McDonnell Douglas, accused of blackmailing and strong-arming the state to secure a $10 million loan, said Thursday it wouldn't leave Utah if it doesn't get the money.
State economic development officials admitted they were confused over statements made by a McDonnell Douglas executive during a presentation made to lawmakers Tuesday about a proposal to expand its aircraft assembly plant here."It should be clear that we have no intention of stopping our operations here," the company said in a written statement released Thursday from Long Beach, Calif. "Any interpretation of our presentation to state officials (Tuesday) that suggests that is incorrect."
The statement came during a press briefing called by state officials to clarify the deal the aerospace firm wants to strike with the state and undo some of the confusion.
Lawmakers, who must approve the $10 million loan, were told the money is needed to consolidate McDonnell Douglas' aircraft assembly operations in Salt Lake.
They also heard that if the company doesn't get the money, its Douglas Aircraft Co. facility near the Salt Lake International Airport may have to be shut down and moved to Long Beach, Calif.
"I have no choice," vice president and general manager William Skibbe warned lawmakers during the House cacucus. "I only need one (assembly plant)."
While lawmakers questioned whether they were being bullied into making an unprecedented loan, the head of a successful electronics firm in Salt Lake City characterized McDonnell Douglas' statement as "tantamount to blackmail."
"If anyone in the Legislature is foolish enough to fall for this, then let me be second on your list," said John Johnson, president of DOD Electronic Corp., in a letter Thursday to Gov. Norm Bangerter.
During the morning press briefing, Stan Parrish, director of state Department of Community and Economic Development, said the statement did not make the company's intentions clear.
"Obviously it was a very confusing statement at best," Parrish said. He spent most of the press briefing explaining that the loan was not sought by the company. "We approached McDonnell Douglas. They did not strong-arm the state of Utah."
In its statement, McDonnell Douglas officials said the loan was the state's idea to get the company to expand and create new opportunities for Utah businesses.
Proposed terms of the loan say McDonnell Douglas wouldn't have to repay it if the company generates $600 million in new business within 10 years. Bangerter and state economic development officials endorse the deal, predicting it could result in 1,800 new jobs and $150 million more in tax revenue.
"It also must be understood that the incentives proposed by the state are an essential ingredient to a business decision that would lead to major expansion of our activity here," the company's statement read.
McDonnell Douglas' offer comes just five months after it broke ground on a $1.6 million expansion of its Salt Lake facility, where about 620 employees assemble lower fuselage and floors for the MD-80 aircraft.
But analysts say all aerospace companies are aggressively cutting costs.
"Many are going through consolidation and cutting back on the number of facilities," said Michael Rosen, an aerospace industry analyst with Smith Barney.
While acknowledging he doesn't know if McDonnell Douglas is asking all states where it is doing business for loans, Rosen added that the tactic may just be a new, aggressive way of doing business.
He noted that a loan from state government is cheaper than borrowing from a bank.
At the same time, Rosen said $10 million is "insignificant" considering McDonnell Douglas' debt load of $3 billion and projected 1991 sales of $20 billion.