Editorial: Incentives for industry still worthy
Published 12:00 am Thursday, October 29, 2009
Dell’s announcement that it will shutter its desktop computer plant near Winston-Salem and lay off all 900 workers by the end of January provided fuel for the fires of those opposed to governments using tax incentives to attract businesses.
And what potent fuel it is. When Dell opened the assembly plant four years ago, it did so based on the promise of $300 million in state and local incentives. Now, the region has nothing to show for that promise besides another empty factory to fill and another uptick in unemployment.
That Dell has agreed to repay about $30 million in tax breaks it had already received and forego the rest hasn’t stopped a group of citizens and their attorneys from pointing to it as evidence that Google shouldn’t get $90 million in incentives for opening an Internet data center in Lenoir.
But the fact that Dell and other companies have reneged on their promises after asking for and receiving tax breaks and other enticements shouldn’t stop Rowan County commissioners from approving an incentive agreement Monday with Magna Composites.
For one thing, Magna is not starting its operations here from scratch. The company bought out Meridian Automotive in June and has been manufacturing exterior parts for automobiles at its U.S. 70 plant with 198 full-time and 60 temporary employees.
Now, Magna wants to consolidate some of Meridian’s former operations in other states to three sites in North Carolina, including Salisbury. According to the Salisbury-Rowan Economic Development Commission, that would mean 162 more full-time jobs, which includes some of those now-temporary positions.
Those 162 jobs will pay well, the EDC says, with an average annual wage of more than $39,000. Those are figures any elected official ignores at his or her own peril in a county with unemployment near 13 percent.
Another important number in this equation: $7.8 million. That’s Magna’s potential investment at its Rowan County plant, which is by far the lion’s share of the $8.8 million total the company plans to spend consolidating operations.
Under the county’s economic incentives program, Magna would get back 75 percent of the taxes paid on its expansion for five years. That’s a total rebate of $160,661 during that period, while the county would collect $53,553 on top of the taxes it takes in from Magna now.
That figures to about $991 the county is “spending” for each full-time job created. The number will increase if the state kicks in its own incentives, which the company has requested. But whatever the final amount is, it won’t approach the $416,000 in incentives for each Google job or the $333,000 per job Dell would have gotten.
Those are lots of numbers. But here are the most important ones: 162 potential well-paying jobs in a county with 9,180 jobless residents.
That’s not going to burn up the unemployment rolls, but it should light a fire under public servants concerned about the unemployed.