Corporate Welfare Weekly: Issue 60

Still No Word from Caterpillar…

Despite a $23.5 million incentive package, Winston-Salem and Forsyth County aren’t feeling the love from Caterpillar. According to the Winston-Salem Journal, local officials are anxiously awaiting word on their “take no prisoners” bid for the new manufacturing plant. Sources said over the weekend they have had no direct feedback from Caterpillar about the proposed $426 million plant or the 510 full-time and contract jobs that the company has promised. 

Montgomery, AL and Spartanburg, SC – NC’s competition in the Caterpillar incentives race – face fewer, if any, public-disclosure requirements, so all Winston-Salem can do is count the days until Caterpillar announces a decision in August. 

The competition is not standing still. More from the W-S Journal: 

“Since Caterpillar confirmed the finalists for its plant last month, Montgomery and Spartanburg have each landed a major manufacturing project. 

On July 2, CT&T Southeast said it would open a $21 million Mini electric-car plant in the Spartanburg area, creating 370 jobs. A local and state incentives package has not been completed. 

On July 16, Montgomery announced that Hyundai Heavy Industries will build a $90 million plant to make large power transformers. 

The plant -- Hyundai's first in the U.S. -- is expected to have 500 employees making an average $18 an hour when it opens in early 2012. That's about 65 cents higher than the average hourly wage Caterpillar is expected to pay at its plant. 

For those wanting to read tea leaves about a potential Montgomery incentive offer for Caterpillar, Hyundai Heavy Industries is eligible for $5 million from the state and $4.3 million from a coalition of local governments, Mayor Todd Strange told The Montgomery Advertiser. 

The incentives "include everything from a land purchase to tax breaks and other items," according to the newspaper. Alabama Industrial Development Training will provide $2 million worth of worker training before the plant starts full operations. 

Strange has told the Advertiser that he does not expect Montgomery to be able to match Winston-Salem's offer, but he is hopeful that Caterpillar will find its nonincentive offerings attractive.”

Perdue Awards Incentives to Violent Video Game Producer in Cary...

Oblivious to the fact that the U.S. Supreme Court is in the process of hearing arguments for a law that would ban sales of violent videogames to minors, North Carolina just approved an incentives deal for the industry. Last Thursday, Gov. Bev Perdue signed off on a bill that gives even more taxpayer dollars away, and this time it’s to video game producers. Apparently, North Carolina is now actively luring the video game industry to the state. 

The signing ceremony was held at the Cary headquarters of Epic Games. Epic produces a variety of violent, “kill with skill” games such as Gears of War, Bulletstorm, and Shadow Complex.

Under the new legislation, producers of digital media will be entitled to a 15 percent tax credit on all development costs exceeding $50,000. This percentage rises to 20 percent if the media is being developed in association with a university or community college. 

The new law is also geared towards luring the film industry here. To help do this, incentives are offered for up to 25 percent of a production company's qualifying expenses, but that tax break is not to be bigger than $20 million. One thing that won't count toward a movie’s cost is any actor's salary that is beyond the first million dollars. Worried that the limited salary provision could end up costing the state, Perdue says she’ll go back to the general assembly next year, and ask them again to work on increasing the film industry incentives in hopes of removing that cap. 

Quote of the Week: 

“There has been a lot of talk about business incentives - what we pay to get businesses to come to North Carolina. Conservation should also be viewed as another business incentive. One of the prime factors in choosing a new business location is the quality of life. That quality of life is certainly boosted when folks have the opportunity to hike, run, bike, canoe or kayak on land and water that have been preserved.”

-Katherine Skinner, Executive Director of the N.C. Chapter of the Nature Conservancy (as published in the N&O).