RESEARCH TRIANGLE PARK – Rolls-Royce is bringing a new jet engine plant and hundreds of high-paying jobs across the pond to the U.S., and the British company chose Virginia over for the new facility.
Taxpayers will pick up a pretty good tab – $56.8 million in incentives – as part of the package that won the plant for Virginia. It will be built near Richmond.
North Carolina was one of the states competing for the Rolls-Royce deal, but Virginia showed it is more than just the state for lovers, as its tourism slogan says. The Commonwealth prevailed with a lot of cash, job training and other benefits. And Virginia officials stated what North Carolina economic development folks have said over and over:
The industrial recruiting game today demands plenty of government help of CEOs will take their business elsewhere.
"If you’re going to play in the big leagues, you’re going to have to come to the field with more than your glove," Hugh Keogh, CEO of the Virginia Chamber of Commerce, told the Richmond Times-Dispatch. "And Virginia has learned that over the past 15 years."
Rubbing salt into the wounds for North Carolina is the fact the state didn’t survive a final cut from eight states under consideration to three. Rolls-Royce officials said that Georgia and South Carolina were the other finalists.
Virginia may also have gotten a bargain compared to lucrative deals North Carolina made to land a PC manufacturing plant and more than 1,000 jobs from Dell ($100-million plus) and the $260 million Google could receive over 30 years for that new server farm in Lenoir.
Some of the economic goodies Rolls-Royce will receive are:
• $35 million performance “grant” with payments of $5.5 million a year in 2014 and 2015 and $3 million annually between 2016 and 2023.
• $6 million from Virginia Gov. Timothy Kaine’s “Opportunity Fund” to help pay for infrastructure
• $5 million for “spinoff development” from the new plant
• $8.7 million for employee training
• Various local government tax breaks
• The University of Virginia will build a research and training center (“Commonwealth Center for Advanced Manufacturing”).
The defeat for North Carolina also puts a temporary damper on a recent surge in airline-related industry recruitment by the state. HondaJet picked Greensboro, a jet engine assembly plant for those HondaJets will be built in the Triad, and SkyBus will build a hub at Piedmont Triad International Airport.
Economic incentives have been widely criticized in North Carolina by media and politicians, but the Rolls-Royce deal and ongoing talks for a possible expansion by Warren Buffett’s NetJets clearly demonstrate that these tax breaks and grants are absolutely crucial to winning business.
A recent poll conducted by the North Carolina Economic Developers Association found that a huge majority of Tar Heels – 82 percent – support the use of incentives as long as other states also offer them.
As Virginia showed in the Rolls-Royce deal, it is playing to win.
North Carolina must continue to do the same.