Fidelity Brings 2,000 New Jobs, Takes Away $69 Million

The big economic development news today was that Fidelity is building a regional center in RTP to house a total of over 3,000 workers, which will include adding 2,000 jobs to their total workforce in the Triangle. These jobs pay an average of over $58,000 per year plus benefits. The reasons Fidelity gave for choosing the site in North Carolina were the education level, quality of life, and the fact that the state is providing $69 million in incentives.

Now I am typically for incentives aimed at bringing good jobs to the state, but the $69 million price tag seems a bit much to me. Granted some of the grants require the company to contribute a certain amount back to the state, the figure I heard for Fidelity was $12 million, and the deal is much smaller than the $318 million given to Dell for creating only 1,500 less highly paid positions.

Also, consider that "quality of life" and "education level" come across when companies talk about the decision to relocate more often than pure incentive numbers. To me that would indicate that we need to have a balance between incentives and building good infrastructure to live and do business in the area. It means that we need to spend and plan to make our cities good places to live. And invest in our education at all levels, so that we can keep our universities and their grads at competitive levels.

Anyway, welcome to all the new Fidelity workers. I only hope that we have a better planning system in place before you all get here. Oh yeah, did I mention that the bulk of the employees are going to be transferred in from Massachusetts.

Comments

Not that I have anything against transplants

I actually quite enjoy them and their demands for more urban lifestyles. I just know that it kills some of the locals to think of more Yankees coming into Cary.

Cary has locals?

While I'd love to see the jobs going to North Carolinians, I'll settle for making Cary a little bluer. Maybe they'll get around to installing sidewalks throughout the Crossroads shopping center so you don't have to drive from one store to another. (It's madness!)

Death Valley

That's my name for Crossroads.

Hi Fidelity

In this case they'll be more like implants.

About 50/50

Between local and transfers are the estimates.

I just realized that I feed Fidelity's profits.

Only through my wife's 401(k) and profit sharing.

We have so many different accounts from before the marriage and each of our employers has a different company running the 401(k)'s. I used to make fun of people that could not keep all their accounts organized and running perfectly, but I think I am starting to slip.

BlueCary

New offshoot of BlueNC.

"85% of Republicans are

"85% of Republicans are Democrats who don't know what's going on." -Robert Kennedy, Jr.

2,000 more Democrats in Cary. WOOOHOOO!

"Man is free at the moment he wishes to be." -Voltaire

The thing about it that bugs me...

....or that I wonder about the most.

As the manager of a small business, I can tell you that big, established customers (heavy volume) are quite often way more of a pain in the ass than they are worth: they make excessive demands, they call in orders late and expect you to cover for their sloppiness, they are casual about paying their bills on time (I have one customer that has just decided they are on 60-day terms, my 30-day terms with suppliers be damned), and there's not really much I can do about it. Those big customers pay the bills.

And I hate them for it, I really do.

I'd much rather have a bunch of smaller customers, grow my business with theirs, get to know them, develop product lines to meet their needs, etc..Soon as I can build up my roster of smaller clients, some of the big boys are going to get a surprise.

So I wonder, and perhaps somebody knows: what is NC doing to promote the development of smaller businesses. Or to put it another way, for the $318 million NC spent on Dell, wouldn't that money have been better spent on 5, 15, 20 or so smaller NC companies with a bright future, than a single company (whose stock is kinda in the tank right now, as I recall) that might or might not provide the desired jobs looking ahead. Doesn't it make more sense, strategically, to put the state's economic development money into lots of little baskets rather than one or two big ones?

There is a newer, similar incentive plan for smaller companies

I agree completely with that sentiment. I always fear that these incentive packages favor the large companies way too much. But there was a new fund created last year that allows the governor to give incentives to smaller companies. I cannot find the details now, but if you read the Triangle Business Journal, there is news of a small grant being made almost every week.

One of these?

Found a list of incentive packages administered by the NC Dept. of Commerce. Perhaps it was one of those (the Fidelity package was part of this program).  It'd be interesting to know how the percentages break down in terms grants, ..uh, granted, vs. size of company. Perhaps it gets spread around better than I think.

I'd still rather spend $30 million on 10 companies than I would $300 million on one company. They're all cute when they're puppies, though.

Yes there are a lot

In fact the Fidelity grants were a combination of different programs. The one that I see a lot is the One North Carolina Fund, but that may be because it is administered by the Governor and Easley has a good PR team.

Fidelity will do the area a lot of good

I've seen estimates around $115 million dollars in salaries each year and $350 million in home sales. That's a lot of income and property taxes that will more than make up for those incentives.

I welcome deals like this wholeheartedly!

Perhaps

I'd love to be able to crunch all the numbers, start to finish. Started digging around on-line for some info and came across this really cool (and somewhat related) web-based case study from Harvard's Kennedy School of Government. No number crunching for now, but dang if it ain't nifty. Off to wonk for the remainder of the night!

More info on Economic Development Incentives

Found some more good stuff online if anybody's interested:

a '96 case study from Minnesota Public Radio;

a more recent article by Alan Peters and Peter Fisher, who also contributed to the above case study; the more recent article is less optimistic, concluding:

On the three major questions—Do economic development incentives create new jobs? Are those jobs taken by targeted populations in targeted places? Are incentives, at worst, only moderately revenue negative?—traditional economic development incentives do not fare well. It is possible that incentives do induce significant new growth, that the beneficiaries of that growth are mainly those who have greatest difficulty in the labor market, and that both states and local governments benefit fiscally from that growth. But after decades of policy experimentation and literally hundreds of scholarly studies, none of these claims is clearly substantiated. Indeed, as we have argued in this article, there is a good chance that all of these claims are false. 

Most of the material I have read makes a strong case for increased accountability and disclosure, regardless of the writer's stance on EDIs. Wonder what NC's policies are in that regard? 

Fidelity - Pork, Dell - Big Pork

Nice to get the jobs but the $69M price tag is really outrageous.

I'm still trying to get more details but right now it appears to be quite akin to the Dell deal in that there's no "performance" clauses covering local and state taxpayer subsidies if Fidelity backs out (in other words, nothing prohibits either Dell or Fidelity from "taking the money and run").

These mega-incentives are a bad, bad deal. Politically, the Dems should be ashamed. $70M divvied up in $100K increments to 700 small startups is both a better "bet" (something the lottery-liking Dems should be familiar with) and promotes a sector of the economy - the small guy - that demonstrably creates more sustainable jobs, better quality jobs, longer lasting jobs. And, generally, locally owned businesses seem to be more committed to the long term viability of their community than the mega-corps.

We need to stop sloppin' the big pigs and show a little more confidence in the quality of our communities.

Having to offer these incentives shows either a lack of salesmanship or intellectual laziness.

There were performance based clauses

For at least part of the state grants. The jobs grant requires that the jobs actually materialize.

The Dell grant had more local grants, and I am unfamiliar with how they work.

Incentives way up...

On the heels of my prior comment, this report from this morning's N & O

But the state is paying more to attract that investment, as well.

Through July, the state had promised $55.1 million through its two main incentive programs, the One North Carolina Fund and the Job Development Investment Grant program, which is contingent on companies creating a certain number of jobs over a number of years. Last year, the state had awarded $11.8 million in JDIG and One N.C. grants by the end of July. Companies also frequently receive tax benefits and local incentives.

And the statistics don't include Fidelity Investments, which said Wednesday it would hire 2,000 employees and invest $100 million to build a campus in Research Triangle Park. The total incentive package from state and local governments could give Fidelity up to $69 million.

The increase in incentive awards reflects the growing size of companies' investments in North Carolina, said Tony Copeland, assistant commerce secretary in charge of recruiting business. JDIG grants, which increased from $8 million to $48.7 million through the end of July, are meant for "transformational companies" with larger capital and job investments, he said.

For all fairness

The rest of the article is about how the investments in the state have gone way up.