Give Cabelas Tax Incentives
A Sporting Chance

December 11, 2006
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The nation's largest specialty retailer of hunting, fishing and camping merchandise has determined that a second Michigan store (one of eight proposed across the country) should be located in a new 62-acre village development in Walker, but has requested $15 million in a tax incentive package to fund public infrastructure for the mixed-use development. Its annual payroll for that single store is estimated at $6.58 million.

The knee-jerk reaction from most of the economic development community, including the Michigan Economic Development Corp., has been refusal. Grand Rapids Business Journal, however, agrees with Senate Majority Leader Ken Sikkema, R-Wyoming, who is determined to hold discussion on the matter. Sikkema's point that Michigan has provided "incentives" for one-time events — the Super Bowl and World Series — is well-taken.

The first point to be made is definition: Is Cabela's a tourist attraction or a retailer? We know of no other "retailer" drawing more than five million tourists to Michigan, as does Cabela's Dundee store, ranking it as the state's top "tourist attraction." That component certainly makes the request for tax breaks to assist construction of public infrastructure more customary than outrageous, and from a unique business position.

Lakeshore tourism groups are likely as celebratory as the Grand Rapids/Kent County Convention and Visitors Bureau at the prospect of such a draw, which further matches existing events (including Van Andel Arena concerts) and attractions with yet another type of tourist. The natural tourism lure of the lakeshore is in sync with the Cabela's visitors.

Secondly, Cabela's starts its floor workers at an average wage of $11 to $11.50 per hour and expects to hire 118 full-time and 145 part-time workers. Those rates are significantly higher than those typical of the retail industry, and in fact better than many industrial jobs. Upjohn Institute analysts expect a "conservative" job multiplier of 1.5 to 1.7 for each of the Cabela jobs.

Michael LaFaive, director of fiscal policy for The Mackinac Center, argues that state business incentives have become political, not economic. The distinction made here is that tax policy in the state is another issue — one that legislators are certainly looking at — in addition to the replacement tax(es) for the Single Business Tax. The state and national regard for needed tax incentives should be a foundation for those discussions.

That Michigan has witnessed a bloodbath in declining jobs and revenues from manufacturers (to whom incentives are targeted) and has not yet regarded the New Economy job providers is almost insane. Consider the comments from this week's Inside Track executive David Hemmings, president of the Pacific Rim Alliance, an English native son. England was a country that in his youth mined coal, produced steel, built military and commercial boats and airplanes, had five car companies, and exported virtually every product that a manufacturing nation could. "Today, there is none of it," he said. "The forces of change made themselves felt on the British economy. Politicians couldn't recognize it, senior management was too inept to manage change, and the labor unions wouldn't allow change." A half century later, Britain has effectively no manufacturing base, and Hemmings sees that same scenario playing out in Michigan. "But it doesn't have to be like that. We don't have to stick our head in the sand and ignore the reality of what is happening."

Upjohn analyst George Erickcek also considers potential losses to other area retailers of similar products, but area residents are accustomed to the "next in line" mentality, not touring, on a normal shopping basis.

Grand Rapids Business Journal urges state officials to give the request consideration rather than ignore it.    

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