Gov. Roy Cooper’s announcement on Tuesday that Siemens Energy, Inc. will be adding an additional 559 jobs to the over 3,500 positions it already has in North Carolina made headlines across the state.
“Siemens Energy is bringing even more great energy manufacturing jobs to the Charlotte community, and this latest expansion demonstrates once again their confidence in our state and its outstanding workforce,” said Cooper, a Democrat, in a press release. “Bringing production of these high voltage transformers onshore not only creates American jobs but makes our electric grid more resilient and ready for the transition to clean energy.”
The $149.8 million project will add 475 positions to the company’s 1,250 jobs in the Charlotte region and establish the company’s first manufacturing site in the US to build Large Power Transformers (LPTs), a critical component of the nation’s power grid. The expansion will also add 84 positions to the company’s Grid Technology engineering operations in Wake County.
The average salary for the positions in the Charlotte area will be $87,036.
All good news, right? Well, maybe not. Here’s the reason.
A Job Development Investment Grant or JDIG, approved by the North Carolina Economic Investment Committee (NCEIC), was used to entice Siemens to bring the additional jobs to the Tar Heel State. The project is estimated to grow the state’s economy by $1.63 billion over the 12-year term of the grant, which is the typical time frame.
In return, Siemens is set to receive a reimbursement of up to $6,979,500, spread over the 12 years.
In addition, since Siemens chose a site in Mecklenburg County, it is classified by the state’s economic tier system as Tier 3, the company’s JDIG agreement also calls for moving $2,326,500 into the state’s Industrial Development Fund – Utility Account, which helps rural communities elsewhere in the state finance necessary infrastructure upgrades to attract future business.
That brings the total amount of the grant to over $9.3 million, which is contingent on promised job creation and investment targets.
The problem is that JDIG’s don’t have a good track record when it comes to “promised job creation and investment targets.”
Just a few weeks ago, Bandwidth, a Raleigh-based communications software company, had its JDIG agreement terminated by NCEIC for not following through on its required hiring goals as part of the agreement.
Bandwidth notified the department in early January. The company said the withdrawal would give it greater flexibility for workplace planning.
It was announced in April 2020 that the company, which offers cloud-based software for voice, text messaging, and emergency services for clients like Google, Microsoft, Amazon, Zoom, and Uber, was to create 1,165 jobs with an average wage of over $96,800, creating an annual payroll of nearly $113 million in the state, as part of a $103.4 million expansion project.
In return, Bandwidth was to receive a Job Development Investment Grant (JDIG) of up to $32.3 million in tax breaks over twelve years. The project was estimated to grow the state’s economy by over $2.7 billion.
The company did not receive any payments under the grant.
A growing number of recent agreement terminations have prompted calls to terminate the JDIG program.
Last July, Allstate had its JDIG agreement terminated after it failed to add thousands of jobs to its operations center in Charlotte.
The insurance giant was set to receive a JDIG grant of up to $17.8 million in tax breaks over the span of twelve years, but the state decided to end the 2017 agreement after the company’s pledge to add 2,250 jobs by 2020 didn’t come to fruition. At that time, Allstate had already employed 1,400 people.
Reports said that executives told NCEIC that the new COVID-19 pattern of remote work is to blame and incompatible with the grant rules. While most employees are remote, a little over 200 currently work at the Charlotte campus.
In August 2022, Centene Corporation, a provider of managed health care services, backed out of plans to move its east coast regional headquarters to Charlotte. Its $1 billion Charlotte campus was nearly complete after a year of construction.
In 2020, the Department of Commerce struck a deal with Centene, pulling $338 million in tax incentives through an add-on to the state’s JDIG. The JDIG program was originally designed to bring companies to poorer areas of the state, but Centene was awarded the first “transformational” JDIG grant to build its hub in urban Charlotte.
At the time, Centene said they abandoned the campus and the East Coast headquarters plan because of the shift to remote work.
Originally, Centene promised to bring more than 6,000 high-paying jobs to Charlotte over the next 12 years, but that promise was later downgraded to 3,200 jobs.
Other notable terminations from the JDIG program include Advance Auto, Microsoft, Sonic Automotive, Conduent, and S&D Coffee.
Two of the largest projects in progress have been awarded JDIG grants.
One is Apple, awarded $845 million in tax breaks over 39 years, provided the follow-through on creating jobs at its planned billion-dollar campus in Research Triangle Park.
The other is VinFast, the Vietnamese electric vehicle maker. If the company meets hiring goals, it could get up to $316.1 million in reimbursement from the state over three decades.
As for Siemens, time will tell if they end the JDIG losing streak.