Corporate Welfare Weekly Issue 59

 

Hatteras Yachts and Becton, Dickinson Receive Incentive Packages…

 

 

News of North Carolina’s most recent corporate handout came Tuesday afternoon as state officials voted to award Hatteras Yachts up to $3 million in incentives. Craven County, where the plant will be located, is also giving the company $900,000 in incentive money. 

 

The boat maker, a division of Brunswick Corp., shed hundreds of jobs in North Carolina during the recent economic downturn. The company however feels the recession is over and they believe the demand for recreational boats is improving. 

 

Meanwhile, on Monday state and local officials announced that medical-device maker Becton, Dickinson (BD) will open a massive distribution center in the Johnston County town of Four Oaks. 

 

BD, will receive state and local incentives worth up to $2.3 million if it meets its hiring and investment goals. It says it will begin hiring next year and create 187 low-paying jobs by 2014. The Four Oaks incentives package allegedly convinced BD to choose it over comparable sites in South Carolina and Virginia, although no details of the competing offers were made available to the public. 

 

More details of the incentives package from the News & Observer: 

 

“BD was lured to Four Oaks in part by a $2.3 million incentives package. That includes a $1.7 million grant from Johnston County, which will pay out the money over seven years if the company delivers on its planned $38.4 million investment. Also, the company will get a state grant worth up to $600,000 from the One North Carolina Fund.

 

The Town of Four Oaks is paying for water and sewer to the site with a $737,958 grant from the N.C. Rural Economic Development Center. The town is seeking more money to match that grant. Johnston County is chipping in $1 million for the business park's roads and infrastructure.”

 

BD will be the first tenant at a long-delayed 400-acre industrial park being built on farmland off Interstate 95, just north of the intersection with I-40.

 

The Four Oaks facility will store and distribute a wide range of BD's supplies including syringes, pipettes, tests to detect cancer, and more. The new jobs will pay average annual salaries of $28,771 – below the Johnston County average of $31,408.

 

 

GE Hitachi Ends Incentive Agreement

 

 

 

On Monday, GE Hitachi Nuclear Energy ended an incentive agreement that it struck with the state back in 2005 that would have amounted to $3.1 million for expansion of its nuclear and aviation operation here.

 

The company said that it could no longer meet the terms of that agreement and about $400,000 it already had received from the program would be returned to the state.

 

More from Wilmington’s Star News: 

 

"The $25.7 million incentive agreement, announced by then-Gov. Mike Easley in 2008, required that GEH invest $704 million and create 900 jobs over the next five years.

 

The payments come annually as the company files a report on its compliance with the agreement.

 

GEH said that it filed its first report, for 2008, and that it expected to get the money this week, following an approval by the N.C. Economic Investment Committee. 

 

But because of weak economic conditions that have affected its business, GEH said, it only partially met its hiring goals and so it would be receiving less in its first payment than if it had met its goal.

 

Both the ending of the 2005 incentive agreement and the reduced payout by the state to GEH under the 2008 agreement are a result of the weak economy, GEH said.

 

“The financial crisis has impacted the nuclear industry and, as a result, new unit opportunities have been deferred,” spokesman Michael Tetuan said Monday.

 

“Plans to expand our work force have been postponed, and we will continue to work with the state to look for opportunities to incentivize the growth of our business,” he said."

 

Of course, the company will continue to try and figure out how to extract more public assistance. 

 

Update on Caterpillar, Inc. 

 

 

 

Monday night, the Winston-Salem City Council voted unanimously in favor of offering Caterpillar, Inc. a $14.35 million incentive deal. The city hopes the offer will entice the company to build a manufacturing plant on the eastern edge of town. 

 

The figure includes $3.75 million to help Caterpillar buy 100 acres next to the Dell plant, $9.6 million in cash incentives, and $1 million in equipment. The city plans to buy the equipment with a grant from the Golden Leaf Foundation, which it does not have yet. 

 

Spartanburg, SC. and Montgomery, AL., are also in the running but their incentive offers have not been made public. North Carolina law requires that its incentive offers be made public. 

 

According to industry experts, the location with the highest incentive offer does not always win:

 

"After the fact, they don't want to be in a position of being criticized for the incentive amount having driven their final decision," said John H. Boyd, the president of The Boyd Co. Inc., a site-selection company in Princeton, N.J. "Dell clearly took a beating in the court of public opinion over the enormity of its incentive package." 

 

Montgomery Mayor Todd Strange told the Montgomery Advertiser that he doesn’t expect Montgomery to be able to match Winston's incentives package.

 

Meanwhile, many local contractors in Winston-Salem have expressed concerns about picking up a share of the work should the company build its new manufacturing plant there.

 

"If there are incentives or any type of payment for a facility going up in Forsyth County or Winston-Salem, local contractors should be given first opportunity if they're qualified," said Bud Palmer, the vice president of business development at Shelco Inc. of Charlotte, which has a Winston-Salem office.

 

Local officials agree, and are hoping to encourage this in any potential deal with the company. Bob Leak, the president of Winston-Salem Business Inc., said he gave a list of local contractors to Caterpillar but the company said it would not even consider contractors until it chooses a site.

 

After receiving its incentives package, Dell disappointed many residents by outsourcing work to a Baltimore company as its primary contractor instead of choosing a local contractor.

 

Steve Sexton, president of Winston’s Sexton Construction Co. Inc. said that large companies such as Caterpillar usually bring in larger names as general contractors and use local companies for the subcontractor or supplier positions.

 

"There's not much we can do but hope the county officials come to their senses and figure out how to negotiate this into their incentives," Palmer said.

 

Quote of the Week 

 

 

“[Governments at all levels need] to discontinue the practice of broadly interpreting and applying [a portion of state law] in a manner that allows local government to provide cash incentives/tax credits/etc. … which can cause undue pressure on local government entities and instead develop a more positive system of business recruitment including … amending the corporate tax code to provide for lower corporate tax rates based upon the creation of new jobs and new investments made by the corporations.”

-Alamance County Commissioner Tim Sutton