Two companies had their stimulus packages canceled Tuesday by the North Carolina Economic Investment Committee for failing to meet work commitments.
Conduent, a Xerox and S&D Coffee spin-off, blames the COVID-19 pandemic and continues a recent trend of companies not signing their labor contracts with the state despite economic stimulus.
EIC, part of the Economic Development Partnership of North Carolina, voted to end a $2.1 million grant awarded to Conduent in 2017. The business services company would create about 200 jobs in Morrisville. As long as hiring goals and specific investment goals were met, the company would have received most of the grant money through payroll tax refunds.
At the time, the state awarded the company a Jobs Investment Development Grant, or JDIG, and a community college scholarship program. The company was also expected to receive over $41,500 in incentives from Wake County and approximately $40,500 from the City of Morrisville.
In 2017, the company employed more than 5,500 people nationwide.
Shortly after receiving the grant, Conduent began downsizing at its Raleigh and Charlotte locations. The 73 positions created by the JDIG grant will reportedly be retained, but the company cited COVID and changing business conditions as preventing them from meeting their employment goals.
S&D Coffee also lost its grant agreement with the state on Tuesday. The company supplies products to restaurants such as Dunkin’ and McDonalds. They received a $2 million JDIG grant in 2012 and pledged to create 180 jobs and keep about 600 in Concord.
S&D was purchased by Westrock Coffee, an Arkansas-based company, for $405 million in 2020 and the company was renamed Westrock Coffee.
According to a report, EIC received a letter from Westrock earlier this month, saying COVID had hurt their business, forcing it to close its route distribution business and laying off and furloughing many employees, leaving their overall employment numbers below pre-pandemic levels .
The company will retain 450 employees at the Concord site.
EIC’s announcement is the latest blow to the state’s JDIG program, citing that most companies are failing to meet their financial obligations to the state.
“This latest news underscores the folly of the state government in committing to incentive deals with select companies when we know how unpredictable the economy can be,” said Brian Balfour, senior vice president of research, John Locke Foundation. “Just last year, (Democratic) Gov. (Roy) Cooper committed the state to a nearly $1 billion tax gift to Apple spread over 39 years. Back in 1983, no one could have predicted what the economy would be like in 2022, so why are politicians investing taxpayer dollars into 2061, a time no one can accurately predict?”
In August, Centene Corporation, a managed healthcare service provider, backed out of plans to relocate its business East Coast regional headquarters to Charlotte. Centene is a $35 billion company and its $1 billion Charlotte campus was almost complete after a year of construction.
In 2020, the North Carolina Department of Commerce struck a deal with Centene and pulled $338 million in tax incentives through an amendment to the state’s Job Development and Investment Grant (JDIG). JDIG was originally designed to bring businesses to poorer areas of the state, but Centene received the first “transformational” JDIG grant to build its center in the city of Charlotte. Shortly thereafter, Apple received a similar grant to build the triangle.
Centene pledged to provide Charlotte with more than 6,000 high-paying jobs over the next 12 years, but that pledge was later downgraded to 3,200 jobs.
Advance Auto Parts completed its Community Economic Development Agreement with the state in July, which included moving its corporate headquarters from Roanoke, VA to Raleigh in 2018 and creating over 700 full-time positions.
Company officials have reportedly told the state they could not add the hundreds of jobs agreed under the agreement. They point to competition for talent and greater flexibility towards workers, such as B. Enabling remote work due to changes that have occurred with the pandemic.
The original project was reportedly expected to add $1 billion to North Carolina’s economy.
In March, Microsoft terminated two government economic incentive grants approved in 2019 that would have been worth $20 million in economic incentives.
The company said it was uncomfortable sharing the amount of employee data required to complete the job creation validation stated in the previously approved job development investment grants.
The company planned a multi-million dollar expansion of its Charlotte and Morrisville operations in 2019, creating hundreds of jobs at both locations. Approved incentive packages were tied to plans for both sites, including an additional $1 million incentive deal from Wake County in 2020 on the condition that Microsoft would create hundreds of jobs with the deal.
Sonic Automotive sent a letter to the state’s Economic Investment Committee in February terminating its nearly $7 million economic stimulus agreement. They said they would not be able to provide the hundreds of jobs needed to fulfill the agreement because of the pandemic.
David Rhoades, communications director for the NC Department of Commerce, told the Carolina Journal in July that the incentive programs the state currently has do not need to be changed or strengthened and are still working well to keep the state competitive. He said the programs are flexible enough to accommodate changing conditions, such as B. Companies adopting more hybrid work situations and new remote positions could qualify for job creation requirements, provided those workers are located in the state and pay taxes in North Carolina.