The news, such that it is considering there’s not much actual substance to it, that a foreign automaker is considering North Carolina for a manufacturing plant is hardly a stop-the-presses moment.
After all, we’ve seen this film (and its sequels) and the plot never, ever changes.
In this latest installment — call it Auto Incentives VI — Mahindra Automotive North America, an Indian company, has let word circulate that it’s evaluating sites to build a second plant in the United States.
And as luck would have it, one of those sites just might be the Triad’s Greensboro-Randolph county megasite.
That naturally set off ripples of enthusiasm and speculation about hundreds, nay thousands, of good-paying jobs on Mahindra’s own assembly line and in pop-up companies that would supply parts and materials.
The only remaining cliffhanger is this: How much is the state willing to throw at an automaker this time?
Let the bidding begin
The plot line, at least as far as North Carolina is concerned, dates back to 1993.
That year, the state Commerce Department, entered into a bidding war with Alabama over a Mercedes Benz plant. The German automaker had this crazy idea that Americans would rush to buy luxury SUVs.
Anyhow, Alabama agreed to kick in (kick back?) some $253 million in tax breaks and capital investments to bag a factory with an estimated price tag of $300-million. North Carolina tapped out at $109 million.
Corporate welfare, North Carolina officials called it. Because it was. And is. But everybody hands out incentives, and if you want to bag a buffalo, you have to use a lot of ammunition.
“We sort of laughed about Alabama — they gave away half the state, something we would never do,” said then-state Sen. David Hoyle in 2005 about the use of giant incentive packages to lure giant companies.
Since then, a conga line of global automakers have sauntered up to state ATMs. Mercedes, BMW, Toyota, GM, Audi and Hyundai have all managed to off-set their own costs by getting different states to pony up.
The most recent example for North Carolina came in early 2018 when Mazda, which had been looking at the very same Greensboro-Randolph 1,900-acre megasite, announced that it would build in ... Alabama.
And that was despite North Carolina’s $1.5 billion incentive offer, which included state tax breaks, cash and help with infrastructure development.
Cue the executives at Mahindra, who no doubt have studied up on the rules of this particular game.
“We are at this point looking at a couple sites in western NC but our search could expand,” wrote Richard Ansell, a spokesman for the company, in an e-mail to the Greensboro News & Record. “SC, TX, AZ and Michigan are also under consideration.”
Of course they are. How much?
The world in which
Every once in a while, state commerce officials will pull back the curtain on how these things really work. A lot of factors are involved — work force availability, training, cost of living, local schools, etc. — before decisions are made.
But still, a bidding war is a bidding war, and pitting one state against another seems common practice.
From the companies’ perspective, doing anything different would be just plain dumb. Free money is the best kind, and so what if a chunk of it is grafted straight from taxpayer wallets?
Comments during the negotiations’ phase of another high-profile deal involving incentives — Dude, remember Dell? — attributed to Kip Thompson, Dell’s vice president for global manufacturing in notes taken by Jim Fain, then the N.C. secretary of commerce, sheds some light on the phenomenon.
“If a state like N.C. can’t get after this, I’m worried for our country — there’s a certain amount of patriotism here.”
As if refusing to hand over wads of public cash to a greedy corporation is somehow un-American.
We know how that ended up. Dell accepted up to $267 million in state and local incentives, moved to Forsyth County and then closed up shop before five years had passed.
That’s not to say Mahindra, Toyota and Mazda are anything like Dell. They’re different dogs scratching the same itch: pitting states against one another for public assistance.
Corporate welfare some might call it. But this is the business world in which we live; the courts have OK’d the practice in acknowledging a public purpose (jobs) by giving public money to private companies.
So the question stands: How much this time?