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Mega- vs. Mid-range
Missed Opportunities
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The Art of the Deal

Mega- vs. Mid-range

"Mercedes-Benz," "BMW," and now "Volvo." These are the battle cries in the economic war among the states that attract the most public attention. The mounting bids states seem willing to place in pursuit of major automobile projects has come to exemplify the "open-arms" race of inter-state competition. Some experts contend, however, that the public and the media are missing the real frontlines in the economic wars by focusing exclusively on these so-called 'trophy' projects.

State-level policy in the mid-1990s has come to be ruled by projects of more modest, but in no way meager, means. [Go to Briefings: Incentive Policy.] "It's the $20 million to $200 million dollar potential projects that number in the hundreds each year that drive policy, not the handful of "trophy" projects over the course of a decade," says Rick Carlisle, North Carolina Governor Jim Hunt's Chief Economic Policy Advisor.

States enact special legislation or prepare unique, negotiated packages for the mega-projects. The toolbox economic developers carry with them on the job everyday, however, is increasingly geared towards the mid-range. These are the projects targeted by governors' "war chests," such as Gov. Hunt's Industrial Recruitment Competitive Fund or Virginia Governor Allen's Opportunity Fund. Moreover, desire to appear attractive to such projects has also led to increasing reliance on the use of tax credits and other changes to the tax code that define the current frontlines in the war among the states. Such provisions affect a state's treatment of all businesses, not merely those that have signaled a readiness to relocate.

Missed Opportunities

To justify their need for an "expanded toolbox," the North Carolina Department of Commerce has kept a tally sheet of those deals that slipped away due to more ample offerings from other states. According to the Commerce officials, some 30 major projects over the past three years settled on sites in Virginia and South Carolina over comparable offerings in North Carolina because North Carolina fell short on incentives. The Governor used this figure to spur the Economic Development Board to adopt the recommendations of its task force on incentives.

Critics counter that the state still retains a high ranking - behind only Ohio and Texas - in the number of new industrial sitings, and that many examples can be found of firms choosing North Carolina over other states without regard to incentives. Furthermore, some contend, the Commerce Department's estimates placed undue emphasis on the role of incentives in the decisions made by the firms in question. A Triangle Business Journal article following up on the firms cited by the Commerce Department called the list "shaky at best." ["Hunts industry-loss claims don't wash," Triangle Business Journal, Mar 1, 1996.]

Ample evidence exists to support both points of view - stories of ones that got away, as well as tales of those that chose to expand or settle in North Carolina despite better incentive offers from others. Key Links lists a number of articles about some of the major industrial projects for which North Carolina was under consideration. These detail the skirmishes that make up the battle for business, and provide a glimpse of modern methods of industrial recruitment.

Key Links

Volvo Prospects
Will Volvo build plant in NC? Greensboro News & Record
No bait to fish for Volvo, Raleigh News & Observer, Jan. 24, 1996
Is Volvo on the way? Maybe ... maybe not! Charleston, SC, Post & Courer, Jan. 12, 1996
Volvo car plant headed for SE? Greensboro News & Record, Jan. 11, 1996

View of Mercedes-Benz from North Carolina
Tax breaks prompt anti-foreign ads, Raleigh News & Observer, May 26, 1995
Alabama scrambles to pay hefty Mercedes bill, Raleigh News & Observer, Mar. 24, 1995
A piece of our hearts (Editorial), Raleigh News & Observer, Mar. 12, 1995
Mercedes, have we got a deal for you, Charlotte Observer, Jul. 26, 1993
The new buffalo hunt (Editorial), Charlotte Observer, Apr. 11, 1993

Major Projects Gained
Incentives edged into Perstorp deal, Triangle Business Journal, Feb. 16, 1996
Skilled workers lure firm, Raleigh News & Observer, Dec. 23, 1995
Goodyear going to Statesville, NC, Charlotte Observer, Aug. 9, 1995
Motorola expansion to add 700 jobs at Triangle plant, Charlotte Observer, Apr. 13, 1995
Stanley Works Distribution Center in Too many projects lost may trigger NC incentives, Business Journal - Charlotte, Jan. 1, 1996

Major Projects Lost
Distributor to move to Fort Hill, SC, Charlotte Observer, Feb. 16, 1996
Incentives lure sugar processor to SC, Charlotte Observer, Dec. 14, 1995
SC offered Wal-Mart sweeter deal on incentives, Charlotte Observer, Oct. 14, 1995
Landing AMP took secrecy, The Charlotte Observer, Jul. 9, 1995
SC lures AMP with new incentives, Charlotte Observer, Jun. 30, 1995
SC adds perks to bring AMP to York County, Business Journal - Charlotte, Apr. 17, 1995
State's chase for Motorola, Raleigh News & Observer, Apr. 14, 1995
NC's meager incentives push jobs over the line, Business Journal - Charlotte, Mar. 20, 1995
Motorola bypasses Durham, Raleigh News & Observer, Mar. 2, 1995
Lure sought for Motorola, Raleigh News & Observer, Feb. 2, 1995



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