Honda is looking to build a factory for making cars in the United States. The company is
Question:
Honda is looking to build a factory for making cars in the United States. The company is concerned about its employees' safety and well-being and wants to locate in a community with good schools. The company also wants the factory to be profitable and is looking for subsidies from potential communities. Encouraging new businesses to create jobs for citizens is important for communities, especially communities with high unemployment. Longview, a small town in Texas, has not been very well since the shoe factory left town. The city officials have been working on a deal with Honda to get the company to locate in Longview. Honda officials have identified a 20-acre undeveloped site. The city has tentatively agreed to buy the site for $50,000 for Honda and not require any payment of property taxes on the factory by Honda for the first five years of operation. The property tax deal will save Honda $3,000,000 in taxes over the five years. This deal was leaked to the local newspaper. The headlines the next day were: "Longview Gives Away $3,000,000+ to Japanese Company".
Do the headlines accurately describe the deal with Honda? What are the relevant costs and benefits to the citizens of Longview of making this deal?
International Marketing And Export Management
ISBN: 9781292016924
8th Edition
Authors: Gerald Albaum , Alexander Josiassen , Edwin Duerr