Dive Brief:
- A Mississippi congressman is calling on Germany-based tire giant Continental AG to ensure that local and minority contractors benefit from the construction of its $1.45 billion tire plant in Jackson, MS, according to an Associated Press report.
- Continental awarded the contract for clearing the 900-acre site to a Georgia-based contractor but said that when considering that company's subcontractors, in addition to other hires, 90% of what they have spent so far on the plant has benefited Mississippi-based workers and companies.
- When complete in 2019, the plant will employ at least 2,500 workers, each earning at least $40,000 a year. State and local governments committed $650 million in tax breaks and other incentives in order to attract Continental to Jackson. Despite Continental receiving taxpayer-backed benefits, the AP reported that the company is under no obligation to hire local contractors or workers.
Dive Insight:
Although Continental is not mandated to hire local businesses and workers, many other massive projects come with these kinds of requirements when taxpayer money is involved. These contractual requirements are often hard and fast, with the owner and contractor owing big cash penalties if they fail to meet the agreed-upon goals.
For example, in exchange for about $285 million in government financing and tax breaks, the Detroit Red Wings agreed to man the construction workforce on its new $627 million arena with 51% Detroit residents. Contractors failed to meet that goal, so the City of Detroit fined them a total of $500,000. The city levied this penalty even though the official in charge of monitoring project hires said she believed the contractors did their best in trying to find and train local workers.
Industry associations say the solution to this dilemma is for government at both the state and federal levels to commit funding for career and technical programs so that there are enough workers to meet demand. The fact that the Red Wings held job fairs, offered job training and still couldn’t come up with the requisite number of workers was a red flag, Brian Turmail, senior executive director of public affairs for the Associated General Contractors of America, told Construction Dive last month. "Mandates don't get at the heart of the problem," he said.