By John Branston
Some mighty big fish have been taken from the waters in and around McKellar Lake in southwest Memphis. An angler recently landed an 80-pound catfish, but it could have been a 70-pounder or even a 25-pounder, fish tales and fishermen being what they are.
TVA Plant on McKellar Lake
Memphis just landed a whopper for the record books – a muskie, usually found in faraway waters. The “Elon Muskie” weighs in at 400 pounds plus several zeroes and a dollar sign. The booster class was both giddy and coy about the particulars but the best guess seems to be the biggest computer in the world could be built in the vicinity of Presidents Island and McKellar Lake where the “game changer” Mitsubishi and Electrolux factories brought thousands of high-paying jobs to the Bluff City and insured the reelection and everlasting fame of Mayor A C Wharton …. wait, this is where story kind of runs off the rails.
Quoting the Memphis Business Journal and television reporter Joyce Peterson on Mitsubishi:
“The state of the art, transformer $200 million manufacturing plant opened in 2013 after the company received tens of millions of dollars in tax incentives to do business in the Bluff City. Mitsubishi Electric was awarded a $34 million PILOT, payment in lieu of taxes, in 2011. The state of Tennessee came up with an additional $11 million infrastructure grant.
“Under the PILOT, Mitsubishi agreed to employ 281 people at the factory at 2865 Riverport Road. Records show 230 worked there last year and 179 employees were on the payroll just a couple of months ago.”
In 2019 the factory was sold and the last 166 employees laid off. Sayonara, Mitsubishi.
Former Electrolux Plant
Electrolux, from Sweden, was another short-lived success story.
The 750,0000-square-foot facility just down the road from Mitsubishi made cooking appliances. It was built in 2013 for $266 million, offset by $188 million in incentives. It started shrinking in 2019 and closed in 2022 and, adding insult to injury, consolidated with another Electrolux plant in Springfield, Tenn., outside Nashville.
Jim Strickland, who was mayor of Memphis at the time, called the news “disappointing to say the very least. The state, county and city acted in good faith and made an unprecedented investment in this company and in Memphis.”
U.S. Rep. Steve Cohen commented, “The company’s abandonment of Memphis will mean potential financial hardship for its employees and suppliers and should result in more careful review of promises made by corporations about local job creation in the future.”
It isn’t clear whether Memphis moved carefully or hastily with Musk’s startup company xAI and its supercomputer to develop generative AI. Ted Townsend, president of the local chamber of commerce, was quoted in the Wall Street Journal saying Memphis had to move quickly to beat out other cities.
“The pace at which we were able to move resonated with the xAI team,” he said.
Incentives for Musk, the richest man in the world, are under discussion as is a property tax increase of as much as 75 cents for residents of Memphis. Incentives are a rounding error for a multi-billionaire. If he comes here, Musk will probably go away in a few years but a property tax increase, like a diamond, is forever.
Musk caused a minor sensation in the local foodie media when he posted on X that he “had challah French toast for breakfast in Memphis.”
Hurrah, challah! X marks the spot where xAI will put Memphis in the global tech big leagues! 100K Nvidia chips R Us t-shirts go into production soon! We Be The New Silicon Valley!
A little-known fact: President’s Island, a scruffy port for trains, trucks and barges and fabricating plants with hot, dirty jobs, is one of the high tech hubs of Memphis. Back in 1991, the U.S. Navy’s Large Cavitation Canal (LCC) was built there. It was not a buzzy story, possibly because reporters like me had no idea what it was: “the largest and most technically advanced, pressurized, closedloop, recirculating water tunnel in the world. The LCC is like a wind tunnel, but filled with 1.5 million gallons.
I was over my head and wrote that it was “sort of a giant water slide” but an editor wisely spiked my story.
If Memphis really wants to turn a corner and distinguish itself in the eyes of America, it should put on its big-girl/boy panties/pants and tell the Muskie fisherman he is welcome to come here but on terms that are favorable to Memphians, not multi-billionaires.
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John Branston covered Memphis as a reporter and columnist for 35 years.
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Join me at the Smart City Memphis Facebook page and on Instagram where these blog posts are published along with occasional articles, reports, and commentaries that are relevant to Memphis.
John, I just watched an angler catch a 52″ muskie on the Collins River below my house last week here in McMinnville, TN. He did it from a pedal powered kayak with a spinning reel. After taking a selfie with it, he threw it back. It didn’t require hundreds of megawatts of climate wrecking fossil fueled electricity or wasting millions of gallons of clean water every day, and the natural resources he did impact was left for future anglers with no damage done.
I agree with the sentiment. However, while we don’t know how many (if any) permanent jobs will be associated with xAI, I do know that Memphis and the surrounding region are hardly in a position to be making demands. If we were a city where residents chose to live first and then started looking for a job, we would be in a stronger position to dictate terms. Maybe we can take a stronger stance calling the shots where logistics are concerned, but anything else….?
In just 2 stories last week, we learned that a total of +/- 2,000 good paying manufacturing positions in the area will be eliminated. In one case, it has the added bonus of foreshadowing the relocation of a locally grown company. Great news for reduced aquifer usage and area catfish I suppose.
Mr. Musk draws no salary. His pay package, as the New York Times explained a few times, is tied to stock performance. Shareholders will vote on it this Thursday, June 13.
Here are some big numbers, so I have done some rounding and may have made an error or two. We are numerically in the realm of astronomers.
Pay package: $46.5 billion. $46,500,000,000
Generous incentives package, TBD: $100,000,000
Ratio of incentives package to pay package: .approximately .2 percent. (decimal point 2 percent)
Good hourly wage in Memphis: $20 an hour
Good annual salary in Memphis: $50,000
Ratio of $20 to $46,500,000,000 (very small number i cannot compute)
Annual city of Memphis operating budget: $709 million $709,000,000
Sales tax in Memphis: 9% +
JB (and others), Anon 2:13 here. I totally agree on that front. It’s bull pies that any incentives would be granted seeing as they more or less translate to bonuses and pay for already stupidly wealthy individuals. That’s also not a Musk or xAI specific issue.
My original comment becomes irrelevant in a world where corporate welfare ceases to exist.
Amen! — This announcement has been associated with so much publicity that it is hard to believe any of it. I am certainly not an expert in these sorts of plants — but I do watch WSJ technology videos. And they always show miles of servers in an air-conditioned building, but the videos never show any employees.