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Checchi, however, dismisses Berg and Berg's opinion. Proclamations that Northwest was in trouble and looking for a bailout, he says, were mere political rhetoric promulgated by opponents of the deal.
"Gene Merriam was opposed to the transaction, and what are his credentials for making a judgment?" Checchi asks. "All that guy did was perhaps look at a balance sheet and a [profit and loss statement] and render some cursory judgment of something he had already decided he was against anyways."
Politics, Checchi says, accounted for most of the criticism of the financial package. "In the course of negotiating the transaction you had all kinds of people throwing whatever roadblocks they wanted to against the transaction," Checchi says. "One of which was to call it a bailout, when it wasn't a bailout."
Arthur Rolnick, one opponent of the deal, didn't call it a bailout. He called it blackmail. Rolnick, research director for the Federal Reserve Bank in Minneapolis, opposes the common fad among state and local governments to hand over money to private businesses. As a simple matter of public policy, he believes, rich companies and businessmen should not be allowed to shake down governments for subsidies and tax breaks to build new plants, offices, or sports stadiums.
But Rolnick never took the debate as personally as Checchi seems to. "I'm not critical of Northwest for doing this," Rolnick says. "We have companies doing this all over the country. Large public companies are blackmailing states."
Despite fierce opposition, the political winds blew Northwest's way. The governor backed the deal, as did Minnesota Congressman Jim Oberstar, who wielded substantial clout as chairman of the House aviation subcommittee. It also didn't hurt that Minnesota native son and former Vice President Walter Mondale had a seat on Northwest's board of directors.
In early 1992, a legislative committee gave final approval to the aid package. It wasn't the $1 billion Northwest had asked for, but it was still a sweet deal.
The final "development package" provided $838 million of loans and assistance for Northwest. The Metropolitan Airport Commission agreed to loan the airline $315 million. Northwest put up its flight simulators, some jet engines, and other equipment as collateral for the loans, says Tom Anderson, the commission's general counsel.
The city of Duluth agreed to pitch in more than $20 million as an outright grant to the airline in exchange for the Airbus maintenance facility, says Karl Nollenberger, the city's chief administrative officer. The rest of the money was to come from other sources, including loans made with the proceeds of government bond sales.
The deal was approved, and Minnesota's elected officials waited for Northwest to build the two new facilities and create those 2,000 high-paying jobs.
They're still waiting.
The Iron Range of northeastern Minnesota is a cold and lonely place. Unemployment runs almost double the state average, a reflection of the falling fortunes of the taconite mines that gave the region its name. The small town of Hibbing dearly wanted the payroll that Northwest's engine repair facility would bring. The town never got it.
Farther south, the city of Duluth was also eager for the 800-plus jobs that would accompany a new Northwest maintenance plant. That city, at least, has gotten part of what was promised.
Shortly after Northwest won approval of the state aid package, it promptly took $315 million from the Metropolitan Airport Commission to prop up its ailing bottom line. But the airline's finances continued to plummet, and it had to cancel orders for some of the new Airbus planes it had planned to purchase.
Northwest determined it didn't need the two new facilities that been the stated rationale for seeking money from the state in the first place.
The size of the state aid package was scaled down as Northwest retreated from its plans. Ultimately, Checchi says, the company only received about $365 million from the state, the vast majority in the form of loans that went for operating expenses.
And for a long time, nothing was built in Duluth or on the Iron Range.
Years later, Northwest did place a telephone reservations center in Chisholm, a small town near Hibbing. A local development agency -- the Iron Range Resources and Rehabilitation Board -- lent the company $9.7 million to build the reservations center, which handles toll-free calls from the airline's frequent flyers. If the center employs 604 full-time workers by the year 2008, the loans will all be forgiven. The most recent report Northwest submitted to the Rehab Board showed 208 employees at the center, says Jean Dolensek, an economic development representative at the development agency. The telephone operators, though, do not make nearly the wages that were to have been paid skilled workers at the engine repair plant that was never built in Hibbing.
A scaled-down version of an Airbus maintenance base was finally built in Duluth. The city gave Northwest $21 million to build the plant, and the state lent the airline $29 million more.
Welcome though they might be, the two facilities don't approach the 2,000 high-paying jobs Northwest dangled before Minnesota lawmakers when the company was seeking help.
"They created about half the jobs they promised, and not nearly the high-paying jobs they promised," says Berg. "They reneged on the biggest part of the agreement."
Checchi counters that Northwest had to scale back its plans. Sometime over the next few years, he says, the airline might still build the engine repair plant it promised -- and expand the Duluth maintenance base. "The irony of this is that we will end up building facilities as large as we originally intended," he says. "It's just going to take a little bit longer, and we will build those substantially with our own funds."
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