Corporate Welfare Weekly - May 16th, 2010 – Issue 50

Recent Announcements…

 

$500,000 in property tax incentives has been approved for a baseball complex in Mooresville. A development group plans to build the $20 million complex between Mooresville and Troutman by 2012. Mooresville commissioners approved the incentives package with a 4-1 vote. The incentives will be disbursed over ten years.

                ~ Joe Marusak, Charlotte Observer, May 13, 2010

 

$98,000 to VSA, LLC from the state’s One North Carolina Fund to build a new production plant in Morganton. The recycler of automotive catalytic converters promises to create 98 jobs and invest $4.5 million over two years. VSA already has its headquarters and a pilot plant in Morganton.

                ~ Hickory Daily Record, May 12, 2010

 

Dell plant to remain open until 2011

 

The Triad Business Journal reported that the computer giant will keep their Winston-Salem factory open until early 2011.

 

“Dell's desktop assembly factory in Winston-Salem has won another few months on life support and is now slated to close early next year rather than this fall, according to Dell spokesman Venancio Figueroa.

 

This is the fourth temporary reprieve for the plant and its roughly 400 remaining employees. Dell first announced last October that the facility would be shuttered early in 2010 and more than 900 jobs eliminated as part of an efficiency drive.

 

But signs of improving demand have pushed back the closure, most recently to late October of this year. Figueroa said the company has not changed its mind about the ultimate fate of the plant but is keeping its options open.

 

‘We communicated to our employees that we'd keep the plant in operation through (October) and possibly beyond if business dictates,’ he said. ‘We recently went back and communicated again that business is such that we'll be extending into early 2011.’

 

The plant's grand opening was in October of 2005. Dell has already repaid local incentives it received on the condition that the plant remain open five years. Figueroa said Dell has no plans to seek to recover any portion of its incentives even if temporary delays to the closing were to qualify it.”

 

One North Carolina Fund recipient going out of business

 

The Asheville Citizen Times reported that Stonewall Packaging, a recent recipient of the state’s One North Carolina Fund, is closing its doors. Although no funds were disbursed, it provides some evidence that the incentive fund does not bring the results lawmakers claim. If results cannot be confirmed, why do we bother?

 

“In a news release, Stonewall said it ‘was forced to cease operations because it was unable to sell enough corrugated cardboard sheets to remain in business. A company that had committed to purchase a large volume of the Stonewall product unfortunately did not uphold its commitment.’

 

… ‘This is not the outcome that we had hoped for with our investment in Stonewall, and we did everything within our power to prevent it,’ Timothy Campbell, president and CEO of Stonewall and Jackson Paper, said in the release. ‘Operations at Jackson Paper are strong and expected to remain so.’

 

Jackson Paper said last year it would buy and renovate the old Chasam Building, a 200,000-square-foot former sewing operation on Scott Creek Road, not far from Harris Regional Hospital. Stonewall had said previously that the new facility would eventually employ 61 people, with an average annual pay of $39,344 plus benefits.

 

The $17 million plant was planned to cater to smaller box makers looking for sources for packaging materials other than the industry's largest players, Campbell said last year.

 

The N.C. Department of Commerce had agreed to provide a $200,000 grant through its One North Carolina Fund, but the company and the state said the money was never disbursed.”

 

The Ultimate Incentive…

 

A recent press release from the Governor’s office detailed that as of February, 2010, Governor Perdue began favoring in-state companies for state contracts. The governor claims the preference for in-state businesses will save jobs in North Carolina. This policy looks more like a protectionist policy and protectionist policies are never conducive for economic growth. In fact, they impede economic growth.

 

“In February, Gov. Perdue signed Executive Order No. 50 that directed the Department of Administration to develop price-matching procedures for North Carolina resident bidders on state contracts for the purchase of goods.

 

Qualified North Carolina companies whose bid price is within 5% or $10,000 of the lowest bid, whichever is less, are given the opportunity to match the price of an out-of-state low bidder and be awarded contracts with the State of North Carolina.

 

Businesses in Cumberland, Rowan and Wake counties received contracts totaling more than $100,000.

 

“It’s critical that we do everything we can to support our home-grown businesses.  North Carolina businesses employ our friends, our neighbors and our family members.  They grow here, they stay here and they create jobs here,” said Perdue.  “The preference for in-state businesses will save jobs and help North Carolina businesses grow and create new jobs.”

 

Gov. Perdue has also called on the General Assembly to legislate additional advantages for small and North Carolina-based businesses.”

 

Around the country…

 

$2,700,000 in incentives has been awarded to Nutramax Laboratories, Inc. from Lancaster County inSouth Carolina. The South Carolina-based company will be increasing its production capacity for new and existing products.

                ~ Charlotte Business Journal, May 11, 2010