Our Editorial: Why pay more for salt?
Republicans in the state Legislature surely understand that limiting bids for services will result in higher costs. Despite a basic principle they should have learned in Econ 101, some lawmakers are trying to force through protectionist legislation that would unnecessarily drive up costs for salt. Taxpayers and many Michigan workers would lose if this bill prevails.
The bill, which would give Detroit Salt Co., Michigan’s only salt mining operation, a leg up over Canadian salt imports, flew through the Senate and is currently sitting in a House committee, where we hope it dies.
Legislators say the bill is a part of their agenda to “put Michigan first” amid growing concerns that state money is going to foreign companies instead of promoting in-state businesses and jobs. Detroit Salt officials say they cannot keep pace with Canadian mines on price, because Canadian companies are able to exploit currency exchange rates to offer lower prices for rock salt.
The legislation would give Michigan’s salt company an advantage in the shape of an 8 percent surcharge attached to bids from out-of-state companies. That will certainly result in driving away competition —and hiking costs.
The Senate Fiscal Agency predicts the bill will increase state and local costs. A similar report out of the House found that Michigan could lose up to $480,000 a year under this legislation.
“I believe we should support Michigan workers first,” says bill sponsor Sen. Rick Jones, R-Grand Ledge. “Detroit is certainly very deserving of that same advantage.”
But it seems his bill would only serve to harm Michigan workers — not to mention the increased costs for everyone else. Road salt is a major expenditure for local communities; paying more for salt will necessitate cuts elsewhere.
Such trade “remedies” can disrupt supply chains and cost domestic jobs. Dockyard owners have said the state’s docks, which pay workers to help import Canadian salt, employ more Michigan workers than Detroit’s salt mine. This bill would force them to cut jobs.
James Colangelo, who procures state contracts for the Department of Transportation, understands the bill could have a negative impact on his department, and if the salt costs go up, that means less money for other important work — such as filling Michigan’s many potholes.
“In my opinion, the more people you have bidding, the better competition you have, the more negotiating leverage you have,” Colangelo told The Detroit News.
He’s right, and lawmakers should listen to the concerns raised by state officials as well as employers. The salt bill would drive down competition, resulting in higher costs and fewer jobs. To put Michigan first, the state should continue to save tax dollars and search out the best deals it can.