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Manteca leaders ready to launch first volley in protectionism war

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POSTED February 19, 2009 4:51 a.m.
Manteca is getting ready to wade into the cesspool known as protectionism.

The City Council contends it is a good thing to give local vendors preference in the competitive bidding process. They will accomplish this by allowing a local bidder who comes in 5 percent or less above the lowest responsible bid to match that bid within 24 hours and they’d get the job.

Local is defined as a company with a physical office – headquarters, regional or otherwise - in Manteca that has at least one employee working in it. They also must have a Manteca business permit.

Sounds noble, doesn’t it? After all you’re giving a local company that has a presence in Manteca and pays local business license fees and probably patronizes local businesses and restaurants a break. If it owns a building in Manteca, they might even pay property taxes to the City of Manteca.

What happens, though, if Manteca ACME Construction has an office in town that has one staff member – a secretary/receptionist – who is actually a resident of Stockton? The owner lives in Ripon and his 10-man staff consists of people who live in Lathrop, Ripon, Stockton and Tracy but not inside Manteca’s city limits.

They submit the second lowest bid that comes in 4.5 percent higher than San Joaquin A-to-Z Construction that happens to be based in Lathrop but is owned by a Manteca resident who happens to also have a 10-man work force of which half live in Manteca. Based on the proposed rules giving “local” preferences in such situation, the city policy would end up hurting Manteca residents instead of helping them.

The litmus test the council is getting ready to apply in a bid to enhance the local economic impact of municipal projects would end up hurting six Manteca residents who live here, shop here, and pay taxes here in favor of a company that has a minimal impact on the Manteca economy in comparison. Yet under the proposed Manteca-first policy the firm that has more Manteca people working for it by far will end up getting at the short end of the stick even though they had submitted the lowest responsible bid.

Worse yet, taxpayers would end up paying more for a project in return for hurting the livelihood of their neighbors.

Protectionism always has unintended consequences.

If you’re going to go for “Manteca first” then why stop at the bottom line of the bid price plus 5 percent? Why not write specifications that require materials used be purchased from Manteca concerns? You could get real creative without being discriminatory by indicating 51 percent of all materials purchased that are taxable must result in 1.5 cents of every dollar spent to end up being paid to the City of Manteca general sales tax and public safety fund.

Or, better yet, since bending the rules is OK in the name of protectionism why not just require a 1.5 percent kickback to the City of Manteca on all taxable sales? Of course, no one would propose doing that as it sounds like a shakedown although it is much more of an honest sentiment of what the city is trying to do.

The folly of having municipal decisions based on “Manteca first” when it comes to the spreading of dollars is best illustrated by the classic battle over Yellow Freight in 1989.

Yellow Freight was demanding the city change zoning at Woodward Avenue and South Main Street to accommodate a freight terminal or else they’d go to Tracy and take good paying jobs with them. Yellow Freights boosters hammered the City Council noting they were going to cost Manteca residents jobs if they didn’t cede to the trucking firm’s wishes. Manteca’s leaders split 3-2 to say no thanks to Yellow freight at that location offering them, instead, an alternative site at Airport Way and the Highway 120 Bypass.

Yellow Freight said no thanks and went to Tracy.

Council critics had a field day screaming Manteca had lost hundreds of high paying jobs.

Now fast forward to 1994.  Then Bulletin reporter Garth Stapley does an update on Yellow Freight and finds – surprise, surprise – that over a third of their drivers are Manteca residents.

The Manteca preference bid is just as myopic as those who opposed funding for the San Joaquin Partnership a few years back when the consortium had yet to generate jobs in Manteca. That changed of course, once Spreckels Park made sites and facilities available. Even so, surveys showed that firms the Partnership was helping locate in neighboring Lathrop ended up employing more Manteca residents than workers from any other city.

Manteca, by the same token, didn’t do itself any major favors by landing Indy Electronics turned Alphatec turned Turnkey Solutions in the Manteca Industrial Park. The concern under various names had about 700 workers at peak with the vast majority coming from Stockton. Now Manteca has an empty building.

The economy doesn’t respect imaginary city limits.

Engaging in protectionism also tends to trigger retaliatory action. If a firm based in Ripon gets burned enough, maybe Ripon will introduce ordinances that will hurt Manteca-based firms doing businesses in their city in retaliation. Before you know it, you have an old-fashioned trade war.

Protectionism sounds good in theory but it rarely works as intended.

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