State Corporate Welfare Winner Released from Prison

Convicted Embezzler Once Shared Stage with Gov. Granholm

By Michael D. LaFaive | March 29, 2018

The man who embarrassed state corporate welfare czars in 2010 — and Gov. Jennifer Granholm, too — by winning a $9.1 million deal from the Michigan Economic Growth Authority while on parole for embezzlement has again been released from prison. He was freed on parole Tuesday.

In 2010 Richard Allen Short’s Renewable and Sustainable Companies, LLC (RASCO) was purportedly going to invest $18.5 million in a Flint location. More than 700 jobs were supposed to be created in the first five years thanks to an assist from the state’s MEGA program. This was such a big deal at the time that Short (and others) were featured at a press conference with the governor. (See WSMH-TV footage, below). The MEGA program gave refundable tax credits, or subsidies, to corporations.

Short, however, was not allowed by the terms of his previous parole to possess so much as a debit card. Imagine the surprise of corrections officials when they saw their parolee on a stage with the governor.

This story is important because by law, state officials overseeing the MEGA program were required to review deals and certify this: “The plans for the expansion, retention, or location are economically sound.” It remains an open question as to the veracity of all claims associated with the deal, but the very fact that the company head was on parole and not allowed to possess a credit or debit card makes the plans suspect.

Had officials bothered to Google “Richard Allen Short,” they may have easily discovered a Flint Journal article from 2008 referencing his past. He also would have turned up in the state’s offender database. Even today a search for RASCO on Google leads to the address of a single-wide trailer where Short once lived.

The RASCO deal underscores the difficulty government central planners have in picking winners from losers in the marketplace. Whatever their talents, state officials did not even have the wherewithal to uncover Short’s past before they approved a multimillion deal and featured him as a symbol of the success of their MEGA program.

Despite this embarrassing episode, some politicians still insist that a handful of government employees can invest taxpayer money and create more jobs than would exist without programs such as MEGA. It strains credulity, particularly considering that even the most rewarded stock investors struggle to consistently outperform the market.

And economic research supports this skepticism. There have been five academic studies done about the MEGA program, incidentally, and four of them found a zero to negative impact. Gov. Rick Snyder and legislators ended the MEGA program in 2011 and replaced it with the Michigan Business Development Program. That program has also failed to create net new jobs.

Embezzler Richard Short seems to have put one over on the state’s economic development bureaucracy. He headed up a company that — at least on paper — dazzled state employees enough to win a multimillion-dollar subsidy deal (though it was not paid out), despite his background. None of this would have happened if our government had stayed out of the corporate welfare game in the first place.

The state should get out of the corporate welfare business rather than come up with new way to play it. We would all be better off if the state ended its “economic development” programs and redirected any savings to fixing Michigan’s transportation infrastructure or cutting taxes.

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.

Union Files Federal Complaint Against Company For Giving Its Members Raises

Michigan auto supplier didn't get permission from the union first

By Evan Carter | March 29, 2018

In one Michigan county, a union filed a federal complaint to stop an employer from giving raises, at least without its permission.

The National Labor Relations Board ruled that Lenawee Stamping Corporation must take back wage increases and a bonus offer it made in an attempt to attract more skilled workers.

The matter is now in a federal appeals court, with the company pushing back against NLRB. The independent federal agency says the company violated its collective bargaining agreement with the United Auto Workers union when it offered the wage increases and bonuses without the union’s agreement.

According to documents filed with the NLRB, the plant manager met with two officials of the union local, including its president in November 2015, to discuss raising the starting wage for skilled employees from $22.19 an hour to $30 an hour. The union officials did not agree to the wage increase, arguing that it would have to go through a collective bargaining process.

The company raised wages anyway. In subsequent meetings between the company and the union, the two parties couldn’t come to an agreements over how to modify the existing collective bargaining agreement.

In March 2016, the company again announced it planned to raise wages without first consulting the union. This time, it raised the starting wage of a semiskilled worker from $10 per hour to $10.75 per hour. In April it notified a union representative that it was going to raise the starting wage of semiskilled workers again, this time to $11.50 an hour. The union didn’t agree to either raise.

In March 2016, the company also announced it would begin paying current employees a $100 bonus for every new employee they brought into the facility. It also promised $1,000 to any new employee who kept working at the facility long enough to finish a probationary employment period. The union local never agreed to the bonuses.

The UAW filed charges against the company with the NLRB. It then issued a complaint, arguing that the auto supplier had violated federal labor law. After a one-day hearing, an administrative law judge issued an order stating that the company had violated federal law by raising wages and offering bonuses without the union’s consent.

At the union’s request, the NLRB then ordered the company to rescind the wage increases and offers of bonuses.

“The Company insists that its decision to increase wages was necessary given the Company’s inability to hire and retain employees,” said the NLRB in an argument to the U.S. Appeals Court. “The Company’s motive for modifying the agreement is irrelevant to determining whether the modifications violated [federal labor law].”

Derk Wilcox, senior attorney with the Mackinac Center Legal Foundation, believes the NLRB’s original decision will be upheld by the court.

“Even though taking away their raises will hurt the workers, the UAW is likely to win this legal battle,” Wilcox said. “The labor law is designed to give the union control, even if it hurts the business. Here, the stamping company desperately needs to recruit and hire new employees to meet demand, but the UAW would rather reward long-time union members than see the company grow and hire more people.”

Kirchhoff Automotive, the parent company of Lenawee Stamping, did not return a phone call or email requesting comment.

A spokesperson with the UAW said in an email that the union does not comment on pending NLRB matters.