Maryland enters the bidding war today for General Motors' new Saturn Corp. auto plant, minus one of the state's strongest bargaining chips. Gov. Harry Hughes decided to use it last week in a deal with New York's Citicorp.
Skeptics say GM has already decided where to locate the Saturn manufacturing complex and that it is merely conducting a charade by listening to the sales pitches of state governors who continue to make the pilgrimage to Michigan. There is no proof that the process is a charade, so Hughes has made the right decision to lead a delegation to GM. With a chance to land the Saturn plant and 20,000 jobs, at least 20 governors felt the trip was worth it.
Maryland's many assets, including an improved economic development marketing program, could do the trick, but being able to offer the Fairchild aircraft plant in Hagerstown as an inducement might strengthen the state's hand.
The 1 million-square-foot plant has become an albatross for Hughes. The governor may have been right, after all, when he hesitated before accepting the plant as a gift from Fairchild to the state. If he had followed his initial instincts and refused it, the imbroglio over Citicorp might never have occurred.
Hughes' reluctance to accept the plant in 1983 stemmed from his concern about setting a precedent. Government, he explained then, "can't become a repository of abandoned plants." Hughes also gave some indication of misgivings about the cost of maintaining the plant while the state developed a plan to turn it into an economic development asset.
With no apparent buyer in sight, until Citicorp made its offer, the governor's concern over expenses for upkeep of the property seemed to have been justified. Indeed, state officials estimated more than a year ago that it would take between $1 million and $2.6 million annually for maintenance of the plant and related facilities.
Before the state developed a marketing program to sell the plant, it shelled out $20,000 to a consultant to study the economic potential of the facility. If nothing else, the $20,000 bought a lot of optimism. The contract for the study had barely been awarded before a top Maryland official confidently asserted that "results of this study will give us valuable insights on how we can make the most of the Fairchild situation."
The state got what it paid for; insights, but no buyers. That is, until Citicorp, the nation's biggest bank holding company, came along with a deal Hughes apparently believed he couldn't afford to refuse. With no other prospective buyers in sight, Hughes and his advisers accepted Citicorp's offer to take the property off the state's books.
Citicorp would establish a bank card processing facility at the Fairchild site, promising to create 1,000 jobs in the process. In exchange, the financial services giant would be permitted to establish a full-service banking network across the state. Although Citicorp has agreed to pay $3.75 million for the Fairchild property, the proposal is structured so that Citicorp could end up paying only $1 million for the plant and exclusive banking privileges unavailable to other out-of-state bank companies.
Although the agreement with Citicorp has generated a storm of protest in Maryland's banking industry, it's worthless without legislative approval by the general assembly. With questions about its legality threatening to abort the agreement, Hughes has proposed amendments that would open up the state much sooner -- with certain limitations -- to other out-of-state banks.
Hughes isn't likely to welch on his deal with Citicorp, but the general assembly can take him off the hook, now that he has spelled out terms that would permit other banks to enter the state. Now, several banks have expressed a desire to get into Maryland -- without promise of any deal. If that is the case, selling the Fairchild plant for possibly $1 million (the facility was appraised at $12 million two years ago) to gain 1,000 jobs is pointless.
Consider the alternatives. GM needs a site for its Saturn plant. Japan's Isuzu Motors Ltd. is in the market for a U.S. plant site. If Maryland sells the Fairchild plant and its site of 50 acres or more to either company for only $1, the state would come out ahead. It would be getting a bargain (20,000 jobs), in fact.
Hagerstown lies at the center of a strong manufacturing area in Western Maryland, but unemployment in Washington County has edged up again to 10 percent. The blue-collar labor force is highly skilled, nonetheless. Besides, the labor market for manufacturers such as Mack Trucks Inc., Kelley Springfield Tire Co. and PPG Industries Inc. is drawn from Western Maryland as well as southern Pennsylvania and eastern West Virginia.
A municipal airport, two interstate highways, three major railroads and 38 truck lines serving the Hagerstown area, plus ease of access to the port of Baltimore, are selling points that make the Fairchild site considerably more valuable as a bargaining chip.