In or out of the incentives game
Published May 17, 2015
Editorial by Burlington Times-News, May 15, 2015.
The Times-News has opposed taxpayer-funded incentives to private businesses for years. The truth is we detest the practice.
But in the sometimes sordid game of attracting industries and jobs to a community there’s no denying that incentives work. In the current climate, they’re unavoidable. So like those famous kerosene-flavored pickles fictional Aunt Bee made on “The Andy Griffith Show,” it’s probably time to at least learn to live with them.
The point was driven home most recently by the Volvo deal that closed in South Carolina last week. It was another example that incentives, sadly, make a difference in attracting major industries and well-paying jobs. Those businesses have something valuable to offer, and that’s why states are willing to bid for them.
In South Carolina, Volvo announced Monday that it will build a $500 million plant and eventually employ up to 4,000 people near Charleston. That’s the third foreign automaker for South Carolina. BMW got the ball rolling when it built a plant near Greenville more than 20 years ago. Daimler — the maker of Mercedes — is building a plant near Charleston. Mercedes, some might recall, looked over Alamance County 20 years ago before heading to Alabama for a bigger share of the incentives trough.
In addition to auto plants in South Carolina, according to the Associated Press, in the past two decades Nissan has built plants in Tennessee and Mississippi; Kia in Georgia; Volkswagen in Tennessee; and Honda, Mercedes-Benz and Hyundai in Alabama. Charleston also landed a Boeing plant.
Notably absent is North Carolina. While South Carolina is forking over $150 million in incentives, North Carolina could not compete. The state’s economic development fund is out of money and lawmakers are bickering over whether to replenish it.
Gov. Pat McCrory and N.C. Commerce Secretary John Skvarla maintain it’s the best tool for landing prize industries. House Speaker Tim Moore, however, said that even if the economic development bill that has passed the N.C. House — but not the Senate — had been in effect, it was not enough to compete with South Carolina for Volvo.
Senate President Pro Tem Phil Berger told the Triad Business Journal that he thinks the Senate ultimately will pass the incentives bill, but admits that it will not be enough to compete with South Carolina dollar for dollar.
Some Republicans would rather see the money spent to continue to reduce the corporate tax rate rather than used for specific incentives.
Interestingly, Volvo’s North America President and CEO Lex Kerssemakers said: “The reason we came to South Carolina is accessibility. We want to be very close to the sea.”
Kerssemakers told the Charleston Post and Courier that the S.C. State Ports Authority’s relationship with BMW was a key selling point. Charleston exports 800 BMWs every day at its port, the 10th busiest in the United States.
McCrory is touting his $3 billion bond proposal, which would provide $75 million for infrastructure improvements at the Port of Wilmington and $125 million at the Morehead City Port, as critical for manufacturing-sector growth here. We agree.
Meanwhile, our state’s leaders will have to decide if they want to continue to play the incentives game. It is worth noting that South Carolina has been able to build very successfully on its landing of the BMW plant 20 years ago.
Similar manufacturing businesses often like to locate near each other. BMW, in a sense, cleared the way for Daimler and Boeing and Volvo. South Carolina also has become the nation’s largest tire manufacturer — more well-paying middle class jobs.
So far, when it comes to landing new auto or tire or airline jobs, the Tar Heel State seems to be running on a flat.
May 17, 2015 at 10:08 am
Richard L Bunce says:
Reduce business taxes and regulations and support all NC businesses, those here now and those that will come if the economic conditions are right. Their major city being a port is something that NC cannot compete with so we can move on from NC being a key east coast port.
