Release (Public Subsidies for) the Kraken: Florida Competes for Spacecraft Factory

Florida Politics reports the Sunshine State is seeking to lure a company code named Kraken to locate its $300 million spacecraft factory to Brevard County. The project would create about 2,000 mostly high-paying jobs.

Space Florida’s board of directors gave approval Wednesday to staff to negotiate with the company to have a satellite factory located near the agency’s launch sites on Cape Canaveral.

Those negotiations could involve creative financing, lease deals, and possibly matching-fund grants from the Florida Department of Transportation.

Space Florida President Frank DiBello told the board Space Florida has competition for the factory from other states.

My best guess is that Kraken refers to Jeff Bezos’ Kuiper Systems. The company was established to develop a broadband satellite constellation composed of 3,236 satellites.

Bezos’ Amazon company is based in Seattle, Wash. The city’s new NHL hockey team is named the Seattle Kraken. Kuiper is also one of the few major satellite constellation projects that has not announced a manufacturing location.

Space Florida is a state-chartered organization whose mandate is to attract and promote aerospace. It has done many deals over the decades.

If it turns your stomach that state taxpayers could end up subsidizing a venture led by the world’s richest man whose main source of income, Amazon, pays little or no federal income tax each year…well, that is a very normal, human reaction. For most people, anyway.

But, it’s the way the game is played. If Florida doesn’t do it, then Texas will. Or Alabama. Or any number of states. Companies play states and cities, even nations, off each other all the time. The bigger the company, the more costly the project, the less the support is actually needed, the higher the amount of incentives and tax breaks are offered.

If taxpayers are lucky, governments can structure deals in ways that place minimal burdens on the public treasury in the short term while producing a net increase over time. If they’re not, they end up with heavy costs and minimal benefits.

The prime example being Spaceport America, which has cost New Mexico $250 million with few of the economic benefits promised by Gov. Bill Richardson and Richard Branson when the project was unveiled as home to Virgin Galactic 15 years ago.

There’s still a possibility that Spaceport America could produce in the long run. The City of Midland ended up with almost nothing from the $10 million plus incentive deal it provided to XCOR Aerospace and Orbital Outfitters. Both companies went out of business.