Thursday, June 19, 2014

Hear that? South Carolina just sucked 7,000 jobs from N.C.

Posted By on Thu, Jun 19, 2014 at 12:57 PM

Back in the early '90s, an odd little rich man vying for the White House got famous talking about a "giant sucking sound," his way of describing a function of a controversial trade agreement called NAFTA in which American jobs were moving south of the Texas border into Mexico. I thought about that this week when we found out South Carolina was sucking upwards of 7,000 jobs from Charlotte and North Carolina - all because, it seems, South Carolina's governor was willing to make some deals our governor wasn't (or couldn't).

But don't worry about it, they say. It's not that big of a deal. The companies that announced they were moving to York and Chester County weren't going that far, just a few miles down the road, and Charlotte would still benefit from the consolidation and expansion/relocation plans of LPL Financial, The Lash Group and Giti Tire Group. Charlotte Mayor Dan Clodfelter said he wasn't concerned about it, telling a Rotary Club lunch meeting, "we will have to get used to the fact that companies will move within a region and more," adding, "there will be some moves in the other direction as well." Charlotte Chamber of Commerce's CEO Bob Morgan emphasized that last part, pointing to the Charlotte Knights' move from Fort Mill to Uptown (though in the next breath, Morgan called the recently announced moves "sobering").

If that's the case - if it isn't such a big deal - then why was South Carolina Gov. Nikki Haley so clearly jubilant in announcing the moves? And why was North Carolina Gov. Pat McCrory so quick, it seemed, to try to downplay the news, shrugging off not only the much-needed jobs but also the increased tax revenue, telling Time Warner Cable News, "I'm not going to get into a bidding war for jobs that are five miles away from where most of the employees are going to be working . . . (when) most of those employees are going to be living and spending their money in North Carolina."

John Lassiter, head of the N.C. Economic Development Board, was clearly more concerned when he told the Charlotte Observer that the state tried to keep the two Charlotte companies, LPL and Lash, and worked to lure Giti, a Singaporean firm - but was "hamstrung" in several key negotiating points by what the legislature allows.

Mecklenburg County Commissioner Bill James, as conservative as they come, told me, "I think that when governments pay to 'compete' the only winners are corporations. Every time an economic development grant is awarded, some company avoids paying their fair share of taxes for schools, parks, libraries, police and fire services. Government shouldn't be in the business of rewarding some companies over others and shouldn't allow some companies to not pay their fair share of government operations. Most county/city grants offer companies 90 percent of their taxes back for 3 to 5 years (sometimes more). During this period, people don't have money for government services because they are giving tax rebates (refunds) to these corporations. It is a racket, and I oppose it."

On the other hand, the Charlotte area's newest state senator, Jeff Jackson, who took Clodfelter's seat when he resigned to become mayor, said to me, "incentives matter, and you're always better off if you can invest $1 to make $2."

But perhaps the most interesting assessment came from John Paul Galles, publisher of Greater Charlotte Biz Magazine. Galles, the driving force behind a newly released study for a consortium of influential local civic and business leaders, known unofficially as "Global Vision Leaders Group," told me the only real important factor to be considered was the extent to which the Charlotte region is developing a strategy as a global hub for international trade - and in relation to that perspective, our eyes should be on our connection to the Port of Charleston and our uniquely positioned place in the region as far as transportation is concerned.

Once Galles got to that, well, all worries about any "giant sucking sound" went out of my mind. We've apparently got bigger things on the agenda.

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