Forsyth board set to vote on incentives

Sep 10th, 2012
by Richard Craver

To read this story in the Winston-Salem Journal, click here.

this story.

The Forsyth County Board of Commissioners is scheduled to vote tonight on the incentive request of a Pennsylvania advanced-components company with expansion plans in Rural Hall.

A public hearing will be held at 6 p.m. at Forsyth County Government Center, 201 N. Chestnut St. The incentive, if approved, would come from the county's general fund.

Ellwood Advanced Components LLC, a wholly owned subsidiary of Ellwood Group Inc. of Ellwood City, Pa., wants $188,047 in performance-based incentives over five years.

In return, the company pledged to create 55 full-time or full-time equivalent jobs over four years and retain 145 jobs from Leistritz Advanced Turbine Components, which it took over Aug. 6.

Ellwood Group is asking for a matching $188,047 grant from the One North Carolina Fund. Typically, money is requested from that state fund if a company has a viable out-of-state option for an expansion.

In this instance, Richard Allender Jr., president of Ellwood Closed Die Group, said last week that the firm is considering a company site in Texas for the expansion. The Rural Hall site is the only one being considered in North Carolina, he said.

In an Aug. 6 news release, Ellwood Group said, "These future investments will depend on our ability to obtain appropriate financial incentives from the state and local governments in the region, and to acquire the land and buildings that are presently being leased by Leistritz from Siemens Energy."

That property is on Westinghouse Road. The company wants the facility to make components for heavy machinery. Overall, it plans to spend at least $15 million buying new manufacturing equipment.

"Our first preference would be for the incentive request and the land purchase to work out here," Allender said.

"Most of our existing synergies for this production are in Texas, and there is a really good internal argument within the company for expanding in Texas."

Although Allender said Ellwood doesn't have a formal incentive request in Texas, "we received really significant incentives for expanding in Texas in 2008."

"It is fair to say this is an either/or decision" in terms of the new and existing jobs either being in Rural Hall or in Texas, he said. "We can leave it where it is and expand, or relocate."

The subsidiary makes closed-die forged turbine blades for steam and industrial gas turbines. It has three screw presses, a 50-metric-ton counterblow forging hammer and blade-finish machining capability.

The company said the new jobs would pay an average annual wage of $51,000 plus benefits.

"Each plant will retain its individual profit and loss responsibility but be organized externally to its markets as one closed-die solution," the company said.

The commissioners' vote will serve as a test of the role of economic incentives to local companies wanting to expand their business.

A July 1 story in the Winston-Salem Journal explored that issue, with advocates saying incentives offer a clear win-win scenario.

The company gets six- to seven-figure local and state tax credits for staying in town.

The community, in return, gets a boost to its workforce and property tax base, and it likely retains dozens or hundreds of jobs.

"More than 80 percent of the jobs that have been created in the past decade or so have come from new business startups or existing business expansions," said Gayle Anderson, president and chief executive of the Winston-Salem Chamber of Commerce.

"We're fortunate that we have major existing employers with the opportunity to expand, but they are being sought after by many locations, so we need to be able to compete to keep them here."

Critics say local and state economic and elected officials are losing at a game of bluff — thus committing to millions of dollars in unnecessary tax credits — by providing incentives to companies that would have expanded locally anyway.

According to critics, the bluff essentially is "give us our incentive requests, or we'll find greener pastures elsewhere."

"It's gotten to the point of having an entitlement tone to it," said Jeanette Doran, a senior staff attorney for the N.C. Institute for Constitutional Law.

Incentives for expanding local businesses have been such a successful economic recipe that Triad companies have had a nearly perfect record on their requests before city councils and county commissioners.

In fact, the last time an incentive request by an existing business was rejected came in May 2005, when the Forsyth commissioners voted 4-3 against a $105,000 package for Tengion Inc. Tengion's carrot was a $9 million research and development facility and 30 new jobs.