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The Rinaldi Report by Peter Rinaldi
When business and politicians lie Exaggerating is part of life. What macho guy hasn’t told a fib or two when talking about his sports heroics, all the girlfriends who chased him over the years or how successful he was with this or that job. We want to put ourselves in the best light and not let our friends and acquaintances know what bumblers we really are. Similarly, a number of industries have announced plant openings in the Miss-Lou. Some were not seen or heard from again after the announcement. Politicians latch on to these fledgling enterprises with hopes that new jobs will help them secure re-election.
Of course, many of these announcements are conditional. The opening
will only occur with OPM – Other People’s Money – because these
start-ups seldom have the cash or financing to make those lofty
announcement dreams come true. Hungry for news stories, the press jumps on these acclamations and treats them as almost biblical verse, truth of all truth. How dare anyone be suspicious of an economic development announcement? The economic news is the truth, the whole truth and nothing but the truth, which of course, it isn’t. Several months ago, Gov. Barbour, some bigwigs from Jackson and a host of local hangers-on gathered in Natchez to announce a plant coming soon. While everyone was backslapping, cheerleading and congratulating each other with the pending success, state officials were saying privately to me that this new company was PWM – People Without Money – and they needed a massive influx of cash to do anything substantial. That information was left out of the press releases. No announcement was more overblown and overhyped in recent years than the Rentech deal. Rentech, a fertilizer company, based in Los Angeles, bought the IP Natchez Mill site and said it would develop a synthetic fuels plant. Several thousand construction jobs and hundreds of permanent jobs were planned. The company would spend as much as $1 billion on the project. Talk around town was, “We’re saved!” Of course, all you had to do is look at Rentech’s financials on Yahoo and see the company had never made a profit and lived on borrowed money and public stock issues. Most investors in the company lost money, though the insiders (corporate officials and directors) lived handsomely on that borrowed and investor cash. The company issued press release after press release saying it was going to do a deal in West Virginia, Montana, Australia, etc. All these notices had impact. The stock rolled up and down. People felt good. Things were happening. But nothing really happened. Rentech did stop most of its red ink from operating the fertilizer plant. It made no real ground on the Natchez site, because it didn’t have the money or the resources to do a big deal of a billion dollars or more. I wouldn’t say Rentech officials lied to the public or the Miss-Lou. They just didn’t tell the real truth about their operations. In December, Rentech announced it had abandoned the idea of making synthetic fuel at the Natchez mill and was looking for less expensive ideas for development of the site. That means to me they’ll try to sell off a few parcels of land there to raise cash, since the stripped mill itself is of little value. The book is not entirely closed on the Rentech story but nearly so. Economic development mania touches nearly all of us in the Miss-Lou area. We want to believe that big numbers of jobs and a turn-around are just months away. With the exception of CCA and Lady Luck, almost none of the cheery jobs announcements over the past 20 years were accurate or truthful. Our area seems particularly adept at attracting con artists (a la John Rivera recently and Walter Hastings a generation ago). Politicians want to subsidize their operations with our tax dollars. In the fever to capture jobs, we’ve wasted millions. As of late, the Delta Fuels-Elevance plant has secured state and county subsidy for its operations. The Adams County Board of Supervisors has voted a subsidy. Yet not one supervisor asked Elevance for a balance sheet or statement of finances before pledging our tax dollars. This is stupidity. Yet Elevance has a good history of being able to raise large sums. While it pledged to start construction in the fall of 2011, it missed that deadline. Instead, it plans to raise $100 million through an initial public offering, listing its company on the NASDAQ as ERSI. The offering and listing have not yet been accomplished, which will delay the Natchez retrofit. The promised jobs are conditional. Ronald Regan said about the Russians and nuclear disarmament, “Trust but verify.” The same motto should apply to us when it comes to economic development. We should welcome the announcement of new jobs and new industry, but check the company’s finances and determine real intentions before we get all hyped up about the promises. Most of the PWM (People Without Money) won’t be able to raise what they need, unless a pigeon-fool drops out of the sky with a wad of cash. Therefore, it’s reasonable to be suspicious about their rantings. In regards to the recent news that Premier Gaming will proceed with its Roth Hill Casino, the first question I asked the state’s gaming executive director was, “Does Premier and Lane’s Natchez Enterprises have the money?” He answered that the state has checked with their lenders and investors to warranty that the lines of credit are there. And since those dollars have been pledged, you can assume the company will go forward (barring an unforeseen disaster), after it deals with the nightmare of final approval by the city of Natchez preservationists and their allied meddlers. As I think about wishes and dreams, I wish I had scored a touchdown when I played football as a teen. But I never did. I’ve never scored a goal in a full-side game of soccer. I wish I had. I’m just not a very good athlete. So I should not portray myself as one, talking of past or current glories that are non-existent. Likewise, the economic wishes and dreams of companies are not reality. We should all be suspicious of businessmen and politicians who seek our tax money and our political support when promised jobs are announced. Hype is easy. Delivering the goods is much harder. Trust but verify.
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55 Seargent Prentiss Drive · Suite 4 · P.O. Box 17833 · Natchez MS 39122 · (601) 446-8803
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