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Layoffs on heels of bonds leave bad taste for some

Recent worker layoffs at two Mississippi companies have somearound the state scratching their heads.

The puzzling aspect isn’t the layoffs themselves, as sheddingworkers is, when circumstances warrant, a common business practice.The curious part is that the business involved – Northrop GrummanShip Systems in Pascagoula and Baxter Healthcare in Cleveand – bothhave received several million dollars in state bond money duringspecial legislative sessions over the last year to expand andmodernize their operations.

Lawmakers in July approved a $14 million bond package forBaxter, a $10 million loan and a $4 million grant. In November, itwas full steam ahead for a $40 million bond package for NorthropGrumman, the second of three planned installments.

Since 2002, state lawmakers have approved $100 million in bondsfor the shipbuilder, and just last month a spokesman for Gov. HaleyBarbour said he was still considering calling lawmakers back toJackson yet again to approve the final installment of $56 millionto help fund expansion of Northrop Grumman’s Gulf Coastoperations.

Sounds like things are humming right along and the state’seconomic development dollars are paying off.

Or maybe not.

Early last week, Northrop Grumman said it was laying off 900workers at its Pascagoula and New Orleans shipyards. By midweek,the company announced it would cut an additional 1,000.

The week before, Baxter Healthcare, less than a month after theLegislature approved its $14 million, announced the layoffs of 60employees.

That these job losses come so closely on the heels of the bondapprovals – whether justified or not – will certainly leave a badtaste in the mouths of some lawmakers and taxpayers alike.

It’s widely understood that to lure new business or to encourageexisting business to expand, taxpayer money must often be used. IfMississippi doesn’t play the game, another state surely will.

Perhaps the recent layoffs make good business sense for NorthropGrumman and Baxter Healthcare, but lawmakers must also considerwhat makes good business sense for the state. That’s not to saythat the bond money approved for the two industries in questiondoes not. From many indications, the state’s economic-developmentinvestments could pay off.

But still there is a lesson to be learned.

In assessing economic-development projects and aid requests, ourelected officials must be careful and exercise due diligence,weighing the cost against the potential payoff while alsoattempting to predict the long-term viability of the businesses andindustries involved.