The News & Observer
January 24, 1996
No bait to fish for Volvo
Dudley Price, Staff Writer
Copyright © 1996, The News & Observer
North Carolina rolled out a large incentive package to try to lure Mercedes-Benz, but the climate has changed.
When Mercedes-Benz was considering building a plant in North Carolina three
years ago, the state anted up a fistful of incentives, including a pledge
to build a $35 million worker training center.Used with permission.
Now, North Carolina, South Carolina and Georgia reportedly are being
considered by another carmaker for a huge plant. Sweden's AB Volvo is considering
building a plant in the Southeast that could cost $500 million and employ
1,500 people, according to reports.
But this time around, the North Carolina's entire landscape of incentives
A $14 million fund to attract business has either been spent or committed
to new or expanding companies.
The $35 million that had been earmarked for the worker training center
has reverted to other funds.
Even the legality of government incentives is being tested in the courts.
William Malready, a Winston-Salem lawyer, challenged the legality of
using public money for private development and a judge this summer ruled
in his favor. The state has since joined Winston-Salem and Forsyth County
in appealing the decision, and their lawyers are scheduled to make arguments
to the state Supreme Court next month.
That may make things different for Gov. Jim Hunt, who led the push three
years ago to get legislative funding for the auto training center.
"What an industry may want and what can be achieved is not something
I can speculate on," said Rachel Perry, Hunt's spokeswoman.
But "obviously the Malready case has made a difference in the incentive
debate," Perry said.
Volvo, for its part, has said that manufacturing and delivery costs,
rather than incentives, would be given the most weight in evaluating a site.
But Gary Carlton, the chief recruiter for the state Commerce Department,
thinks that incentives are necessary for bagging top prospects like Volvo
in the big "buffalo hunt."
Carlton said a larger question is whether Volvo is truly interested
in a Tar Heel site.
Volvo already has an operation in the state, the Volvo GM Heavy Truck
Corp. based in Greensboro. The joint venture is 87 percent owned by Volvo
and has manufacturing plants in Ohio and Virginia. About 700 employees work
at the Greensboro headquarters.
Dan Johnston, a spokesman for Volvo Cars of North America in Rockleigh,
N.J., said the carmaker routinely examines possible expansion sites but
he would not confirm whether North Carolina was being considered.
And Carlton said no one from Volvo has contacted him.
"I think if they're working here, they are working through consultants
and the consultants are being very cagey and, if there is a project, I don't
know if they've brought their client to the state," Carlton said.
Speculation among real estate professionals is that Volvo is interested
in a 1,000-acre site near Mebane in Alamance County. Mercedes considered
the same location before opting for a site - and state incentives valued
between $200 million and $300 million - in Alabama.
But real estate people in the Mebane area have been unable to verify
"If someone is doing any looking, nobody is doing any talking,"
said Mickey McDaniel, past president of the Burlington-Alamance Board of
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Copyright © 1996, The News & Observer.
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