In 2011, North Carolina provided $22 million in incentives to lure the headquarters of Chiquita Brands International to Charlotte from its longtime home in downtown Cincinnati. The company jumped at the offer, especially because it was no longer controlled by Cincinnati financier Carl Lindner. After much celebration, Charlotte slipped on the banana peel.
Earlier this week, Chiquita announced a merger with Ireland’s Fyffes to become the world’s largest supplier of fruit. Despite much tap dancing about executives sharing their time between cities, the inescapable truth is that the headquarters will be in Dublin. How much of the 320 workers remain in downtown Charlotte remains to be seen, but the CEO won’t be there, NASCAR and cole-slaw-covered hotdogs notwithstanding.
What is clear: Most of the $22 million is probably lost with minimal gain for the state, even though the city and county are trying to recoup their minimal share of the incentives.
All over America, states are desperately playing the incentive game. North Carolina is trying to make up for catastrophic job losses in textiles, apparel and furniture after China joined the World Trade Organization. Charlotte, once headquarters to two money center banks, lost one in the Panic of 2008. (The reader should know that I was business editor in both Cincinnati and Charlotte).
Last year, North Carolina bagged 223 new projects and expansions of various sizes, according to Site Selection magazine. But few of these create large numbers of jobs. A data center employing 30 can’t replace a textile mill where hundreds worked.
The state’s unemployment rate in December was still 6.9 percent vs. 6.7 percent nationally. In Charlotte, unemployment was 9 percent in the fall of 2012, before moderating late last year. The statistics, however, are an unreliable indicator of labor-market health because North Carolina has been aggressive in cutting off unemployment benefits.
So I can grit my teeth and defend the incentives Washington gave Boeing. They will keep many of the more than 81,000 jobs here, most of them high skilled and high wage. Boeing has deep roots and sunk costs here, as well as a network of hundreds of other companies in a world-class aerospace cluster. Sure, we’re being played, but at least this way we get to stay in the game and arguably win more than was invested by taxpayers.
But that kind of deal is a rarity. Chasing every site-selection lead that is merely seeking taxpayer money and cheap land and workers is a losing game. As Bruce Kendall, president and CEO of the Economic Development Board for Tacoma-Pierce County, told me, “Most of them are just kicking the tires.”
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Today’s Econ Haiku:
Amazon Prime hike
Will profit margins sizzle
Or will it be cooked?