Thursday, November 19, 2015

Johnson Controls - the next nail into the WEDC coffin

It’s well past dispute that the Scott Walker-created Wisconsin Economic Development Corporation (WEDC) is little more than a taxpayer-backed slush fund for GOP corporate donors, but what's happened with Johnson Controls in the Milwaukee area has brought into focus all areas that WEDC has failed Wisconsinites in. This goes from the questionable handout of millions in tax breaks from WEDC for “job creation” followed by mass layoffs, to possible pay-to-play corruption, to disgusting displays of corporate greed.

Start with the job situation at JC, which has been the subject of a series of excellent reports by WKOW’s Greg Neumann in Madison (and Neumann has gone after WEDC with increasing diligence in the last year). Neumann noted that Johnson Controls is now outsourcing the jobs of many of the same employees that WEDC gave big money out to have JC hire a year ago.
On Friday, Johnson Controls, Inc. notified the Wisconsin Department of Workforce Development it will be permanently closing its Milwaukee Business Center in suburban Glendale and laying off all of its employees there beginning in January.

WEDC officials confirmed Tuesday the agency has awarded the company $2.46 million dollars in job creation tax credits since March 28, 2014 for two separate projects.

Johnson Controls received $1.46 million for the creation of 329 jobs at its corporate headquarters in Glendale. But the company also got another $1 million for the creation of 266 jobs at the Milwaukee Business Center (MBC), which is now shedding all of the 277 employees currently working there.
But that shouldn’t be a big deal, since Johnson Controls will have to pay back the money at the MBC right? Uhhh, not so much.
A contract agreement between the Wisconsin Economic Development Corporation (WEDC) and Johnson Controls may allow the company to close its Milwaukee Business Center (MBC) next June and still keep the majority of a $1 million tax credit award…

The contract obtained by 27 News shows that despite being signed on March 28, 2014, the effective date goes back to June 1, 2011.

WEDC Spokesperson Steven Michels indicated the deal was back dated because the old Department of Commerce made an initial award offer to Johnson Controls in 2011.

Due to the effective date, the company would be able to claim a $6,000 tax credit for any new job maintained into June 2016. That's because the contract only requires Johnson Controls to maintain the new jobs for 60 months past the effective date - a period that will end on May 31, 2016.
Oh, and lookie here, the last of the layoffs will occur in June 2016, meaning that JC could well get all of those tax credits without having to keep the jobs around. Cool deal, eh?

And in the repeat of a constant pattern we’ve seen since WEDC began, Johnson Controls employees have anted up to the campaigns of Gov Walker and other WisGOP. The Wisconsin Democracy Campaign noted these donations in a blog post they threw out yesterday.
Company employees contributed about $5,700 to Walker in 2014 when the tax credits were awarded and the governor was at the agency’s helm. Top Johnson Controls employee contributions to Walker in 2014 were $1,000 from Andrea Ferestad, of Mukwonago, senior program manager; $600 from Donald Pfeiffer, of New Berlin, an engineer; and $550 from Paul Thompto, of Brookfield, a control engineer.

Since Walker was first elected governor in 2010, through June 2015, Johnson Controls employees have contributed about $28,200 to the governor.
Granted, this figure is relatively small compared to the typical corporate business donations to Walker, and could just reflect the desires of some everyday Johnson Controls workers from the dead-red suburbs of Milwaukee. But Johnson Controls’ CEO Alex Molinaroli is a member of the Metropolitan Milwaukee Association of Commerce, a major pro-Walker organization that has given hundreds of thousands to help Scotty stay elected, including a $170,000 donation from MMAC’s PAC that Walker had to give back in 2012 after it was revealed that individual MMAC members gave in excess of state spending limits.

And even though Johnson Controls is outsourcing these 277 jobs to other JC “global business centers” in China, Mexico, and Slovakia, they apparently aren’t tapped out for cash, as this blurb from yesterday’s Milwaukee Business Journal shows.
Johnson Controls (NYSE: JCI) said its board has approved an 11.5 percent increase in its quarterly dividend. The first increased dividend of 29 cents per share will be paid Jan. 5 to shareholders of record Dec. 11. The automotive supplier and provider of facility management products and services has increased its dividend in 35 of the past 37 years.
Hmmm, so Johnson Control employees will gladly use money left over from their salaries to shell out funds to donate to GOP candidates, take taxpayer dollars from those GOP candidates via WEDC, and give out 11.5% more money to their stockholders. But when it comes to actually keeping people employed in Wisconsin, sorry! I guess the money just isn’t there! I find those priorities interesting….and vomit-inducing.

Ready to set up those guillotines yet? And on a related note, can we get the Obama Administration’s Department of Justice to put down the donut and start some perp walks on those who have helped facilitate the criminal enterprise known as the WEDC slush fund? 4 years of rampant pay-to-play corruption and fraud involving taxpayer dollars should be more than enough, shouldn’t it?


  1. As always, best blog going. I wonder when people will respond in the same way to this kind of scamming that they would to, say, a charter school packing up in the middle of the night like the Baltimore Colts, or a union employee finding a penny on the ground. Maybe I'm wrong and the voters will finally show up for sanity, but gerrymandering + insanity leave me doubtful. Party allegiance trumps all. There has to be a way to break the corporate hostage taking, but a legislative road to that goal seems hopeless. Anyway, keep it up. Love this blog.

    1. Thanks Chuck. I think constant exposure is the only way you can do it. And WEDC's mess is getting to the point that it's impossible to.ignore.

      And this is where the feds have to play a role, because the Banana Republicans won't step up, that's for sure