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Published: 10/1/2004

Cautious reaffirmation for Jeep

DESPITE a recent court ruling striking down Ohio's tax abatement law, DaimlerChrysler has chosen to proceed with a $2.1 billion expansion of its Jeep manufacturing operation, and that's good news for Toledo.

City Council approved the tax-abatement package, potentially worth $44 million, for DaimlerChrysler and its suppliers to create 600 jobs at an expanded North Toledo facility, and the community should appreciate that DaimlerChrysler has stayed the course.

When the U.S. Sixth Circuit Court of Appeals struck down the state's Machinery and Equipment Investment Tax Credit last month, stretching credulity by claiming that it interfered with interstate commerce, the fear was that being denied use of this economic carrot would put Ohio at a disadvantage in attracting business.

Indeed, whatever one thinks of tax abatement, the court's ruling unquestionably put businesses in the court's jurisdiction - Ohio, Michigan, Kentucky, and Tennessee - at a disadvantage competing for business with states not covered by the ruling.

Eileen Granata of the Regional Growth Partnership said a company that had appeared ready to close a deal to bring jobs to Toledo was now looking elsewhere, and other companies that had been considering Toledo were "taking a step back."

So, while the court's ruling will be appealed, and hopefully overturned, the uncertain outcome would have made it understandable for DaimlerChrysler to put the brakes on expanding its vehicle lines in Toledo.

Failure to overturn the federal appeals court ruling, after all, would likely cost the automaker millions.

As Ms. Granata noted, "There are certainly no guarantees, and DaimlerChrysler understands that."

We understand it as well, and recognize that the decision to proceed is as much a result of the strong bond that has been forged between Toledo and DaimlerChrysler as it is of the automaker's estimate of the legal standing of the tax abatement question.



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