North Carolina will do just about anything to keep technology companies happy, including offering IBM up to $750,000 to bring just 10 jobs to the state. IBM has revealed plans to construct a $362m so-called "leadership data center" in either North Carolina, New York or Colorado. Hoping to secure this center, Durham County …
I live here in North Carolina. I think I need to complain to my officials about this.
"And companies such as Google and Microsoft also receive perks to build their new centers with taxpayers agreeing to major breaks for power consumption. That's quite handy for the likes of Google and Microsoft, since they're so strapped for cash and battling it out with rivals in low-margin businesses where just a few nickels can be the difference between maintaining a monopoly and going bust."
You won't find sarcasm THIS satisfying anywhere else. Truely scathing stuff, keep it up!
"likes of Google and Microsoft, since they're so strapped for cash "
I should be so lucky. According to the 2007 annual report, Microsoft has over $21 Billion ($21E+9) US Dollars in "cash and short term investments"
If that is "strapped for cash", I've got some nice swamp land that has "excellent growth potential", or some otherwise investment from Nigera available.
Then as the saying goes: "A billion here, a billion there, pretty soon it adds up to real money" (Ev we love you!, unlike your current senator!)
This actually tops Toledo Ohio's efforts to keep Jeep
When Chrysler made rumblings of relocating its Jeep facility out of Toledo, the Mayor essentially sold the properties of several hundred residents out from under them, and gave Chrysler an incentive program that still has people talking.
I don't believe the city is receiving any taxes on the property and are relying solely on the income tax of about 1,500 workers. Granted, they're all paid fairly well as they're all union, but the benefit to the city and surrounding areas certainly doesn't match the deal Chrysler got.
It sickens me when I hear of companies getting huge incentive packages, like that, especially at the cost of the state and local governments, which translates to the tax payers.
Who's paying the employees?
This is about the annual salary IBM would be paying them, minus the benefits.
So that makes them State employees.
Hopefully they'll have the same level of job security as a regular state employee.
It sucks how really good terms get stolen by the marketing guys. Leadership Class computing is just that, leadership, building another dime-a-dozen data center inhabited with 12 parts swappers doesn't qualify as leadership.
What they are doing at Oak Ridge National Laboratories qualifies as Leadership: http://computing.ornl.gov/
I've been in a lot of data centers and nothing I've ever seen compares to the overall quality of the Oak Ridge installation. Plus they've got this really cool display at the Science Visualization Facility that is a blast to play Counter Strike on (shows my age I guess): http://www.ornl.gov/info/ornlreview/v37_2_04/article14.shtml
The data centre won't work
Ten employees being meddled with by 1000 execs per year? That's 20 execs visiting per week per employee all expecting meetings and PowerPoints and other general ego-fluffing.
Let's hope the exec spend all their time at the strip clubs and golf courses otherwise the poor bastards won't get any work done.
Someone needs to go back to school
"Durham County officials in North Carolina have just committed to a seven-year, $750,000 incentive package for IBM" ... "Over five years, the data center would generate $4.4 million in visitor spending, which in turn would translate into $150,000 in local tax money, Shelley Green of the Durham Convention and Visitors Bureau said."
So the County is, effectively, giving IBM $750,000 over seven years, which is $107,142 per year. The County estimates (I would say grossly over-estimates) additional tax of $150,000 over five years from visitors, which is $30,000 per year. At that rate, it will take 25 years to recoup the cash they're giving away in this "incentive package".
In other words, the County will be losing money for 25 years. Who wants to bet the data center won't even exist that long?
Worth the money
Why are people so focused on the $750K for ten full time jobs after completion? What about the construction of a $362 million data centre? Wouldn't you expect more than ten North Carolina construction workers, electricians, plumbers, cooling system engineers, etc. to find employment for some amount of time on this?
It's costing the county and state a portion of the additional property and income tax that they wouldn't be getting anyway if the thing weren't built, and they are getting a major construction project. As a bonus, it may even bring some revenue and prestige after it's completed. Where's the problem?
This is an excellent investment.
Presumably this $362M facility won't built itself. So apart from 10 permanent jobs there'll be a few thousand temporary jobs for the construction work. On top of that, there will be all the lovely new STUFF that the building will be kitted out with - lots of business for the local suppliers too.
Since IBM already have a large presence in RTP (between Raleigh and Durham), the locals well know that this small amount of money will bring huge benefits to the local area.
And of course, if IBM don't build there, then the grant doesn't need to be paid, no loss.
They could stipulate in the terms of the agreement that contract work has to be local too, and supplies where possible locally sourced so the majority of the $362M goes into the local economy.
As mentioned in a couple of the comments above, I think the €750k is an excellent investment because of the indirect benefits from contractors building/maintaining the facility, the taxes the state can collect on the services rendered, etc etc etc.
I expect the business case calculation was a breeze.
Thumbs down for elected officials unable to explain business cases to the plebs.
Gooder than good
To the comments above about jobs during construction: not only are those good jobs for locals who in turn will spend the money locally: they are good jobs *in an industry that is really hurting for work right now*, with the housing slump.
Anybody care to estimate the financial and social costs of all those people being out of work, or the value of keeping them usefully employed and skilled so that they are still around when the economic cycle turns back up?
Economy in transition
Well, can you really blame us here in NC? A few decades ago, North Carolina was pervaded by agricultural and textile industry jobs. Much like the Pennsylvania steel industry that dried up and went overseas, these native NC industries were shrinking quickly. I'm actually proud of the way that we have handled our transitional economy. Starting with the development of the Research Triangle Park last century and extending to recent infusions of cash into scientific and biomedical research, we have plowed taxpayer money into modern industries that have allowed us to stand apart from other states that have faced similar transitions.
By investing heavily in our education system as well as "halo-effect" companies like Dell, Google, Honda Aircraft, IBM, and Lenovo we entice others businesses and skilled labor to move here as well. It helps having these marquee names. In my opinion, it's worth spending a little extra taxpayer money at times to build a strong economy for the future.
I live in Pennsylvania. Yup...Big Steel moved their operations to overseas facilities and the region lost the tax revenue that went with it. Since then, the incentives, moratoria and abatements that have been given to companies (VW, SONY, Bayer and a number of foreign companies come to mind) have had a net loss effect on the region. The number of PERMANENT jobs has decreased, tax revenues have all but dried up and the politics continue.
When I was young (in the 70s) a lot of businesses moved production from up here to the South (Union Switch and Signal and Alcoa come to mind quickly). That hasn't been recovered from either so unless mathematics has changed with the times, lost taxes are just lost unless there's a long-term replacement.
The strong economy arguement hasn't been borne out thus far in most ex-industrial regions so here's to hoping things changing.
More maths oddities
So if the county is right and this brings in $4.4M over five years from 1,000 execs, this would mean the execs are spending. $150,000 in taxes. Or $30 each exec in tax money each year.
Is this worth a downpayment of $750,000?
Annual ROI on 750,000: $75,000 - $150,000. Or $75-150 each exec each year.
Why not just give it to the local strip club? You don't have to have 1,000 execs turning up then.
"This is about the annual salary IBM would be paying them, minus the benefits."
That's $750,000 over 7 years - about $11K per year per employees.
Even in NC, I doubt you'll can staff a data centre at $11K per year per employee.
I mean, really.
"After all, the food and strip clubs are quite a bit better up North."
What? The FOOD? They don't even have grits in New York, never mind collared greens. And the fried chicken is frankly crap.
re: Local spending
Make sure the execs and strippers are local too!
Seems the same as when Boeing complain about Airbus subsidies.
Our greens don't wear collars
It's collard greens (for which I don't particularly care).
There's also seafood and hush puppies and real BBQ, not to mention the tomato flavored variety from the counties around Charlotte, which the people there seem to prefer for some unfathomable reason. :-)
WTF, IBM n NC?? SOB!!
Hellooooo!! IBM has had a huge presence here in NC for over 25 years. Is this news to you?