NC incentives promised go unused as firms retrench
When Volvo Construction Equipment announced this month it would shutter its western North Carolina plant, it was a reversal from its expansion plans of three years ago coaxed by the promise of millions of dollars from state taxpayers.
The company planned to expand manufacturing and assembly and add about 260 workers. If it could keep that level of employment for 12 years, it was on track to collect up to $3 million from the state's Job Development Investment Grant program.
But Volvo's actual growth only allowed it to collect $69,247. With the plant closing down in March, the state will try to recoup even that, the Asheville Citizen-Times reported Monday.
While scores of companies announce expansion plans they say depended on receiving one of North Carolina's top two kinds of economic-development grants, many never fulfill enough of their job-creation promises to collect the money.
Boat builder Chris-Craft Corp., computer builders Dell Inc. and Lenovo, and memory-chip maker Qimonda North American decided to cut staff rather than expand as their sales soured, ending their claims on promised incentives. Internet giant Google reconsidered its desire for a JDIG with strings attached and backed out.
The companies were among 13 to quit the JDIG program out of 99 approved for job-creation sweeteners since the program started in 2003.
Just months ago, in February, toolmaker Snap-on said it would expand its Murphy plant, add 40 jobs and earn a $120,000 state grant. But the manufacturer added just five full-time jobs this year, said Richard Secor, spokesman for Kenosha, Wis.,-based Snap-on.
"We have created a modest number of jobs, and we had aspirations to create more, but the recession's been longer and deeper than I think any of us expected," Secor said.
The good news is that no money will go to companies that fall short, said Dale Carroll, who oversees incentives programs as deputy state commerce secretary. Businesses collect after proving they've created the promised number of jobs.
"We pay them following the performance or the lack of it," Carroll said. "It's a built-in safeguard."
But critics of taxpayer-funded corporate incentives insist the money makes little difference in business decisions on whether and where to locate or expand.
The second major incentives program, the One North Carolina grants, offers incentives that are too small to make a difference to a company's decision, said Bob Orr, the head of the N.C. Institute for Constitutional Law, which has sued the state over aid to companies.
"If it's a billion-dollar corporation, does $50,000 mean anything? It means nothing," he said.
Information from: The Asheville Citizen-Times, http://www.citizen-times.com