Mercury Marine’s economic impact overstated?

Simply amazing. Both of these things cannot be true at the same time.

From Manta:

Mercury Marine Group is a private company categorized under Marine engines and located in Fond Du Lac, WI. Current estimates show this company has an annual revenue of $45,800,000 and employs a staff of approximately 550.

From the  Fond DuLac County Economic Council:

 The impact extends well beyond Fond du Lac County. The direct and indirect impact is expected to result in the loss of almost 8,000 jobs and $450 million loss in annual earnings in the 7-county region (Fond du Lac and adjoining counties); and loss of over 11,000 jobs and $600 million annual earnings in the State.

It is simply impossible for a $45M company with ~500 employees to impact 11,000 jobs and a $600M loss in the state.

Since both of these things could not be true, I checked HERE and confirmed the first numbers.

I think that if Gov. Doyle knew that  it was an exagerated *cough* report from the Fond Du Lac County Economic Council  he might not have offered much in the way of state incentives.

Oh, by the way, you can read about the Stillwater plant here. It has 380 employees.

The company had requested an economic incentive package from state and county officials in Oklahoma and Wisconsin to cover some costs in relocating one of the two facilities.

Ahh, having your cake and eating it, too. You just gotta love the new president of Mercury Marine and his moxy to pit both states against each other,  embrace an exagerated  *cough* economic report on the company website, and make the union look like they are the bad guys. No wonder Brunswick cleaned house earlier this year and brought a new tougher management team into place.

Savvy guy, eh? But what can you expect when the company sales are down 50%? It isn’t costs, it’s freakin’ sales that are the problem. (It’s the economy, stupid!)

Swabero Schwabero has convinced everyone that he is the softball guy but he really is playing hardball. He will likely not move either plant and just reap the tax credits from both states for ten years or so.  A tough guy that  ya just gotta like. And that is the reason why the big dogs get millions of dollars per year in bonuses.  

  Mercury Marine, a subsidiary of Lake Forest, Ill.-based Brunswick Corp., has to reduce production capacity because sales have dropped 50 percent from a year ago and any recovery could take years, Fleming said Monday. 


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7 thoughts on “Mercury Marine’s economic impact overstated?

  1. PB I think your reading comprehension needs a little work. The financials of Mercury Marine and the total economic impact of the factory are two different things. The business trade magazines & sites don’t care about the impact on the local community, only the sales, expenses, etc. While the County Economic Council (and state) care much more about how many people are employed and the ripple effect their salaries create.

    You can certainly take issue with the numbers the numbers they’re claiming. It is very difficult to estimate this sort of total economic impact because it is necessarily filled with an enormous number of assumptions. I’ll always argue that any time numbers come out for total impact, people be very cautious and not take it at face value. But the point is the impact in Fond du Lac and the surrounding area is several orders of magnitude larger than the hundreds of people who work directly for Mercury Marine.

    Breaking it down into a few numbers (whether they are accurate or not) does not really it justice. From the County Council, here are some numbers that are specific enough to be more trustworthy and not directly dependent on assumptions:

    250 companies in Fond du Lac County provide products or services to Mercury Marine

    The company is a significant water and sewer customer of the City of Fond du Lac. If no new customers took their place, the water and sewer rates would have to increase by up to 5.5% which
    equates to approximately $44 a year for the typical residential customer.

    The largest economic impact however, is heavily dependent on speculation. With a loss of jobs and an employer this large, it WILL depress property values and the real estate market. This, in an already struggling market will be huge. Is it 1 percent? 5 percent? 25 percent? Who knows. Is it fair to multiply that percentage drop in value by every property? Maybe, maybe not. You can certainly argue it isn’t actually a realized loss unless/until a property is actually sold. But once that building goes off the property tax rolls, that money won’t becoming coming back on – it’s not like anybody is going to move in. That’s $600K per year to the city, county, school district and technical college. How many years do you multiply that out to determine the total impact?

  2. Ok, I am willing to learn. Why will 11,000 jobs be impacted if 500 people lose theirs? Am I missing the nuance of “impacted”? I see impacted as menaing they disappear.

    1. WT, I can easily see how the loss of 500 jobs would affect 11,000 others.

      You might be only 1 job, but how many other jobs do you affect economically? Take an easy example, you go to a resturant, the cook, waiters, bus boys, bartenders all make money.

    2. Exactly. Again, I’m not justifying the numbers themselves only, that the impact is much larger than the 500. “Impacted” is a very ambiguous term, no disagreement there. On one end, if everyone’s sewer & water bills go up $44, they’re impacted. On the other end are the people who literally lose their jobs.

      If 500 are without jobs, that’s X number of cars those people would have purchased & no longer will. So the dealerships make less money – sales people make less money. It’s reasonable to think that Holiday will have to cut some sales people. The drop in property taxes from the plant and and lower property values means less money for cops, teachers, etc. Some of them will be out of work. The local Subway or other fast food restaurants will see a significant drop in lunch sales, etc. Each person who loses their job or has their income/tips drop, will in turn spend less. For each dollar flowing in from Mercury, XX cents was spent locally. And a cut of that. And cut of that.

      The math is tough – filled with assumptions that can be colored by bias. But the principles are straightforward and is seen every time something like this happens.

      1. Then it’s BS. If ‘impacted’ is so ambiguous a term that it merely means a relationship exists, the term means nothing.

        If I walk down a street every day and so do thousands of others, can we say that I have impacted their lives ‘x’ amount of dollars when I move to another state?

        That is the most tenuous of strings to tether financial impact to. In fact, it misrepresents the truth of things.

        Does my move mean that others have to make up my property taxes and income taxes? Does my moving mean that others have to pay more in utilities for a decade to come?

        These are false associations and if this type of impact analysis was used to save snail darters, I can certainly understand the anti-environment crowd better.

        Makes me suspect the ‘impact’ of global warming,too.

        I will dismiss all future impact analyses going forward as balderdash.

        In fact, this type of analysis is like saying I know Vladimir Putin because there are 6 degrees of separation between us. And that is silly.

      2. One more thought: If a company makes $45M a year in revenue and can cost the state $600M in losses, does this multiplier effect work the other way? If the company goes from $45M to $60M has it increased its economic impact by a factor of 13 from $15M to $195M? If it goes from 500 jobs to 600 jobs has it increased the impact upon state employment by a factor of 22 to 2,200 jobs for every 100 jobs it creates?

        This is just fallacious, in my opinion. How a company can have more of a financial impact than the payroll it disburses plus the goods and services it purchases is beyond me.

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