The Road to Crony Capitalism

Bechtel corporate headquarters in Frisco: Rich and powerful

by James A. Bacon

Good news, bad news on the economic front. First the good news: Engineering-construction giant Bechtel Corp. will relocate 625 employees with its global operations, government services and civil business units from Frederick, Md., to Reston Town Center.

“The company was attracted to the commonwealth due to its business environment, cost, and ability to attract the best workforce to meet future growth needs, especially [information technology] and engineering employees in the area,” said Gov. Bob McDonnell in a press release announcing the move.

Oh, that and $6.5 million in state funds — a $1.5 million grant from the Governor’s Opportunity Fund to assist Fairfax County with the project and a $5 million Virginia Economic Development Incentive Grant. Previously, Bechtel had agreed to keep another 1,250 jobs in Frederick in Maryland after extracting a $9.5 million loan from that state, reports The Washington Business Journal.

Once upon a time I would have considered that good news, and I guess I still do. Bechtel’s employees are highly skilled and highly paid. (The jobs staying in Maryland pay $125,000 each on average.) The deal means more jobs, bigger tax base, a hefty multiplier effect on the local economy and a reaffirmation of Virginia’s superior business climate. All very true. But the subsidy sticks in my craw. I’m getting increasingly cynical and disillusioned with a system that dispenses favors to the rich and powerful and nothing to the small and obscure.

Here’s the other news from yesterday: Muller Martini Manufacturing, a maker of bookbinding equipment, has announced that it will close its Newport News facility, laying off 98 workers. And Berry Plastics Corp., a manufacturer of plastic bottles, will shutter its Henrico County plant, costing about 130 workers their jobs. Here we are, two years into an economic “recovery,” and it seems like more businesses are shrinking than growing. I don’t know if state or local economic development authorities tried to intervene to save those jobs (and I’m not even persuaded that it would have been a good idea to do so), but there seems to be a rank injustice that a rich and powerful company like Bechtel is getting state assistance while obscure, no-name companies don’t. Have you ever heard of Muller Martini or Berry Plastics? No, either have I. It’s a parable for our times.

Meanwhile, a quick check with the Virginia Public Access Project shows that Bechtel Infrastructure Corp., based in McLean, has donated nearly $76,000 to Political Action Committees and politicians since VPAP started keeping track in 1999. Donations from Muller Martini: zero. Donations from Berry plastics: goose egg.

Let me go way out on a limb and predict that Bechtel will be contributing more money in the future. Don’t forget, a Bechtel-led consortium is building Phase 1 of the Rail-to-Dulles project and soon will begin angling to win the contract on Phase 2. If it looks like crony capitalism and smells like crony capitalism…

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