- Ongoing trend continues of companies not living up to their economic promises to North Carolina despite JDIG incentives.
Two companies had their incentives packages terminated Tuesday by the North Carolina Economic Investment Committee for failure to follow through on job commitments.
Conduent, a spin-off of Xerox and S&D Coffee, blame the COVID-19 pandemic, continuing the latest trend of companies’ failures to complete their employment agreements with the state, despite economic incentives.
EIC, part of the Economic Development Partnership of North Carolina, voted to end a $2.1 million grant awarded to Conduent in 2017. The business services company was to create approximately 200 jobs in Morrisville. As long as hiring goals and specific investment targets were achieved, the company would have received most of the grant money through payroll tax rebates.
At the time, the state awarded the company a Jobs Investment Development Grant or JDIG and a community college grant program. The company was also slated to receive over $41,500 in incentives from Wake County and approximately $40,500 from the town of Morrisville.
In 2017, the company employed more than 5,500 workers across the state.
Soon after receiving the grant, Conduent began to cut jobs in its Raleigh and Charlotte locations. Reports say the 73 positions created through the JDIG grant will be retained, but the company cited COVID and changing business conditions had prevented them from meeting their employment goals.
S&D Coffee also lost its grant agreement with the state Tuesday. The company provides products to restaurants like Dunkin’ and McDonalds. They were awarded a $2 million JDIG grant in 2012, promising to create 180 jobs and retain around 600 in Concord.
S&D was purchased in 2020 by Westrock Coffee, an Arkansas-based company, for $405 million and rebranded the company as Westrock Coffee.
Earlier this month, according to a report, EIC received a letter from Westrock saying that COVID had hurt their business, forcing it to close its route distribution business and terminate and furlough many employees, leaving their total employment numbers below pre-pandemic levels.
The company will retain 450 employees at its Concord location.
EIC’s announcement is the latest blow to the state’s JDIG program, as it has been cited that most companies do not complete their financial commitments to the state.
“This latest news underscores the foolishness of state government committing to incentive deals with select corporations when we know how unpredictable the economy can be,” said Brian Balfour, senior vice president of research, John Locke Foundation. “Just last year, (Democrat) Gov. (Roy) Cooper committed the state to a tax giveaway to Apple for nearly a billion dollars spread out over 39 years. Back in 1983, nobody could have predicted what the economy would look like in 2022, so why do politicians commit taxpayer dollars through 2061, a time nobody can accurately predict?”
In August, Centene Corporation, a managed healthcare service provider, backed out of plans to move its east coast regional headquarters to Charlotte. Centene is a $35 billion company, and its $1 billion Charlotte campus was nearly complete after a year of construction.
In 2020, North Carolina’s Department of Commerce struck a deal with Centene, pulling $338 million in tax incentives through an add-on to the state’s Job Development and Investment Grant (JDIG). JDIG 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. Shortly after, Apple received a similar grant to build in the Triangle.
Centene promised to bring more than 6,000 high-paying jobs for Charlotte over the next 12 years, but that promise was later downgraded to 3,200 jobs.
Advance Auto Parts ended its Community Economic Development Agreement with the state in July, which involved relocating its corporate headquarters from Roanoke, VA, to Raleigh in 2018 and creating over 700 full-time jobs.
Reports say that company officials told the state they could not add the hundreds of jobs agreed upon as part of the agreement. They cite competition for talent and being more flexible with workers, like allowing for remote work due to changes that occurred with the pandemic.
The initial project was slated to reportedly grow North Carolina’s economy by $1 billion.
In March, Microsoft pulled the plug on two state economic incentive grants approved in 2019 that would have been worth $20 million in economic incentives.
The company said they were uncomfortable sharing the amount of employee data needed to complete the validation of job creation specified in the previously approved Job Development Investment Grants.
The company planned multi-million-dollar expansions of its operations based in Charlotte and Morrisville in 2019 with the creation of hundreds of jobs at both locations. Approved incentives packages were tied to plans for both sites, including an additional million-dollar incentives deal from Wake County in 2020 on the condition that Microsoft would bring hundreds of jobs with the deal.
Sonic Automotive sent a letter in February to the state’s Economic Investment Committee terminating their economic incentive agreement of almost $7 million. They said they wouldn’t be able to create the hundreds of jobs needed to fulfill the agreement due to the pandemic.
David Rhoades, Communications Director, N.C. Department of Commerce told Carolina Journal in July that the incentive programs the state currently has do not need to be changed or strengthened and are still working well to keep the state competitive. He said the programs are flexible enough to account for changing conditions, like companies that adopt more hybrid work situations, and new remote positions can qualify for job creation requirements, provided those workers are located in the state and pay North Carolina taxes.