill. That didn’t work, but the NDP lost its bid for re-election in 2013, and the McNeil Liberals dutifully rescinded Dexter’s legislation.
And so it goes.
Now we are about to spend $1.4 million for each one of — maybe — 75 new jobs Michelin may create.
How many new healthcare positions could all that money buy?
That, obviously, wasn’t Premier Tim Houston’s question last week, even though he insists healthcare is his Job 1.
All of which made me curious.
How much must Michelin spend on lobbying to always get such favourable-to-itself results?
Apparently… very little.
According to a search of the Nova Scotia lobbyists’ registry, there have been just two lobbyists registered to make Michelin’s case with the government over the years.
The first, Kim West— then a principal of the PR firm McArthur Thompson Law — was registered to lobby for Michelin North America in 2005. But, three years later, her status was listed as “terminated.”
The second, George Sutherland of New Glasgow, appears to have been on staff at Michelin, and his lobbying activities included “seek[ing] funding and tax credits for possible investment projects and mak[ing] representations on any legislation or policy that may affect Michelin.” He was appointed in 2012 but his status has been inactive since 2014.
Both responded no to the form’s question — “Have you lobbied, or do you expect to lobby, a member of the House of Assembly in the member’s capacity as a member? Or a person on the member’s staff?”
Why would Michelin waste all that money trying to persuade a government when that government is already well and truly persuaded to do its bidding?
A version of this column originally appeared in the Halifax Examiner.
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