Machinists Union Charges Illegal Use of Katrina Relief Funds

Washington, D.C., November 12, 2010 – The International Association of Machinists and Aerospace Workers (IAM) is calling for an investigation into the growing practice by Gulf Coast states of using federal disaster relief funds to persuade established manufacturing facilities to relocate from other states.

In a letter to U.S. Attorney General Eric Holder, IAM International President Tom Buffenbarger requested a formal investigation into Louisiana’s $400 million offer to Hawker Beechcraft Corp. if the company would relocate from Wichita, KS to Baton Rouge, LA.

“The IAM believes your Office should be concerned with where Louisiana got $400 million to game our economy in this way,” said Buffenbarger. “It seems clear that the state is using federal development assistance, including “supplemental Katrina” funds through the U.S. Department of Housing and Urban Development (“HUD”) Community Development Block Grant (“CDBG”) program.”

Buffenbarger noted the “Aerospace Alliance” formed in October of 2009 by the governors of Louisiana, Alabama and Mississippi to bring aerospace manufacturing jobs to their three states. Local development corporations advertised the development of aerospace parks for new facilities, public infrastructure to support them and whatever else would be needed for a company to move – including Federal money, specifically touting special federal Katrina funds authorized by the Gulf Opportunity Zone Act of 2005.

“We believe that Louisiana’s gambit violates the law,” declared Buffenbarger, who cited a Congressional prohibition on the use of Katrina Supplemental funds, “to assist directly in the relocation of any industrial or commercial plant, facility, or operation, from one area to another area, if the relocation is likely to result in a significant loss of employment in the labor market area from which the relocation occurs.” [42 USC § 5305(h)].

“Such inter-state raiding, successful or not, only drags on our national economy, because moving jobs between states adds nothing to national employment,” said Buffenbarger. “It is not activity that the American taxpayer should be subsidizing.”