The News & Observer

Raleigh, N.C.

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.

RALEIGH - 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.

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 has changed.

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 the reports.

"If someone is doing any looking, nobody is doing any talking," said Mickey McDaniel, past president of the Burlington-Alamance Board of Realtors.

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Copyright © 1996, The News & Observer.

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