Norandal could lose incentives due to layoffs
SALISBURY — Upcoming layoffs at Norandal could reduce or eliminate the company’s incentive payments.
Robert Van Geons, executive director for RowanWorks Economic Development Commission, said he’s planning to meet with leaders of the aluminum rolling mill, as well as city and county staff, to determine how cutting 59 jobs will affect the company’s incentives.
“All grants are based on performance on investment and job creation,” Van Geons said. “If they fall below the required numbers, they would not get their payment.”
Norandal will eliminate about a third of its workforce on Dec. 29, according to a WARN notice filed Oct. 30 with the N.C. Department of Commerce. The plant is located at 1709 Jake Alexander Blvd.
The layoffs come after Norandal, a subsidiary of Franklin, Tenn.-based Noranda Aluminum Holding Corp., invested $7 million in the plant in 2010 and pledged to add 25 employees.
Salisbury, Rowan County and the state of North Carolina all promised cash incentives to the company in exchange for the plant expansion and new jobs.
Norandal was scheduled to receive its first incentive payments last year, and the company probably will not have to return any payment already issued, Van Geons said.
“They made their investment and had the jobs at the time,” he said.
John Sofley, assistant city manager for finance, said the city of Salisbury has not paid last year’s incentive to Norandal. Leslie Heidrick, Rowan County finance director, could not be reached.
Sofley said the city was in the process of determining last year’s incentive for the company when the layoffs were announced. Now, Sofley said, he’s waiting to hear from Van Geons about how much the city owes Norandal.
Van Geons said he doesn’t know yet.
“If a company has a relatively small shortfall (in jobs promised), the grant is reduced,” he said.
But if a company fails to generate more than half of the jobs pledged, the incentive grant is suspended, he said.
Even if the company receives no incentive payments this year, the five-year incentive agreement would be suspended, not rescinded, Van Geons said.
Companies that lay off workers sometimes recover and add jobs later, he said.
“If the economy picks up and they go back to meeting their requirements, in year three they could come back into the grant cycle and could have missed only one or two years,” Van Geons said.
Every incentive grant agreement is unique and has its own particular requirements, he said.
No one expected these layoffs when company leaders and elected officials signed grant agreements in 2010, Van Geons said.
“This is not something the company planned and not a situation that anyone at Norandal or the city or county or state wanted or expected,” he said.
In August 2010, Salisbury City Council agreed to award Norandal a grant of about 75 percent of tax revenue generated by the project over five years, or $28,320 a year. Rowan County commissioners did the same, agreeing to an annual grant of $28,560.
Norandal was scheduled to receive $108,000 in incentives from the One North Carolina fund.
The expansion updated the operation’s machinery, increased its capacity and was supposed to boost the plant’s work force to 188.
About 175 people worked at the plant in September.
Contact reporter Emily Ford at 704-797-4264.