Corporate Welfare Weekly - January 11, 2010 – Issue 32
Jan 17th, 2010
2010 marks the 20th anniversary of the Winston-Salem and Forsyth County’s incentives era.
The Winston-Salem Journal reported in a January 10 article written by Richard Craver that the incentives era turns 20 years old in Winston-Salem and Forsyth County this year.
“Amid all the touting, if not shouting, about job- and capital-investment pledges from companies and economic officials, two key questions remain unanswered publicly. …
What's clear is that there's no readily available scorecard for the estimated 70 city and county incentives packages awarded since 1990, which total more than $112 million — topped by the $38 million for Dell.
That means there is no definitive way to determine what percentage of an estimated 13,045 jobs pledged in those packages were created by the recipients, and how many still exist. However, the Winston-Salem Journal's analysis of data provided by the city and county shows it is likely that more than 40 percent of the pledged jobs either were never created or no longer exist. …
‘I'd like to know what we got and didn't get from our incentive packages, how many jobs came and stayed, for the sake of making comparisons and fine-tuning future offers,’ Plyler said. But Plyler says he is ‘a stronger supporter of incentives now than ever’ to help add jobs in a region struggling through a pivotal and painful economic transition. …
After the celebratory ground breakings and grand openings fade and production begins, most incentives packages involving recruited businesses don't require keeping the public updated on how recipients are performing during the contract period, which can last up to 15 years. That is why economic officials prefer to promote, if not perpetuate, the promise of the pledge rather than publicize actual work-force numbers. …
Local residents are not alone in not having a good way to track how incentives packages are paying off. Advocacy group GoodJobs-First released a study in November 2007 that found just 30 states, including North Carolina, provide limited online information about incentives packages. The group gave North Carolina a "D+" grade for its policy; no state received a grade higher than a ‘B.’ …
‘Shouldn't we be trying to assist small businesses in an across-the-board way instead of dumping money into companies that literally have no loyalty to North Carolina?’ said Robert Orr, the executive director of the N.C. Institute for Constitutional Law. ”
To read the full article, click here.
Recent Announcements…
$2,500,000 in possible benefits has been granted to Husqvarna from the Job Development Investment Grant (JDIG) to relocate its North American Headquarters to Charlotte. The state Economic Investment Committee voted on January 7th to award the Swedish-based outdoor power equipment producer the JDIG.
~ Staff Reports, Ashville Citizen Times, January 7, 2010
$82,000 to Wilbert Plastic Services from the state’s One North Carolina Fund. The supplier of molded plastic parts for the automotive, industrial equipment and custom parts markets plans to expand its Belmont manufacturing facility and move its headquarters from Chicago to Gaston County. A local incentives match is required. The company will also receive property tax credits from Belmont and Gaston County and could also qualify for more incentives from the state.
~ Daniel Jackson, Gaston Gazette, January 6, 2010
Quotes of the Week…
“North Carolina’s cash incentives were not as ‘robust’ as some other locations, but the company selected Belmont for other reasons, including closer proximity to manufacturing operations in the southeastern United States, access to Charlotte-Douglas International Airport, Belmont’s quality of life, low labor costs, workforce development at Gaston College and its working relationship with Donny Hicks and other Gaston County leaders.”
~ Greg Botner, CEO of Wilbert Plastic Services, as quoted by the Gaston Gazette
“We’re now being held hostage to in-state companies who are threatening to leave. An unwillingness to say ‘no’ to businesses is depriving the state of money for the very things that attracted businesses in the first place. We’re mortgaging our ability to get on that short list. So it won’t matter in the long run how many incentives we’re willing to offer. Businesses won’t want to come.”
~ Amna Cameron of the N.C. Justice Center, as quoted by the News & Observer
It can’t be! It’s just not possible!
It seems Research in Motion, the maker of BlackBerry mobile phones, has selected the Triangle as the site of its newest office. And without any offered incentives from the state! Could this really be possible? So then why are they coming? The Canadian company touted the talent of the area’s workforce as being the main factor in their decision to locate in the Triangle. You see, this is how companies behave when the government stays out of the way. Companies will come if an area has something to offer. They won’t come if an area has nothing to offer, despite the lure of incentives.
Read the full News & Observer article here.
Discouraging Tidbit…
On January 5, The Richmond County Daily Journal reported in an article written by Eren Tataragasi that employees of APG Meridian were left out in the cold as the company closed its doors without telling any of their employees ahead of time.
“It’s been less than a week since APG Meridian employees found out they no longer had a job, and still no one has heard a word from the owners. …
‘Two months ago they [the owners] came and met with everyone telling us we’d have Christmas bonuses and that business was picking up, but it was all a ruse.’
Employees had no idea anything was wrong, though, until they went to pick up their paychecks on Dec. 31. …
[Santiago] Rivera, [the company’s welding supervisor], said he truly is just shocked that after receiving help and incentives from the state, city and county to get to Hamlet, that they would up and leave as they’re doing. …
The company relocated to Hamlet [in 2006] with the assistance of a $60,000 One North Carolina Fund Grant, which the county matched. Not only has the closing of the plant left workers without a next paycheck and no recourse but to file for unemployment, it has taken a huge chunk of tax base out of the county.”
Another Occurrence Where Incentives Were Not a Deciding Factor?
Issue 28 of the Corporate Welfare Weekly detailed the state and local incentives that were awarded to LabCorp, previously known as “Project Kaleidoscope,” to entice the company to establish its new billing center in Greensboro instead of staying in Burlington. The medical-testing company was awarded a total of $900,000 in state and local incentives to consolidate its billing operations in Greensboro. Aside from the $275,000 LabCorp was granted from the state, the company was granted$248,791 from Guilford County, and $373,000 from the City of Greensboro.
Tomas Murawski reported in the Alamance News on December 31, 2009 that Alamance County and Burlington officials tried to keep LabCorp in Alamance County with an incentives offer of their own if the company would remain in Burlington. Alamance County offered $302,450 and the City of Burlington offered $317,450, but they were still passed over by the company. This is only a $1,891difference from the Guilford County and the City of Greensboro offer.
“LabCorp raised a lot of questions last month when it passed over Alamance County as a potential site for a new billing center, which the Burlington-based company has indicated it may ultimately establish in Greensboro.
But one thing that seems fairly certain at this point is that LabCorp didn’t base its decision on the financial incentives that Greensboro and Guilford County have offered to lure the company into their neck of the woods.
The Alamance News has confirmed that Alamance County and the city of Burlington also offered the company a sizable chunk of taxpayer funds before they were bumped from the list of possible sites for the center.
Harold Owen, Burlington’s city manager, said that the city of Burlington also sent Williams an offer which was fairly similar to the county’s proposal. … Owen added that he isn’t quite sure why the company has opted to establish the new billing center somewhere outside Alamance County.”
Murawski, Tomas. “Officials tried to keep LabCorp in Alamance with $600,000 incentives offer.”Alamance News. December 31, 2009. Page 1 & 7A.
We are constantly being told by our elected officials that incentives are a necessary evil and a critical factor in a company’s decision of where to expand or relocate and that we can’t possibly do without them. According to these officials, our state’s economy would surely shrivel up and fall apart sans incentives. In fact, the result would produce the opposite effect; economic equilibrium would likely be reached if government would stop interfering at their every whim.