LEWISTON, ME
Broken Promises
After winning generous subsidies, Wal-Mart cuts jobs and pay at new distribution center
In January 2002, Wal-Mart decided to build a 480,000 square foot distribution center in Lewiston, Maine.1 In exchange, city leaders and the State of Maine agreed to provide the company with $16.7 million in subsidies.2 In order to seal the deal, Wal-Mart made two key and explicit promises: that it would bring 350 jobs to town3 and that the wages would be between $12 and $15 an hour.4 But when the distribution center finally opened in June 2005, Lewiston residents learned the truth when Wal-Mart reneged on both its promises regarding the number of jobs and the wage level.5
These broken promises came at a very high cost to Maine’s taxpayers and the residents of Lewiston. State and local governments collaborated to give Wal-Mart favorable subsidies, including local tax increment financing worth $5.8 million, water and sewer relocation valued at $1 million and $940,000 for sand/gravel pit relocation.6 For its part, the State of Maine provided $4.7 million in equipment tax reimbursements as well as $1.2 million for improvements to roads leading to the new facility.7
Wal-Mart succeeded in squeezing every dollar out of state and local taxpayers to build its distribution center, which it needed to support planned expansion throughout the Northeast.
Lewiston City Councilman James Carignan was quoted in the Portland Press Herald about Wal-Mart’s process, “It’s ironic that a company that thinks of itself as America’s store does business in such an undemocratic way.”8
In June 2000, the city council was briefed several times about a then-unnamed company and their plans for a project within the city. Just one week before the council’s vote, Wal-Mart revealed its role in the project.9 As part of the negotiations, Wal-Mart even required confidentiality agreements from Maine & Co, the intermediary that led the effort to bring Wal-Mart to Lewiston.10 “I think it’s an unfortunate situation,” Carignan said, “when you have a gun held to your head like that.”11
In its lobbying effort, Wal-Mart forecast a total investment of $45.5 million in Lewiston12 and even said that employing 450 people was not out of the question.13 According to documents referenced by the Associated Press at the time of the deal’s announcement, the new distribution center would create 256 transportation and warehouse jobs paying $12 per hour, 56 administrative and clerical jobs paying $13 per hour, and 14 technical jobs paying $15.50 per hour.14 Plans also called for 24 full-time executive and managerial positions starting at $40,000 annually.15 Payroll was estimated at $9.3 million annually.16
As recently as April 2005, the Associated Press reported, “The jobs, which include material handlers and support staff, offer starting pay of $13 per hour, plus benefits.”17
ORIGINAL DOCUMENT
Wal-Mart forecasted it would create 256 jobs paying $12 per hour.
But when it was finally time to hire employees for the distribution center, the promises were broken. The advertisement in local papers read: “Pallet Company located at the new Wal-Mart Distribution Center. Material handlers needed for temporary-to-direct hire positions. Pay ranges from $8.50 to $9.50, based on work history and experience.”18
Potential employees would also learn that far fewer jobs were actually available. According to the Associated Press, “Wal-Mart Inc. says it has already received more than 2,000 applications for jobs at its new $60 million distribution center. The retail giant said it expects to open a 415,000-square-foot warehouse for nonperishable items this June and needs to hire 225 people before then. … The number of new jobs was adjusted downward to reflect more automation in the retailer’s warehousing systems.”19
Two-hundred and twenty-five employees or 350, $12.50 per hour or $8.50, it’s all just numbers to Wal-Mart. Executives in Bentonville knew that they needed a distribution center in Maine and they knew Lewiston needed jobs and economic growth. The rest was just a game.
