The debate over state and local tax incentives designed to encourage companies to create jobs – an on-going, acrimonious back-and-forth in North Carolina with Republicans fighting Republicans – has led to the suspension of benefits for IBM in Missouri where the state says Big Blue isn’t meeting its promises.
A spokesperson disagrees: “I’m telling you quite directly that IBM has fulfilled its obligation to the state.”
So who is right?
The Missouri story is likely big reading at the North Carolina General Assembly and in Gov. Pat McCrory’s office. Republicans are divided about what the state should provide in jobs incentives and simply won’t buckle under to repeated pleas from the governor of their own party to refund and expand programs. This isn’t a single-party issue. Democrats have concerns, too.
Cries of “corporate welfare” ring out on both sides of the political aisle. Then there is the on-going debate about incentives going to companies that locate or expand in large metro areas, leaving rural counties fighting for leftovers. (Read this in-depth update from WRAL’s Tyler Dukes and check his previous reporting on what state incentive programs have offered – and delivered.)
Making the incentive debate even more intense is when a company like IBM layoffs workers – and then there is the classic case of Dell’s shutting down its heavily supported huge PC plant in Winston-Salem. (Dell did repay incentives received.)
But making a deal with IBM can be especially troublesome because the company closely guards employment numbers, as the state of Iowa has discovered.
What’s the number?
IBM (NYSE: IBM) is always extremely secretive about layoffs, finding ways to avoid mass layoff notices (known as WARN) by cutting workers in dribs and drabs. Over the past two years, it also has made internal changes that ensure the company faces lower risk of age discrimination lawsuits by disclosing even less information to workers in business units hit by so-called “Resource Actions.”
However, Missouri has required IBM to produce documents about how many workers have been hired and are still at a service center in Columbia after the most recent layoffs that had hit IBM centers across the U.S. – including RTP.
The Columbia Daily Tribune newspaper broke the incentive dispute story Sunday under the headline:
“State suspends IBM incentives after layoffs”
“The Columbia center at 2810 Lemone Industrial Blvd. was so battered by the January layoffs that the Department of Economic Development, which already has paid millions in incentives to Big Blue, has suspended the company’s last remaining incentive,” wrote reporter Alicia Stice.
IBM would receive the incentives if it created and maintain 500 “new jobs,” the state told the newspaper.
IBM won’t talk numbers
However, documents filed by IBM with the state showed only 453 jobs – “112 fewer than it had in June of last year,” the newspaper noted.
IBM already has received $4.1 million in state incentives, another $3.9 million from a jobs program and $1.71 million for training, the newspaper noted.
But IBM told the paper it wouldn’t discuss current job numbers and insisted its commitments had been honored.
“I’m telling you quite directly that IBM has fulfilled its obligation to the state,” IBM’s Clint Rosewell said. “IBM has fulfilled its obligations to the state in regards to training, staffing and reporting. I’m not going to get into numbers.”
Missouri and the city paid dearly to bring IBM to Columbia with promises of more than $32 million, including a $3 million city-owned building that the newspaper noted Columbia “is paying $300,000 annually for the building over a 10-year period.”
Nothing owed: Mayor
The initial job target was 800.
However, the city’s mayor defended the IBM deal and the current number of jobs, saying Columbia benefits from IBM’s outpost.
“There’s a difference in promising and projecting,” he said. “They don’t owe the city of Columbia 800 jobs. They owe the city of Columbia a footprint and an opportunity to grow its workforce. … The world is full of businesses that, when conditions change, they have to restructure.”
Read the full story at: http://www.columbiatribune.com/news/local/state-suspends-ibm-incentives-after-layoffs/article_ab0731f1-0c79-5bde-a970-bc1046da9b7e.html