TastyKakes dependent on taxpayer dough
The Aker Shipyard and Tasty Baking Company in Philadelphia have absorbed more than a half-billion in taxpayer funded grants, low interest loans and tax breaks, collectively called “investments” by politicians.
Both stand on the edge of bankruptcy today.
This is part two of a two part series examining the history of the two Philadelphia companies, their reliance on taxpayer funds over the years and the ultimate failure of governmental “economic development” to keep them afloat.
To read part one, which focuses on the problems at Aker Shipyard, click here.
Tasty Baking
TastyKakes and their derivative brands of cookies, cupcakes, pies and doughnuts have been part of southeastern Pennsylvania diets for nearly 100 years. They have been part of the culture.
But, times have changed, as has the culture.
On Jan. 4, Tasty Baking Company CEO Charles Pizzi let it be known the company has until the end of the month to restructure its debt, find a partner or go bankrupt.
Over the past decade, the company has tried to expand to a national market, rather than being confined to the Philadelphia region. The price of flour, sugar and corn syrup has skyrocketed during the same period. The expansion of its market has not succeeded.
Tasty Baking has received more than $32 million in taxpayer subsidized loans and grants in the last three years. Gov. Ed Rendell said last week he would like to have the state give the troubled company another $1 million in tax dollars.
Friday, Tasty Baking may have won itself a temporary reprieve from bankruptcy thanks to a combination of public and private funds.
The new $6.5 million aid package includes a $1 million loan of state taxpayer money from the Department of Community and Economic Development and $2 million from the Philadelphia Industrial Development Corporation.
The remaining $3.5 million came from private investors, reported the Philadelphia Inquirer.
Until last year, Tasty Baking was located in an aging six-story structure in the rundown Hunting Park area of Philadelphia. Modern manufacturers do not use six-story buildings for their processes, whether it is cupcakes or automobiles.
Tasty Baking’s board opted for a state-of-the-art, computerized baking facility and separate new headquarters near the Delaware River, next to the Aker Philadelphia Shipyard. In addition to the $32 million state taxpayers put in, the city also gave the company property tax abatements for the property through 2018.
The project is also located in a Keystone Opportunity Zone, which means the company doesn’t have to pay many state and local taxes.
Tasty Baking expected to save $13 million to $15 million a year in operating costs at the new facility, which also offers tours. The company cut its work force to fewer than 600 through the automation of operations, according to the Philadelphia Industrial Development Corporation, the funnel through which tax dollars reached Tasty Baking Company.
Apparently, it wasn’t enough.
